Sales Tax is the tax charged in a state and/or local taxing jurisdiction when a buyer purchases products or taxable services.
If the seller has nexus in the buyer's state or state where the goods or services are consumed or constructed, then the seller has the collection responsibility and remittance of Sales Tax to the appropriate taxing jurisdiction. ASD® has nexus in all states and local taxing jurisdictions that we do business in.
In tax law, nexus describes a situation in which a business has either an economic or a physical presence in a state and is, therefore, subject to collecting Sales Tax on sales within that state.
A business might have Sales Tax nexus in a state if it has:
- A certain dollar amount threshold of sales in the state
- A certain amount of transactions in the state
- A physical location in the state – including a warehouse or shipping facility
- Employees working in that state, including outside sales reps
- Property (including intangible property) in the state
- Any employee or independent contractor who regularly solicits business or maintains a market for a company in the state (even if their location is outside the nexus state)
If a business has nexus in a particular state, it is required to register with that state, and collect and remit Sales Tax in accordance with that state's rules, regulations, and rates.
But did you know, the buyer could be responsible for paying Use Tax to the state and/or local taxing jurisdiction if the seller does not have nexus in the jurisdiction where products or services are consumed or constructed?
Some differences between Sales and Use Taxes:
- The seller is responsible for collecting and remitting Sales Tax; the buyer is responsible for calculating and paying Use Taxes.
- Sales Tax is paid to the seller; Use Tax is paid to the state (or local) government.
- Sales Tax is assessed by the seller; Use Tax is self-assessed by the buyer.
- Sales Tax is paid to the seller at the time of sale; Use Tax is paid to the state government according to its requirements – usually annually, biannually or quarterly.
By choosing to work with a seller, such as ASD®, who has nexus in the state where goods or services are being consumed or constructed, a buyer can be assured that sales taxes are being collected and remitted. For the buyer, this reduces the administrative burden, and liability, of calculating and remitting Use Tax in the jurisdiction themselves.
Any questions about upcoming workplace technology projects? ASD® would be happy to help.
Share this Post