The old rule of sales tax required a physical presence in the state. If you ordered from a catalogue from another state, for example, the company you ordered from did not have to charge you the sales tax for the state in which you lived. A recent Supreme Court ruling, South Dakota v. Wayfair, Inc. (2018), ruled that nexus with a state, or the minimum grounds required to collect sales tax online, no longer requires actual presence in the state. The internet has changed the way we do business, and states are scrambling to adjust to the new reality.
Do I need to charge sales tax on my website? The answer is likely yes, since most states as well as the District of Columbia have made plans for eCommerce sales tax. This has far-reaching consequences for online business.
Maine’s Online Sales Tax Rules
Maine is one of the states that has changed its laws. eCommerce sales tax rules in Maine now require any business with $100,000 in sales to submit the online sales tax. Even if this threshold is not met, a business with at least 200 separate transactions in the state must also collect sales tax online. Maine’s new law took effect on July 1, 2018.
The rules for Maine are independent of the rules in the various other states. Some states have not implemented a revised tax policy at this time, while others may have regulations that differ from Maine’s policy.
We Can Do It More Efficiently
It is a long and difficult job to keep track of sales tax records by hand. It slows a business down in the middle of the rapid online world. If you have to hire an extra worker to keep track of sales tax, or even a whole department, your compliance costs can soar, reducing your profits.
The old-fashioned way is not only slow but prone to error. Every form is a chance to make a mistake, and yet there are thousands of tax jurisdictions. Each state has its own tax rates and tax rules, and within each state municipalities further complicate the issue. Maine online sales tax rules apply only to Maine, but must be recorded in conjunction with any local regulations to collect online sales tax. If a single mistake is made and found during an audit, it can result in thousands of dollars in fines for the company.
The solution is sales tax automation. Computers can streamline the entire process, keeping compliance costs down and reducing the labor hours required to collect sales tax online. Over 20,000 companies around the world have turned to Forix partner, Avalara, for their online sales tax needs.
Avalara’s specially designed software seamlessly integrates with your business and assumes the burden of online sales tax record keeping. For each sale generated, it automatically makes the correct sales tax decision. It keeps track of over 12,000 tax jurisdictions as well as the rules for millions of different products and services.
In addition, Avalara fully automates the filing and remittance process for all sales tax obligations. Each year Avalara gathers data for hundreds of thousands of sales taxes, fills out necessary forms and files them. It also keeps track of all exemption certificates.
Disclaimer: The information in this blog post is provided for general informational purposes only and should not be construed as legal advice from Forix or Avalara.