BlueCherry® & Avalara

• Do you sell something you can physically touch? If so, it’s referred to as “tangible personal property” and it is generally subject to tax. However, exceptions vary from one region to another.

• If you sell items through a marketplace, there is a high likelihood that it is taxable. Whether you or the marketplace are responsible for collecting and remitting those taxes depends on the region.

• Services, SaaS, installation, clothing and apparel, and labour are taxed differently in each region.

If you sell in multiple regions, an automated tax solution like Avalara AvaTax can apply the correct taxes on products sold in each jurisdiction.

Nexus is the connection between a seller and a state that requires the seller to collect and remit sales tax, and is based on your unique business activity in a given jurisdiction.

You can create nexus in a variety of ways, most of which fall under either physical nexus or economic nexus.

• Physical nexus is established by the presence of your business in a state. In addition to a shop or office, physical nexus may be triggered by off-site employees, warehouse locations, affiliations, even trade show attendance.

• Economic nexus is determined based on where your customers are located. If you reach a certain sales volume or number of transactions with residents of a jurisdiction, you can trigger nexus.

It’s important to note that you’ll need to register and remit sales tax if you have either physical nexus or economic nexus.

You’ll have to match your sales against the requirements for each jurisdiction. We offer a nexus tool to help you determine where you have a nexus obligation. Depending on the number of countries you have customers in, tracking software may be a worthy investment. For instance, AvaTax tracks sales in real time, alerting you when you reach 80 percent of nexus thresholds and when you need to register in a new country.

It depends. Some states require you to register if you sell via Fulfilment by Amazon (FBA), while others count FBA sales towards economic nexus thresholds. Additional states have marketplace facilitator laws in place, requiring marketplaces to collect and remit sales tax on behalf of sellers. And if you sell through multiple channels, you may still trigger nexus and be required to register and remit on your own, even in states that collect from marketplaces.

1. Determine where you have nexus. Keep in mind that New Hampshire, Oregon, Montana, Alaska, and Delaware (the NOMAD states) do not collect sales tax. However, some jurisdictions within Alaska do impose their own local sales tax. The remaining 45 states and Washington, D.C. all have some form of transaction tax. Start with where you have physical nexus, then identify where you’ve triggered economic nexus.

2. Register in each state in which you have nexus. Registering through Avalara Licensing is easier than registering with individual departments of revenue.

3. After you register, collect sales tax in the states you’ve registered in, then submit returns and remit the taxes to the proper tax authority. Avalara can help with this, end to end.

When you register, states determine your filing frequency based on your projected sales volume. The more you sell, the more often you’ll file returns. Like most things sales tax-related, the requirements and deadlines vary from state to state. You can look up deadlines on each state’s revenue department site or in our state sales tax guides.

It depends on the amount of sales you have had and in which states. Do you owe more than £10,000 in taxes? A state probably isn’t going to just let that go, and you could create exposure when you register. If you’re concerned about the liability of past sales, schedule a free consultation with our Professional Services team to discuss your options.