US sales tax guide for international sellers
A few things have changed recently regarding US sales tax laws. As an international seller, we know you have questions. Need information on nexus? Registration? Exemptions? Read through our simple US sales tax guide for international sellers.
What is nexus?
When someone refers to nexus, they refer to a link or a connection with a state that stands as a prerequisite for any tax-related activities.
Only when one has nexus can a state require you to collect or pay its taxes. This could include sales or use tax collections, and income, franchise, or use tax payments.
Any activity helping to establish or maintain a market can create nexus, such as the existence of inventory, sales, and transactions. Third-party activities include installations, implementations, training, performance or services, sales, customer service, collection, and credit checking.
How do the new sales tax laws affect me?
International sellers should note that US states are becoming more aggressive in their search for tax evaders. The penalties and interests you can incur can exceed 50%.
This aggression has been partially spurred on by Amazon’s provision of seller information to US states, making it easier for these bodies to pursue foreign sellers.
Do I need to collect sales tax?
Before concluding whether or not to collect sales tax, you must take certain steps forward to further your understanding.
Firstly, make sure to analyze your nexus and your taxability. No nexus means no responsibilities!
Once you’ve done so, quantify your materiality (what is most important to you depending on your situation). Then, if you determine you do have nexus, register where you need to, then collect and remit your tax.
If so, when, where, and how should I register?
There are three ways that you could consider registering for sales tax collection.
Registering prospectively entails registering from the current date going forward, on all future sales.
Registering historically (how the state wants you to) entails registering from the date at which your nexus began.
And registering through a VDA (Voluntary Disclosure Agreement) grants you access to a reward for stepping forward and announcing yourself freely. Instead of the state looking back 7-10 years into your sales history, the state looks back 3-4 years and it waives certain penalties.
Frequently Asked Questions
Developing a successful global business strategy is crucial for any business looking to expand beyond its domestic market. The benefits of entering the global market are endless. In this article, we will explore the main concepts of global business strategy.
Collecting tax forms is an essential process for marketplace business owners. In this article, we’ll discuss why it matters, how to do it efficiently, and how automation can improve the tax form collection process.
Welcome to our Reports and Research hub. Based on our leading position and experience in the world of cross-border business, our research reports aim to offer you our latest findings and global insights. Feel free to browse our reports and discover valuable resources to support your business’s growth and success.
Want to make and receive cross-border payments with ease? Payoneer gives you access to a universe of opportunities to make international payments, receive funds, and much more to run your global business. Read on to learn about how to get started using Payoneer today.
Every business owner needs to issue invoices. Learn what an invoice is, what you need to include on your invoices, and when you need to send them, and why tracking invoices is important for your business’ success.
What is payment fraud detection and what do you need to know to understand, detect, and prevent fraudulent activities. Discover the best practices, tools, and strategies to safeguard your business against payment fraud and protect your financial assets.
The basics of treasury management What is treasury management and why is it important? Treasury management plays a crucial role in the financial operations of businesses. This piece will explore the fundamentals of treasury management, its core functions, and its importance for businesses.
Accounts receivable (AR) is crucial for business success. By managing your AR process effectively, you can improve Your cash flow, increase revenue, and build better customer relationships. AR involves tracking and managing customer payments and outstanding balances. Our comprehensive guide will help you understand what AR is, And how you can optimize your AR process…
Accounting plays a vital role in the financial management of businesses and organizations. This guide will provide an overview of accounting, explaining its fundamental principles and processes. We’ll review types of accounting, key documents, special considerations, and more.