Sales tax laws continue to evolve and grow more complex, with most states having unique economic thresholds that require their own correct procedures and paperwork to account for. A fitting example of this is Colorado’s recent rollout of its Retail Delivery Fee. As of this summer, Colorado now imposes a $0.27 Retail Delivery Fee on all deliveries by car to a location within Colorado with at least one item of tangible personal property subject to sales and use tax. Retailers must state the retail delivery fee separately on all customer invoices and receipts and file it accordingly.
As a business owner, you are responsible for determining if you have sales tax nexus in a given state. If you are unfamiliar with sales tax nexus, it’s whether your business has a sales presence within a given state. There are many determining factors for if your business operations create sales tax nexus within a state, here are just a few:
- The presence of an office building, storefront, home office or other location
- Some states have a click-through nexus, in which eCommerce retailers are taxed for being affiliated with another state even without a physical presence
- Having team members working out of a state
- Operating a storage building or warehouse
- Storing inventory at a warehouse or building
- Conducting short-term business in a state such as a convention or fair
- Since the adoption of the Wayfair V South Dakota ruling in 2018, economic nexus has become the most prevalent source of frustration for business owners and the most common new trigger of nexus standards
The list above illustrates the common headaches that come with navigating sales tax. A great first step toward alleviating those headaches is conducting a nexus study. A nexus study examines all of your business operations within the states you operate within and determines if you have sales tax nexus in those states. It’s a crucial resource for establishing sales tax compliance if you perform business activities in multiple states.
In addition to performing a nexus study, you may want to consider partnering with sales tax advisors to help you implement the study results. Managing your tax filing procedures is a complicated endeavor, and without help, it can feel near impossible. Advisors can provide the resources, tools and expertise to instill confidence in your filing processes and confirm sales tax compliance.
If you are not yet partnering with a sales tax advisor, and are unsure where to start, BerganKDV can help. We work with clients every day to simplify sales tax complexities so that they can focus on growth and running their businesses. Our team stays current on legislation so that updates such as the recent Colorado fee don’t halt operations.
To partner with an advisor like BerganKDV, you must first take a nexus study so that our team fully understands your sales tax obligations. We offer various compliance-focused services including a nexus study. You can check out more details on the study and request one here. If you have additional questions regarding sales tax compliance and what services we provide to address those needs, feel free to reach out and one of our team members will be happy to assist. Let’s talk!