Whether you’re a multinational company, eCommerce business, or online seller, you know how complicated USA sales tax is and thank your lucky stars that you’re not a US company.
But in today’s increasingly connected global business landscape, international sales are now just a few clicks away. And the borderless activity that has helped you expand your audience is also the reason why you could be exposed to USA sales tax.
So when does the complex web of tax laws and regulations become applicable to non-US sellers, and how do you navigate your way through them?
We’ll show you.
When does USA sales tax become a concern?
If you’re an international seller, it’s essential to understand the primary nexus triggers that can create the obligation to collect and comply with USA sales tax laws. While the rules vary by state, here are a few common triggers to keep in mind:
The primary issue when it comes to international sales tax for sellers is understanding when you have a “nexus” in the United States. But nexus triggers aren’t limited to sales numbers. A company can trigger a sales tax nexus in a number of ways when it comes to international purchases.
Stay aware of your physical presence
Setting up a warehouse, office, or other physical presence in the US can trigger nexus, even if you don’t have a single US-based employee on the payroll.
Tracking international sales tax
Sales to US customers is the easiest way to be subjected to sales tax, depending on the state. While some states have minimum sales thresholds, others tax all sales to their residents.
Consider your inventory warehousing
Storing inventory in a US-based warehouse can trigger nexus, even if the warehouse is owned by a third-party logistics provider.
The possible downside of affiliate programs
If you participate in an affiliate program that promotes your products to US customers, you may be subject to sales tax in some states.
These nexus triggers aren’t always straightforward, and each state has its own thresholds. And it’s important to remember that even if you are a non-US seller, your sales channel, such as Amazon, has a US presence that immediately changes the dynamics.
So what do you do to become compliant if a nexus is triggered? And how do you navigate the complexities of international sales tax that eCommerce sellers face?
How to become compliant if a nexus is triggered
What makes sales tax so complex is the fact that each state has sales tax laws and penalties of its own. Which means you have to be super aware of your sales in every state to tax your products right.
For non-US sellers, who aren’t familiar with the US tax system, it can be especially challenging to stay on top of these laws, especially when it comes to US sales tax on services and US sales tax on digital services, where legislation is still catching up to the evolving landscape.
To help you manage your sales tax journey, these are some steps you can take to stay compliant:
Stay aware of your nexus status
Keep track of where you have a nexus, as it can change quickly. If you add a new warehouse, hire a contractor, or begin participating in an affiliate program, you may trigger nexus in a new state. Regularly reviewing your business operations and sales can help you stay on top of your nexus status.
Determine your tax obligations
Once you know where you have a nexus, you’ll need to determine your tax obligations in that state. Each state has its own rules and rates, and some products or services may be exempt. You may also need to register for a sales tax permit in that state.
Get a USA sales tax permit
To register for a USA sales tax permit, you’ll need to follow the specific requirements of each state where you have nexus. While the application forms are generally easy to find and complete, the approval processes and requirements for each state differ. Which can make this a drawn-out process if you don’t tick all the boxes the first time round.
Collect and remit the right amount
If you’re required to collect sales tax in a particular state, you’ll need to add the correct amount to your sales prices, and remit the collected amounts to the applicable state on a monthly or quarterly basis.
Keep detailed records
It’s important to keep detailed records of your sales and tax collections in case of an audit. This can include invoices, receipts, and other documentation.
Becoming compliant with USA sales tax laws can be time-consuming and expensive, as it’s a state-by-state checklist. But the time and costs related to non-compliance are far worse, as penalties and interest can add up quickly.
But compliance doesn’t have to be a headache. Not when you have Complyt on your side.
Finding the sales tax support you need to stay compliant
The implications of international purchases and sales tax affect all businesses roaming the online business landscape. And when it comes to international sales tax, compliance can quickly become tangled up.
That’s why you need a tax partner on your side that simplifies compliance.
Complyt protects you from exposure when your business is growing in the digital, borderless world of commerce.
Our automated platform helps you:
- Calculate sales taxes instantly
- Report, file, and remit taxes with ease
- Stay compliant when exempt and selling to resellers
- Monitor nexus triggers that can occur in a few clicks
- Integrate with your eCommerce platforms
To put it simply, we help you to stop worrying about sales tax and continue growing your brand in the global market.
