#Florida economix nexus law professional
The HBK SALT professional team has been helping businesses address economic nexus and resolve their sales tax compliance issues with state revenue departments since Wayfair broke in 2018. HBK can review your business activity and provide a concise economic nexus analysis. The solution for your business needs to consider the quantified tax liability and associated risk.
#Florida economix nexus law how to
How do you measure all those thresholds to determine where you need to register for sales tax? If a state economic nexus law went into effect in 2018, but your business hasn’t registered yet, what do you owe for prior years? There is often more than one solution to the economic nexus puzzle and more than one answer to the question of how to address the related sales tax compliance. Often the minimal exposure is manageable compared to the administrative burden and costs associated with registering and regularly filing sales tax returns.
A business could technically have an obligation to register and file sales tax returns, but will it do so if no tax liability exists and no taxable sales are planned? It is not uncommon for these businesses with minimal exposure to eschew registration. There are also the matters of materiality and practicality. Tracking and maintaining exemption certificates is key to avoiding any issues with a state that might later challenge the manufacturer’s nexus or filing determination. However, that manufacture should ensure it receives an exemption certificate from its customer. For example, a manufacturer that sells parts to a wholesaler for resale will not include those “sales for resale” in states where exempt sales are excluded from the threshold measure. Some states count only taxable sales towards their thresholds others include gross sales or receipts. Still, there are subtleties that require examination to determine where and even whether to register. As well, some states have begun to apply the economic nexus standards to corporate income taxes, which could require sellers into their states to file and pay income taxes. They will have to register with the revenue departments in those states, collect sales tax from their customers, then file returns and remit the taxes. The sales tax nexus thresholds apply to annual activity, but sales tax filings are typically required on a monthly or quarterly basis, which can require the seller to add employees, make modifications to its accounting or resource planning systems, or engage an outside consultant or resource to keep up with all their sales tax compliance requirements.ĭespite complexity and cost, businesses small as well as large clearly are obligated to determine what additional states they will have to file in. Complying can be cumbersome as well as expensive, especially if the business sells into several states, as each state may have different nexus requirements and sales tax rules. Many small and mid-size businesses have been slow to react to the new economic nexus laws. Many states have chosen $100,000 in sales or 200 transactions as the levels of activity that trigger economic nexus, but each state has its own thresholds, rules, and guidelines.
Some use strictly a dollar amount as a threshold, others a dollar amount and/or a number of transactions. Economic nexus is sufficient and triggered when a business from outside the state sells a product or taxable service into the state.Įconomic nexus laws on remote sellers generally require out-of-state sellers to register, then collect and remit sales taxes when the sellers meet sales or transaction count thresholds, which are set independently by the each state. But in the wake of Wayfair, a physical presence is no longer required for a state to compel sales tax collection. Physical presence could refer to an office or other property, or to an employee entering the state to sell or provide services. state that imposes a sales tax has passed “economic nexus” legislation-that require out-of-state businesses selling to customers in their states to collect and remit sales taxes on those sales once they have reached the certain sales or transaction thresholds.īefore Wayfair, businesses were required to collect and remit sales taxes only if they had a physical presence in a particular state.
The decision has materialized into new laws-every U.S. Supreme Court denied a challenge to South Dakota’s law requiring remote sellers who sell into the state to collect sales tax if they exceed the state’s economic nexus threshold.
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