International businesses have to comply with U.S. state and local sales tax regulations
Since the Supreme Court’s Wayfair decision back in 2018, companies in one state can be required to collect and remit sales tax in all states. Your Idaho business has to handle sales tax for Georgia customers, not just Idaho customers. This requirement has thrown a lot of U.S. businesses for a loop.
Until 2018, an Idaho company only had to collect sales tax in Georgia if they had a physical presence in Georgia. Short of a warehouse, sales rep, or physical store in Georgia, they didn’t have to charge sales tax at all for customers who lived in Georgia.
The customers were required to keep track of the sales tax they would have paid had they made their purchases in Georgia. They were supposed to pay that sales tax (use tax at that point) along with their income taxes. Hardly anyone actually did that.
Fast forward to the present day. Now every state with state sales tax requires companies from other states which have significant revenue from their state to collect and remit sales taxes. What’s more, they require this of companies in other countries, too.
All remote sellers are now required to meet sales tax requirements in every state where they meet the threshold to establish economic nexus.
Instead of determining nexus on the basis of physical presence in the state, states can say that anyone who sells something to a person in their state has nexus. This is often called “economic nexus.” In Georgia, any company that has more than $100,000 in sales or at least 200 transactions in the state in the current or previous calendar year has economic nexus.
The thinking here is that a company in Mexico which sells goods to a customer in Georgia online is benefiting from Georgia’s infrastructure. They are using Georgia’s roads to deliver the goods. They are using Georgia’s postal service and internet providers. Georgia’s banks are stepping up to take care of the transactions. We’re not sure what else they might be doing in Georgia, but Georgia feels like they owe the state something.
Sales tax, for one thing.
It’s hard enough for Idaho
A seller in Idaho probably has no idea what the sales tax rates in Georgia are. They are likely to vary from one city to another, and may be different for different kinds of goods. There are sales tax holidays to take into account, too. It’s hard to keep up with all that.
A seller in Mexico can’t be expected to have any insight into the sales tax requirements in Georgia. However, whether it’s a reasonable expectation or not, it is a legal requirement.
Outsource your sales tax compliance
If your company is required to collect and remit sales tax, then you must register in every state where you have economic nexus. You have to calculate and collect sales taxes, file on time (and the schedule is different in different states), and remit the taxes you’ve collected.
Sales Tax DataLINK can help. In fact, we can take the whole sales tax burden off your shoulders and make sure that your company is compliant with all the relevant sales tax regulations.
Call us at 479-715-4275 and let us help make your sales tax compliance easier.
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