Sales tax in the USA
One of the biggest issues Online sellers encounter when entering the US eCommerce marketplaces is Sales tax.
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Nexus for online sellers
Sales Tax must be charged when a nexus (or connection) between a business and a state exists.
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Registering for sales tax
With so many states having their own set of rules, and with the obligation to register in every states where an economic nexus exists
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Sales tax filing
Filing frequency is commonly based on the taxpayer’s sales volume and the amount of tax that the taxpayer collects during the period.
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Introducing Marketplace Tax Collection in the USA

Depending which marketplace platform online sellers are using, it is important to know if they are considered a “Marketplace Facilitator”.
For example, Amazon enters in the Marketplace facilitator definition, as a result, the obligation for sales tax collection and remittance shifts from the seller to Amazon.
At the moment, marketplaces such as Amazon, Etsy, Walmart, Rakuten and eBay, are required to collect sales taxes in 45 states.
For those marketplaces that are not considered Marketplaces Facilitators, like a Shopify websites, accounting and filing sales taxes returns is still the sellers obligation.

Sales tax in the USA

One of the biggest issues online sellers encounter when entering the US eCommerce marketplaces is sales tax. Each state has its own state or local rate or both. In addition, sales registration thresholds and number of transaction differs from state to state.

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Physical nexus for online sellers

Sales Tax must be charged when a nexus (or connection) between a business and a state exists. Traditionally, a nexus occurs when there is physical presence in a state, such a store or employees, but since June 2018, a new rule was enforced and now online sellers with out a physical presence in any state will need to collect Sales Tax based on the volume or value of transaction within a state.

Registering for sales tax

With so many states having their own set of rules, and with the obligation to register in every states where an economic nexus exists, sales tax registration can be difficult to cope with. To make it even more complicated, selling on both Amazon and Shopify for example, will create the need to only report sales coming from Shopify but not Amazon’s.
The best recommendation is to consult with US state tax authorities or a tax professional. GVC is well equipped to assist you monitoring your sales and apply for a sales tax registration when required. Do not hesitate to contact our tax experts.

 

Sales tax filing

Sales tax return filing frequencies can vary depending on each state requirements and can go from annually, semi-annually, quarterly, monthly, semi-monthly to monthly. Filing frequency is commonly based on the taxpayer’s sales volume and the amount of tax that the taxpayer collects during the period.

REGISTRATION THRESHOLDS IN US STATES

STATEEFFECTIVE DATEANNUAL ECONOMIC THRESHOLDANNUAL TRANSACTION THRESHOLD
Alabama01 October 2018250,000N/A
Alaska100,000200
Arizona30 September 2019150,000N/A
Arkansas01 July 2019100,000200
California01 April 2019500,000N/A
Colorado01 June 2019100,000N/A
Connecticut01 December 2018100,000200
Florida
Georgia01 January 2019250,000200
Hawaii01 July 2018100,000200
Idaho01 June 2019100,000N/A
Illinois01 October 2018100,000200
Indiana01 October 2018100,000200
Iowa01 January 2019100,000200
Kansas01 October 2018N/AN/A
Kentucky01 July 2018100,000200
Louisiana01 January 2019100,000200
Maine01 July 2018100,000200
Maryland01 October 2018100,000200
Massachusetts01 October 2017100,000
Michigan01 October 2018100,000200
Minnesota01 October 2018100,000200
Mississippi01 September 2018250,000
Missouri
Montana
Nebraska01 January 2019100,000200
Nevada01 October 2018100,000200
New Hampshire
New Jersey01 November 2018100,000200
New Mexico01 July 2018100,000N/A
New York21 June 2018500,000100
North Carolina01 November 2018100,000200
North Dakota01 January 2019100,000N/A
Ohio01 August 2019100,000200
Oklahoma01 July 201810,000N/A
Oregon
Pennsylvania01 July 2018100,000N/A
Rhode Island07 July 2019100,000200
South Carolina01 November 2018100,000N/A
South Dakota21 June 2017100,000200
Tennessee01 October 2018500,000N/A
Texas01 October 2019500,000N/A
Utah01 January 2019100,000200
Vermont01 July 2018100,000200
Virginia01 July 2019100,000200
Washington01 October 2018100,000N/A
Washington DC01 January 2019100,000200
West Virginia01 January 2019100,000200
Wisconsin01 October 2018100,000200
Wyoming01 February 2019100,000200

Source credit: taxconnex

*The above information is only indicative. This table is updated regularly but please contact GVC in order to ensure that it is correct at the date you are using it.