I would like to take this opportunity to introduce Andy Johnson and myself. We are both with Peisner Johnson & Company, a CPA firm that focuses exclusively on state and local taxes. Over the past 22 years (since we were founded in 1992), we have helped thousands of companies solve their state tax problems - and the majority of those problems involved sales tax.
In our experience most of the sales tax problems we see can be traced to one of five root causes – which we call “Hotspots”:
- Nexus - Nexus is the necessary link you must have with a state before the state can force you to collect or pay its taxes.
- Taxability – Taxability varies from product to product (or service to service) - as well as state to state.
- Rates - The sales tax rates can vary depending on where the product is delivered or the service is performed.
- Use Tax – If the seller does not collect sales tax on a taxable sale, it does not mean that it’s tax- free. The state expects you to pay it to them directly as a use tax.
- Exemption or Resale Certificates – Certificates are the documentation you must collect if your purchaser is claiming an exemption.
Over the coming weeks and months – Andy and I will be writing about these hotspots from a layman’s point of view. In other words, we will approach each topic as if the reader has no sales tax background. Not all of the subjects we cover will be basic (some will be fairly complex), but our intention is to present them as an introduction to sales tax - in an easy-to-understand format.
Have a sales tax question? We would like this new blog to be an interactive resource for you and invite your questions, suggestions and feedback. Simply use the "comment" feature below. All questions will be answered – and we will dedicate discussions (based on good suggestions) to those making the suggestion. (However, please rest assured that unless you ask to be identified – we will not post any identifying details.)
We truly hope that this new SALES TAX BASICS blog will become your “go-to” tax resource if you are trying to understand sales tax basics. We look forward to hearing from you!
Our first post (which will follow shortly) will discuss Hotspot #1 – Nexus...
Other recent “Sales Tax Basics” posts by Michael J. Fleming:
- Where and When Should I Collect Sales Tax?
- Amazon Turns Over Third-Party Seller Tax Data to Massachusetts
- Are Amazon FBA Sellers Responsible for Collecting Their Own Tax?
- Additional Amazon FBA Tax Amnesty Information
- Amazon FBA Tax: New Amnesty Can Protect Delinquent Sellers