TAS 257 : Sales Tax 101 + The Biggest Questions Answered with Mark Faggiano

One of the most unaddressed and confusing issues when it comes to selling any kind of products online is the collection of sales tax. One of the reasons it can be so confusing is because every State has its own set of regulations surrounding sales tax as well as its own process business owners need to go through in order to register and pay their taxes. That description alone should show you how difficult it is to remain in compliance. State sales tax issues are one of the most frequently asked questions Scott receives so he decided it was time to get someone on the show who could answer the basic questions about sales tax. That someone is Mark Faggiano of Taxjar. You can hear their conversation on this episode.

I have to collect State sales tax? Really?

Sometimes the fact that the internet is worldwide makes it seem like State and National jurisdictions don’t apply to what goes on, on the World Wide Web. But the fact is that when a product is purchased that transaction is taking place in a particular place. In other words, the purchaser is sitting at a computer or other device within a specific jurisdiction. It makes sense that States would want to collect sales tax when that happens. So yes, as a seller of products you really do need to be collecting sales tax with each product you sell. But how do you do it? That’s what this episode of The Amazing Seller is all about, so be sure you listen.

As an Amazon seller, what States do you need to collect sales tax for?

When it comes to knowing what States you should collect sales tax for it comes down to a couple of issues. First is the issue of “nexus.” Nexus refers to the place where you as a business are actually doing business. The most obvious qualification for where your business nexus is located, is the State in which you reside and do your work. But what if you have employees in a different state, or a warehouse in yet another State? And what if Amazon is warehousing your products in a number of States? As you can see, it gets very complicated. But Mark Faggiano from Taxjar is on the show to help us sort it all out. He’s Scott’s guest on this episode.

Do I really need to register with a state to pay a very small amount of sales tax?

What if you discover that you’ve sold enough products in a particular state - let’s say Maine - to owe $15 in tax to the State of Maine. Does that mean that you should register with the State of Maine so you can fork over that $15? Technically, probably so. But there’s another way to look at it that most people who do product sales for a living feel is safe and ethical. You can hear abou the varying approaches to the issue on this episode as well as hear all of them explained in detail. What are you waiting for? You should listen to this one.

What if I had lots of sales in the past and never collected sales tax at all?

It’s entirely possible that many people who sell products on Amazon - either private lable or retail arbitrage - are just now hearing about the possibility that they may owe sales tax to various States. If that’s you, here’s something important you should consider. What kind of sales volume have you done in various states in the past? That may impact whether you should be concerned about the issue or not. But at the very least it’s an issue you should look into because of the possibility that a given State may decide to audit you to come after their Sales tax money - and that could be even more costly than paying the tax of your own accord. Find out how you should think through the issues on this episode.

OUTLINE OF THIS EPISODE OF THE AMAZING SELLER

• [0:03] Scott’s introduction to this episode and his guest, Mark Faggiano of TaxJar!
• [1:14] How Scott came to do this episode in the first place.
• [3:29] How Mark got into the business of dealing with sales taxes.
• [6:03] What is meant by “nexus?”
• [10:37] How do product sales impact the States I collect tax in?
• [12:44] Can you limit where Amazon moves your product inventory?
• [15:00] The 2 camps sellers tend to fall into when it comes to State sales tax compliance.
• [19:30] Does Amazon send State sales tax on my behalf as a seller?
• [21:57] How many States does Amazon have warehouses in?
• [23:42] How Taxjar helps sellers keep track of their tax liabilities.
• [25:41] Stories of Amazon sellers who are being audited for sales tax issues.
• [28:10] What’s the easiest way to register in various States?
• [30:44] The first steps for brand new Amazon sellers.
• [32:32] How you can get your tax data for free from Taxjar.
• [33:25] How to deal with past sales on which you may owe tax.

RESOURCES MENTIONED ON THIS EPISODE:

• www.TheAmazingSeller.com/TaxJar (affiliate link)
• TaxJar blog
• Support (at) taxjar (dot) com