Below is a guest post byt Susan McLain, marketing manager at Avalara.com.
Main Street Fairness and Internet sales tax issues are looming before Congress this fall. As our children return to school and business begins to creep back from the summer lull, e-commerce businesses have much to follow in this legislative session.
The Main Street Fairness Act hopes to legislate the implementation of the Streamlined Sales and Use Tax Agreement (SSUTA) among the states. The SSUTA* is the result of years of work by the Streamlined Sales Tax Governing Board (SSTGB) to “…find solutions for the complexity in state sales tax systems that resulted in the U.S. Supreme Court holding (Bellas Hess v. Illinois and Quill Corp. v. North Dakota) that a state may not require a seller that does not have a physical presence in the state to collect tax on sales into the state.”
NEXUS AND INTERNET BUSINESSES
Physical presence and nexus are interpreted to be the same. Nexus for a business originally meant a business with a warehouse, retail location, sales person or distribution center in a state. With expanded definitions being adopted by states and the growth of Internet retailing, this definition now includes:
- Any associated business that shares the trademark or a substantially similar name (as is the case for Amazon’s distribution center in Texas);
- Affiliates that run “click-through” sites on behalf of Internet retailers (if the affiliate lives in a particular state, then the sales taxes will need to be collected and remitted by the Internet retailer that received the click-through);
- Repair and maintenance service locations (a relationship with a service center that repairs a product sold by an Internet retailer would denote nexus);
- Shipping of returnable containers into a specific state.
With expanded definitions of nexus, you may now be required to collect and remit sales taxes for additional states. Additional nexus means additional complexity for many businesses. Additional complexity can mean increased audit risk. How do you reduce risk, regardless of what the laws are?
INTERNET BUSINESS IS ALL ABOUT AUTOMATION
Internet business is all about automating the sales process. Implementing a cloud-based solution that provides accurate sales tax calculation, proper management of exemption certificates for tax-exempt transactions and timely filing and remittance of sales tax returns can help you to reduce your risk and maintain compliance—automatically.
*Funded by the Streamlined Sales Tax Project
Select the Best. Forget the Rest.
Avalara’s AvaTax product delivers end-to-end sales tax compliance for e-commerce shopping carts and the financial applications on the back end as well. Fully integrated into hundreds of financial applications and e-commerce shopping carts, Avalara’s AvaTax ensures accurate sales tax calculations “down to the rooftop,” easy collection and management of customer exemption certificates from within your e-commerce shopping cart—real-time, during the transaction—and timely, responsive filing and remittance of your sales tax liabilities.
Susan McLain is a marketing manager and content specialist with Avalara.com. She has been a technical and marketing writer and designer for over 15 years with experience in a variety of industries including medical devices, networking, satellite technologies and e-commerce. Learn more about AvaTax Today. Call 877.780.4848 (206.826.4900) or visit www.avalara.com.