US sales tax checklist for non-resident businesses
- Dec 9, 2020 | Richard Asquith
Selling online into the US?
If you are selling from abroad to US businesses or consumers, then most of the states will expect you to be charging sales tax following the 2018 Wayfair Supreme Court ruling.
This blog is an extract from Avalara's comprehensive US sales tax for Europeans guide which covers all you need to know about sales tax to successfully sell into the US.
There are many questions to get distracted over, including:
- Am I over the registration threshold?
- How do I treat past sales and any tax liabilities?
- How do I get rate calculations correct?
- How do I submit tax returns correctly?
Below is a checklist of the key issues, and how Avalara can help you keep on top of them and stay focused on growing your business.
Should you sales tax register?
The ‘nexus’ rules for determining if you have to be registered vary from state- to-state. They are expanding fast following the 2018 Wayfair ruling. States are additionally extending tax nets to traditional and digital services.
An Avalara Nexus Study will review your footprint and offerings in each state to determine if you should be tax registered.
What about back taxes?
Once it is clear you should be registered, how much tax is due from prior sales? This may include interest and penalties.
What is the best route to disclose and pay any historic taxes outstanding?
A Tax Exposure Analysis estimates tax due on prior sales, and what fines may be due. We will look to mitigate any liabilities by identifying exempt transactions. We will also suggest the best way to settle the bill to minimise total costs.
Avalara's Voluntary Compliance Service includes registering for tax and choosing the optimum disclosure path based on the various options by state.
How to get sales tax registered
If there are no back taxes, then the appropriate Department of Revenue or Taxation, or other similar taxing authority still needs to be approached, and an application filed to register.
Avalara's Registration Service includes gathering and checking all the data and supporting documents to support applications in any state. Once we complete the application and submit, we see it through to getting fully registered.
What about back taxes?
Once registered, many states filings? States will require the submission of returns covering old transactions.
Backfiling involves Avalara helping to determine the various returns required, and completing them in conjunction with your accounts team.
How to get the live tax calculation right
Taxability - understanding the rates, rules and taxing boundaries - is the most complex area of sales tax. It’s annoying for your customers and potentially costly for you if the tax authorities spot you have got it wrong.
Avalar's AvaTax delivers cloud-based, real- time rates and calculations into your invoice system or shopping cart. And with integrations into over 700 ERP and e-commerce systems, it is easy to plug and play.
How to file returns and settle due taxes
Keeping on top of all the filing deadlines and forms. Plus, managing multiple tax payments to different states and local jurisdictions.
Returns is a cloud-based returns preparation software solution. Using your data from AvaTax and other sources, it prepares returns with a higher degree of accuracy than doing it yourself.
It manages the complex filings deadlines to help ensure nothing is missed. It also consolidates multiple tax payments into a single transfer which it can make on your behalf.