In This Article We Learn about 7 Things You Didn’t Know About Online Sales Tax
Sales tax filing are an important part for you if you are registered to be a taxpayer or filing for tax. Online sales tax is paid by those you are making sales on their online store or businesses.
- Sales tax in states where you have nexus
Sales tax nexus basically means to have a significant presence in a state. Most of the common factors which create nexus include the location, personnel, drop shopping, storing inventory or selling at a tradeshow.
- Governed at state level
There is no ‘federal’ or ‘nationwide’ sales tax, there is only state wise sales tax. Each state governs their own sales tax and have their own state authority (Department of Revenue) which handles the matters, laws, rules and regulations related to sales tax from state to state. Though every state has their own rules regarding sales tax.
- Some products are not taxable
Many people who pays sales tax don’t know which products or items are taxable or not taxable. For examples, if you sell a tangible personal property then you can charge your customers with sales tax when you sell the property. But some of the states have exceptions for certain types of items which are considered not taxable by them.
In some states, the clothing is not taxable, while in some other stare the groceries are not taxable. You can find out with your state authority, which items are taxable and which are not in your state.
- Tax rates vary
Sales tax for all the goods and services for every year are not the same, they vary from time to time. As a consumer, you might have noticed that you pay different types of sales tax on food, clothing, groceries and any other item or product. Some of the states have the same rate for every item while some states have varying rates for their goods and services.
- Origin-based or Destination-based
In origin-based states, the sales tax is charged on the location whether your home or warehouse, where the order for the products in originated. So, the sales tax is according to the rules of that state.
In destination-based states, the sales tax is charged based on the buyer’s ship to location. So, the sales tax here is according to the rules of state where the buyer is. These situations make the matters worse sometimes.
- Collect taxes on all nexus states
As an online seller or business owner, you need to know that you need to collect sales tax on all of your nexus states on different platforms and shopping carts. So, you can collect sales tax on every sale you make in the state or different state.
- Sales tax filing depends on sales volume
There is a general rule that the more sales you have, the more the state want you to file for tax return. Most of the states will assign you with monthly, quarterly or annual basis of sales tax filing frequency depending on the rules of the state authority (Department of Revenue).
So, these are the seven things which you might or might not know about the online sales tax. But all of them are equally important for you to know if you are a taxpayer’. Also, you need to know the rules and regulations regarding online sales tax in your state as well.