Sales Tax 101: The Best Online Sales Tax Resources
- Jun 7, 2015 | Avalara
Whether you are new to collecting sales tax or are expanding your business into e-commerce, sales tax can trip you up. Complex taxation rules, ever changing sales tax rates, and a wide variety of filing frequencies and due dates makes sales tax compliance a time consuming responsibility. To help you sort through all this, we offer 12 websites you can use as great resources to answer your sales tax questions.
Learn the Basics
- A good place to start is with some Sales Tax Basics. This series of online articles from Sales Tax Support breaks it down with examples and understandable analogies.
- Accounting-Simplified explains how to enter sales tax transactions in your double-entry accounting system. Most accounting software does this for you automatically, but because tax reporting often involves accounting for returns, over collection, and exemptions, you should understand the accounting theory fully. More helpful articles can be found at Simple Studies, Accounting Coach and AccountingTools.
- Comprehensive online courses on tax accounting are available through the Sales Tax Institute. Separate courses or webinars cover sales tax basics, exemptions, nexus awareness, and more. Courses cost between $100 and $200, and may be most effective for new e-commerce retailers who plan who have warehouse inventory in more than one state.
Mastering eCommerce Sales Tax
- The QuickBooks Small Business Center is a good place to turn for recent articles on sales tax reporting, advice, and nexus updates.
- Sales Tax Support offers comprehensive advice on how to collect and pay sales tax, and how to evaluate your nexus responsibilities. It also includes topics that cover drop shipping, exemptions, certificates, and forms, and provides a free state-by-state nexus tool: Sales Tax by State, which describes the nexus requirements for each state.
- If you’re ready for a slightly more advanced website, the Journal of Accountancy offers articles like this one: Navigating Nexus. The article covers the difference between nexus rules for sales tax and state income (and other) taxes. It also includes a very detailed checklists to help you get set up for reporting and to see if you have liability.
- The MultiState Tax Commission offers a Uniform Sales and Use Tax Certificate accepted by 38 states. Instructions are included on the form.
- If it has come to your attention that you should have been collecting and paying sales tax in a particular state, but haven’t, you can always file a Voluntary Disclosure Agreement (VDA). See this article at CBIZ for information, advice, clarity, and warnings.
Finding Information Fast
- Want to look up sales tax rates quickly? Use Avalara's free Sales Tax Rate Map. You may also want to look over our list of tips and to-do’s for identifying sales and use liabilities.
- The U.S. Small Business Administration provides links and online forms so you can quickly apply for business registrations or tax accounts in each state. See SBA: Learn About Your State and Local Tax Obligations.
- Something to be aware of is that 16 states offer various sales tax holidays. Depending on the state(s) you are in and the product or service you offer, you can give yourself and your customers a break from sales tax collection.
States with extreme weather patterns may offer brief holidays in which to purchase weather-preparedness items. In Texas, for instance, the state grants residents three days in which to purchase up to $6,000 of Energy Star-qualified air conditioners, up to $2,000 on qualifying refrigerators, and no limit on fans, dishwashers, clothes washers and dehumidifiers. This applies to online and catalog sales as well.
Quite a few states offer modest windows in late summer in which to buy computers, supplies, and clothing for school. Tennessee grants three days to spend up to $1,500 on computers, and $100 each on school clothing and supplies.
Just Plain Weird
- Some states and cities have specific taxes for particular items. For instance, if you live in California and want to buy fresh fruit from a vending machine, be prepared to pay 33 percent in taxes. In Illinois, stores must collect a 6.25 percent sales tax on candy, but only if it doesn’t contain flour – so Whoppers and pastry-based candies are exempt. Can you imagine trying to sort that out at the cash register?
In Kansas, ironically, you have pay taxes on a hot air balloon ride, but only if the balloon is tethered. Apparently “free roaming” balloons are considered a legitimate form of transportation. In good news, people over 100 years old are exempt from paying sales tax in New Mexico.