Online sales taxes take effect in these states

2021 Sales Tax Changes Report

Online sales taxes take effect in these states

Taxability can also depend on how a class is categorized. Is it considered part of a gym or club membership? If so, it could be subject to sales tax in Tennessee. Or not.

According to the Tennessee Department of Revenue, spin classes offered by fitness facilities are generally taxable but a karate class would generally be exempt.

Adding another layer of complexity, such as transferring a class online, can really cause a person to break out in a sweat because it may change the way the class is defined for tax purposes, and therefore taxed.

And of course, when classes aren’t held in person, instructors and students don’t need to be in the same location. Thus, a yoga instructor based in Washington, D.C., where yoga is taxable, may have a student in Missouri, where instructional classes are exempt.

Whether the charges for that class would be taxable under D.C.’s law or exempt under Missouri’s depends on how the sale is sourced (i.e., which jurisdiction’s rules apply, those at the location of the seller, the location of the buyer, or a combination of both).

With online classes now commonplace, these are questions businesses, and tax authorities, must answer. 2021 could bring more action on this front. More information about the tax implications of streaming services can be found in our communications section.

Manufacturers adapt and pivot to survive pandemic

The COVID-19 pandemic hit manufacturers hard. Industry leaders say it “accelerated many trends that were already appearing,” such as expanding B2C sales and B2B marketplace transactions. Some of these may have tax implications.

COVID-19 throws wrench in manufacturing supply chains

Plant closures in China and elsewhere disrupted global supply chains, slowing or altogether stopping production lines the world over. Once manufacturing resumed, a lack of truck drivers, restrictions on shipping, and a reduction in flights slowed the movement of goods. “Stockpiling and panic buying by consumers” only increased the strain on supply chains.

The burgeoning movement to reduce reliance on China got a boost from the pandemic.

In a February 2020 survey of over 1,000 North American manufacturing and industrial suppliers, “over half of manufacturers” surveyed said they’re “‘ly to extremely ly’ to bring production and sourcing back to North America. Additionally, 47% of U.S. manufacturers report they are now seeking domestic sources of supply.”

At the same time, sudden drops in demand for existing products inspired some companies to completely retool their business, go-to-market strategy, and operations in order to meet rising demand for new products.

For example, clothing manufacturers in New York, Los Angeles, and Virginia began producing masks and protective gowns instead of fashionable clothing and bathing suits.

This led to new customers and, in some cases, new selling models.

Manufacturers have had to navigate these and other changes despite staffing challenges caused by stay-at-home orders and remote work requirements.

They’ve had to develop safe working conditions for on-site employees and new protocols for remote employees.

Many also created new digital sales models to enhance virtual selling in response to interrupted physical sales cycles; in some industries, these have proven to be “equally or more effective in reaching customers than their former sales methods.”

About 65% of B2B decision makers surveyed in April 2020 believe new go-to-market sales models are equally or more effective than pre-COVID-19 models.

B2B and B2C ecommerce and marketplace sales on the rise

The new environment has placed an emphasis on B2B ecommerce, which wasn’t necessarily a priority previously. Worldwide, B2B ecommerce growth is now outpacing B2C ecommerce, though manufacturers are also expanding B2C sales.

According to a survey on industry trends conducted by Alexander Group, “As face-to-face customer contact diminishes, manufacturers are re-thinking their channel strategies.

Approximately 20% of manufacturers have their own ecommerce channels, while others are prioritizing distributors with full online capabilities.

” To better compete, some firms are heavily investing in ecommerce platforms and bypassing normal wholesale and distribution channels so they can sell directly to consumers.

New markets lead to new sales tax obligations

Surging B2B and B2C online sales could create new tax compliance obligations for manufacturers. Businesses dealing primarily or even exclusively in exempt transactions aren’t immune from economic nexus.

Although some states exclude exempt sales from their economic nexus thresholds (or may not require some wholesalers to register), other states include exempt sales in the threshold count.

Thus manufacturers, resellers, and wholesalers may need to register and file returns in addition to collecting and managing exemption certificates on B2B transactions.

Businesses that have grown B2C sales may have additional collection or reporting requirements.

Источник: https://www.avalara.com/us/en/research/sales-tax-changes.html

What are the Laws for Collecting Internet Sales Tax in Your State?

Online sales taxes take effect in these states

As of June 21, 2018, the United States Supreme Court changed the laws regarding the collection of sales tax by internet sellers. The Supreme Court ruling in South Dakota v. Wayfair Inc.

, established that individual states can require ecommerce retailers to collect state sales tax on the goods they sell.

The ruling overturned previous law which made the consumer responsible for paying sales taxes to the state, rather than through the retailer.

The former legislation meant that states were only able to tax sales by businesses which had a physical presence in the state. In the wake the new legislation, retailers that have an economic activity — known as an economic nexus — in a state can be obliged collect sales tax.

