Can I collect sales tax without registering to do so?

If you’re a casual seller, offering items through a website or at events, you may find that you can get away with selling a small amount without a permit.

In fact, in Tennessee, only businesses making at least $4,800 in product revenue are required to get a permit. In California, anyone who makes at least three sales in a 12-month period is required to apply, regardless of the amount.

Without a permit, you may be fined, although many states aren’t aggressive about policing this, especially among sellers without a store.

Collecting sales tax on purchases without remitting the amount collected to the state falls in a different category, however. By charging customers sales tax and pocketing the money, your business is committing fraud. Texas investigates this through its Criminal Investigation Division, with guilty parties subject to criminal penalties ranging from a misdemeanor to a second-degree felony. Mississippi considers this tax fraud. If state investigators determine that you weren’t willingly attempting to defraud customers, they’ll likely deem it negligence instead of fraud, reducing the penalties you’ll face.

Sellers often delay getting a tax permit because they assume it’s a convoluted process. However, many states provide step-by-step instructions on obtaining a permit, which can have it in your hands within a matter of days. Even if you don’t own a storefront, you may need to display your permit at any craft fairs, festivals, or other events where you sell items.

Before selling your first item, go to your state government website and take all measures necessary to get a permit. You’ll be covered if questions come up and in many cases it costs you absolutely nothing. Also check the laws in any states where you plan to sell to customers to see if your business qualifies as having nexus. Remember that if you sell on Amazon, any distribution warehouses your products pass through could earn you a qualification as having a physical presence in the state.

Whether you’re required to file for a sales tax permit in a particular state largely depends on local laws. In many cases, if you earn more than a certain amount or make more than a minimum number of sales each year, you’ll likely be required to file. If you’re collecting sales tax from customers, though, you’re required to remit that sales tax to the state or face fraud charges, which can come with criminal penalties.