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Online Sales Tax

What You Need to Know About Online Sales Tax

What You Need to Know About Online Sales Tax

The Mystery of Online Sales Tax

Are you wondering if your state requires online sales tax? Or, if the states you sell the most products to do? Along with having an expert accountant and bookkeeper on your side, this article can help clear things up for you.

What Are the New Internet Sales Tax Laws?

On June 1, 2018, the Supreme Court ruling in the South Dakota v. Wayfair Inc. case changed the laws regarding sales tax collection by online sellers, overruling Quill Corporation v. North Dakota in 1992. The new ruling allows states to require internet retailers to collect sales tax even if they do not have a physical store or warehouse in the state.

What States Have to Pay Online Sales Tax?

If a state has a nexus standard, meaning they have some form of a sales presence in a state, they have the ability to require e-commerce businesses to pay internet sales tax.

The following states have a nexus standard and have enacted laws to require online retailers to pay internet sales tax:

  • Hawaii
  • Tennessee
  • Vermont
  • Mississippi
  • Alabama
  • Illinois
  • Indiana
  • Kentucky
  • Michigan
  • Minnesota
  • New Jersey
  • North Dakota
  • Washington
  • Wisconsin
  • Colorado
  • North Carolina
  • Connecticut
  • Georgia
  • Iowa
  • Louisiana
  • Nebraska
  • Utah
  • Ohio
  • California

States also have different thresholds for sales in dollar amount per year or number of transactions per year, that determine at what point a business is required to pay internet sales tax. These thresholds start at $10,000 and go up to $500,000, and begin at 200 transactions per year.

On this chart, you can see that for California the remote seller threshold is exceeding $500,00 for the total combined sales during the preceding or current calendar year. This means that unless you have made more than $500,000 this or last year, you do not have to pay online sales tax.

SD Bookkeeping, Inc. Can Help Your Business Stay Financially Up-to-Date
Hiring an expert bookkeeping service can help you stay up-to-date on sales tax laws, including online sales tax laws, and alert you if and when they do change. We can help you keep track of all your business accounts, payroll, and help you master QuickBooks with our Certified QuickBooks ProAdvisors.

We work closely with each of our customers, fully understanding how important your business is to you. By partnering with your CPA or tax preparer, we help you organize and stay up-to-date with your business’s finances and save money on your taxes every year.

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