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Is Sales Tax Optional?

Sales tax is not optional..

Sales tax is an ambiguous consumption tax imposed by the government on the sale of goods and services. If you’re running a business, there is a chance that you may be required to collect and remit sales tax to the government.

Uncertain if you should be collecting sales tax?
The best option is for you to visit your State’s Revenue website, answer a few questions to see if sales tax is applicable to your business.

If you know you should be collecting sales tax and “think” it is optional, that is a misconception. Collecting and remitting sales tax to the government is a requirement. Failure to do so may impose consequences of which can be both civil and criminal in nature.

Another misconception about sales tax is that if you are an Online Retailer you don't need to collect and pay sales taxes. This isn’t always true.

  1. If your State levies sales tax, then you must collect these taxes on all Online Sales made within your state.

  2. You must also check your economic nexus in all States in which you do business. If you have made sales equal to or in excess of $100,000 or have sold more than 200 products in any one State, then there is a chance you’ve reached economic nexus. Economic nexus requires that you collect and remit taxes to the local government.

  3. If you store products for sale in a warehouse in any other State that is not your company’s registered State, then you have established physical nexus in that State and must collect and pay sales tax.

If you believe you should be collecting sales tax but unsure of the technicalities associated with Sales Tax, then get in touch with your accountant or tax advisor.

Unfortunately, ignorance isn’t a defense.
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