Guest blog post by Mark Faggiano from Taxjar
At TaxJar, we call January the “Sales Tax Perfect Storm” because nearly every ecommerce business with transactions in the United States will have a sales tax deadline in January whether they file state sales tax returns every month, every quarter, or annually.
If you’re not terribly familiar with US state sales tax regulations, we’ve created a list of four easy steps to get ready for the big storm.
1. Find your sales tax filing due dates
This list shows when January sales tax is due in each US state.
2. Report your owed sales tax for each state where you have a sales tax nexus
Sales tax nexus is roughly defined as having a “significant presence” in a state. If you have sales tax nexus you will be required to file returns in that state. If you’re based in the US, you will have always have nexus in your home state, but you can also have nexus in other states due to business activities like employing remote workers in a state, selling at craft fairs within a state, or having a warehouse stock your merchandise within a state. As each state will have different guidelines for determining nexus, we have compiled a guide to determining if you have nexus in a given state.
3. File your sales tax returns
After you’ve figured out how much sales tax you’ve collected in each state where you have nexus and where you’ve collected it, you’ve finished the hard work! Now it’s time to file each individual state sales tax return. There are a few options for filing:
- File online: To file online, you’ll need to find your state’s sales tax portal website, fill out its detailed form, and then submit a payment–usually a separate system from the portal.
- File by post: This option is still around for some states, but others have discontinued the option to mail in your sales tax returns.
- AutoFile: Using this option, TaxJar will file your sales tax returns and remit any sales taxes owed to the state on your behalf. You won’t have to worry about completing forms or reporting the taxes yourself–it’s all done automatically! This service is available in most US states, and AutoFile is even smart enough to determine if your state has a discount for filing on time and will apply that discount automatically when applicable.
Regardless of how you file your US sales tax returns, please ensure that you file for every state where your business is registered even if you owe no sales tax for that particular filing period.
4. Prepare for Next Year’s Perfect Storm
After you’ve filed and as you conduct business in 2018, make sure that you keep track of any new states where you have newly established nexus and that you’ve registered for permits in those states as soon as you discover you have nexus. This will make your life easier next January during the next “Perfect Storm”.
You may also find that you no longer have nexus within a state, and in that case you should contact that state’s department of revenue to let them know you’re ready to end your business relationship with that state. Keep in mind that some states have “trailing nexus,” so you’ll want to check that state’s regulations regarding how long you must continue filing after your cause of nexus has ended.
We at TaxJar know that dealing with sales tax is never fun, but having a system to automate the bureaucratic pain away makes it less of a hassle and leaves you with more time to conduct your business. If you want to know more about sales tax, check out our Sales Tax 101 for Amazon Sellers Guide or join our Sales Tax for eCommerce Sellers Facebook group!
About the Author:
Mark Faggiano is the founder and CEO of TaxJar, a service that makes sales tax collection, reporting and filing simple for more than 5,000 online sellers. Try a 30-day-free trial of TaxJar today and eliminate sales tax compliance headaches from your life!
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