If you sell products or services in the U.S. you may be required to charge and collect sales tax. There are thousands of taxing jurisdictions in the U.S. including state, city, and local taxes. As states search for more revenue streams they are increasingly focusing on sales tax. We can help you analyze your sales tax liability- starting with whether you are obligated to collect sales tax at all and at what rate. We can also prepare your state sales tax returns which must be filed monthly, quarterly or annually depending on sales volume.
Similar to VAT, sales tax (also referred to as a transaction tax, use tax, gross receipts tax) is an indirect tax that it is collected by the seller on behalf of the person who bears the ultimate economic burden of the tax, the buyer of the product. If the seller does not collect the sales tax, the buyer must generally pay it to the state as a “use tax.”
Many clients believe that if they do not have an office in the state, they do not have “nexus” in the state that makes them subject to sales tax. However, slight physical presence, like a one-day visit to a trade show can create the required “nexus” or connection to obligate the seller to collect sales tax. In increasingly more states, physical presence is not even required- mere “economic nexus” created by sales to customers in the state can create a tax obligation. Also, while services are generally not subject to sales tax, there are, in fact, a number of states, like New York and Texas, which are taxing SaaS.
Philip Stein and Associates recognizes the opportunity that the U.S. market represents for our clients and we also recognize the growing trend of state tax authorities conducting sales tax audits in their quest for additional revenue. We counsel our clients about sales tax best practices before making sales to the U.S. market and we assist them in registering for sales tax, filing sales tax returns, as well as represent them in audits and voluntary disclosure proceedings.