If you sell items online, it is important you keep track of the different rules for different states, as each state has its own rules and procedures for the collection of internet sales tax.

List of States With Internet Sales Tax

To give you a helping hand, check out the following information on laws for collecting internet sales tax in the different states.

States with Economic Nexus

Certain states have enacted economic nexus standards, which requires businesses that have a selling connection to that state other than a physical presence to collect sales tax on remote commerce.

These states include:

  • Alabama
  • Hawaii
  • Illinois
  • Indiana
  • Kentucky
  • Maine
  • Maryland
  • Massachusetts
  • Michigan
  • Minnesota
  • Mississippi
  • New Jersey
  • Nevada
  • North Dakota
  • Ohio
  • Oklahoma
  • Pennsylvania
  • Rhode Island
  • Vermont
  • Washington
  • Wisconsin

Thresholds for Economic Nexus

As well as being aware of the states that have enacted economic nexus standards, you should be conscious of the different states’ thresholds for economic nexus.

TaxJar offers insight into the gross revenue thresholds, which, if retailers hit, make them subject to sales tax collection laws.

$100,000 a Year Sales Threshold

  • Arkansas
  • California
  • Colorado
  • Hawaii
  • Illinois
  • Indiana
  • Lowa
  • Kentucky
  • Louisiana
  • Maine
  • Maryland
  • Michigan
  • Minnesota
  • Nebraska
  • New Jersey
  • Nevada
  • North Carolina
  • North Dakota
  • Rhode Island
  • South Carolina
  • Utah
  • Vermont
  • Washington
  • Washington D.C.
  • Wisconsin
  • Wyoming

Economic Nexus and B&O Tax

The states of Washington imposes a Business and Occupation (B&O) Tax that is levied on gross income rather than net income, as well as Economic Nexus, which online retailers should be aware of.

States with Affiliate or Click-Through Nexus

Affiliate or click-through nexus refers to an in-state business receiving a commission for referring a specified amount of sales to out-of-state sellers through a website link.

The states with an affiliate of click-through nexus include:

  • Washington
  • Idaho
  • California
  • Nevada
  • Utah Colorado
  • Kansas
  • Oklahoma
  • Texas
  • Minnesota
  • Iowa
  • Missouri
  • Arkansas
  • Louisiana
  • Illinois
  • Tennessee
  • Alabama
  • Georgia
  • North Carolina
  • Virginia
  • West Virginia
  • Ohio
  • Michigan
  • Pennsylvania
  • New York
  • Maine

States with Use Tax Reporting for Non-Collecting Sellers

As Avalara notes, a small but increasing number of states impose rigorous use tax notice and reporting requirements on non-collecting vendors. While use tax notice and reporting requirements differ from state to state, they are designed to make it so onerous for a business not to collect that they voluntarily tax their sales instead.

The states with use tax reporting for non-collecting sellers are:

  • Washington
  • Colorado
  • South Dakota
  • Oklahoma
  • Iowa
  • Louisiana
  • Alabama
  • Georgia
  • Kentucky
  • Pennsylvania

Streamlined Sales Tax (SST) states

Streamline Sales Tax (SST) is an effort to simplify and lessen the burden of sales and use tax collection, administration and compliance that is made by certain states, local governments and the business community.

SST arose in response to efforts made by Congress to permanently prohibit states from collecting sales tax on internet retailing.

There are currently 23 full member states that adhere to the SST and Use Tax Agreement.

These states include:

  • Arkansas
  • Georgia
  • Indiana
  • Iowa
  • Kansas
  • Kentucky
  • Michigan
  • Minnesota
  • Nebraska
  • Nevada
  • New Jersey
  • North Carolina
  • North Dakota
  • Ohio
  • Oklahoma
  • Rhode Island
  • South Dakota
  • Utah
  • Vermont
  • Washington
  • West Virginia
  • Wisconsin
  • Wyoming

States that Tax Marketplace Sales

A number of states have recently created legislation which requires a marketplace facilitator to collect and remit sales tax on behalf of the transactions their third-party sellers make.

These states include:

  • Washington
  • Arizona
  • South Dakota
  • Oklahoma
  • Iowa
  • Minnesota
  • Alabama
  • South Carolina
  • Virginia
  • Pennsylvania

For an overview on state laws regarding internet sales tax, check out the following infographic by Hotwire Global.

Image: Shutterstock

Источник: https://smallbiztrends.com/2019/01/list-of-states-with-internet-sales-tax.html

NEWS
Leave a Reply

;-) :| :x :twisted: :smile: :shock: :sad: :roll: :razz: :oops: :o :mrgreen: :lol: :idea: :grin: :evil: :cry: :cool: :arrow: :???: :?: :!: