New Ecommerce Sales Tax Laws in Idaho May Affect You
Gone are the days when you had to run out to the local department store or gift shop to buy that birthday present for your brother. Today, all you need to do if you don’t feel like venturing out is type “brother gifts” into your browser and get to shopping. Ecommerce is booming, and we can all thank technological advances in recent years for that. It’s convenient, as safe as using your credit card in a store and, in many cases, has been sales tax-free for years. The issue of sales tax has been difficult for states to enforce, because so many shoppers have been buying online from companies located outside their state. The rules are changing, though. On June 21, 2018, with the Supreme Court decision on South Dakota v. Wayfair, Inc., states have a model to base legislation on to enforce sales tax collection and remittance.
Explaining the Remote Seller Nexus
As states began trying to solve the problem of losing millions in sales tax revenue to online shopping a decade ago, some enacted legislation to get Ecommerce businesses to collect and remit the tax. The provisions they created are called the “Remote Seller Nexus.” A business must have a connection with a state, or a nexus, if the state is to require that business to abide by sales tax laws. New laws that states put into place require businesses to collect and remit sales tax based on thresholds of sales volume or number of transactions in that state. The companies do not need to have a physical presence in the state for these laws to be enforced. This is called an economic nexus.
How This Ruling Affects Websites and Sales Tax
Only forty-five out of the fifty states require retailers to collect and remit sales tax to their governments, but a large majority of them are planning to use the court ruling on South Dakota v. Wayfair as a model to require online businesses to charge and remit sales tax. Economic Nexus came online in five states on October 1, 2019, and some states have already begun enforcing legislation regarding sales tax for internet sales. If you operate a business that sells to consumers outside of your state, you will need to start charging and remitting sales tax for your goods.
How New Laws Affect Businesses Selling in Idaho
A new Idaho law went into effect on June 1, 2019 that affects online retailers and marketplace facilitators. According to this new legislation, retailers without a physical presence in Idaho must collect and remit sales tax when they reach the threshold of $100,000 in Idaho sales during the current or previous year. Marketplace facilitators are businesses that advertise and sell products for other companies on a marketplace platform. They are included in the new law, as well. Marketplace facilitators with no brick and mortar presence in Idaho must collect sales tax when their total sales, combined with their third-party sales in Idaho, exceed $100,000 in the current or previous year. The law also requires them to have seller’s permits for their sales in Idaho and their third-party sales. If a retailer has a physical presence in Idaho and is also a marketplace facilitator, they must collect sales tax on their third-party sales in Idaho and have separate seller’s permits for their own Idaho sales and third party sales.
Making Online Sales Tax Collection Easier for Your Company
The accounting work you must do to keep track of sales tax data for your online sales may seem like an overwhelming undertaking. Non-compliance with new tax laws will result in fines that affect your business’ bottom line. Keeping current on internet sales tax laws is essential for your business, but following through and abiding by them without clerical errors is difficult. Luckily, Forix is here to help, by partnering with online tax service providers who have the knowledge to manage your ecommerce sales tax collection and remittance.
If your internet sales in Idaho have reached $100,000 in the current or previous year, let us help you be sure that you are collecting and remitting the appropriate sales tax to the state. We have the best software to collect sales data, fill out and file the required tax forms, and pay these taxes to the state. This doesn’t have to be a process that takes valuable time away from your normal business operations. Reach out to the experts at Forix to find out how we can take this burden off your hands and save you money on potential compliance costs and fines while you focus on making your business successful.
Disclaimer: The information in this blog post is provided for general informational purposes only and should not be construed as legal advice from Forix.