After the U.S. Supreme Court ruled on South Dakota v. Wayfair, states now have the ability to collect sales tax from remote sellers. Remote sellers are businesses that do not have physical presence in the state however are making sales, online or otherwise, into that state. As a result, most all states have passed legislation to proceed with collecting these taxes.
As the dust continues to settle on this new legislation, many states are now at the point where they are beginning to issue letters to companies that are not properly registered and are in violation of the new laws that have been enacted.
Below is a list of things companies that do business in multiple states should do as soon as they possibly can to avoid being on the wrong side of these new state mandates:
- Make sure you have the systems in place to track your sales. Do you have an ERP, sales tax engine or point of sale system to collect this data? If you don’t, you will need to decide if you are going to invest in this technology on your own or if it would be more cost effective to have BerganKDV provide you with the software and consulting.
- Once you have a proper system in place to monitor your sales in multiple states, you need to get registered in those states where you are doing business. The Sales Tax Institute keeps a remote seller nexus chart to show which states have implemented legislation. Again, you can take this process on yourself, or BerganKDV has a full suite of services that can help you with the registration and reporting process.
- When contemplating how to proceed with either your own software or outsourcing, evaluate the scope of investment, including initial license and annual renewal fees, service provider fees covering the project lifecycle and internal resource costs. If you decide to automate with a third party, you are probably looking at about a three month window to get ramped up and running.
If you have already received a tax notice from a state tax agency saying you have tax due, below are a few things you need to do:
- Act on it. This sounds like an obvious thing to do, but even if you know the notice is incorrect, you still need to respond. Ignoring it to deal with later will escalate into more notices and maybe even a tax lien.
- Call in professional help. If you aren’t sure what to do, reach out to a Certified Public Accountant or tax attorney to advocate on your behalf if the issue seems to complex to tackle on your own.
- Respond in writing and make your case, providing documentation when you can. It’s probably a good idea to send it by certified mail in order to have proof that it was received.
Navigating the continually changing state and local tax landscape can feel very overwhelming. We have people who can help! Start here.
