SALT | Sales and Use Tax Consulting Services

STATE AND LOCAL TAX

FAQs

Are services subject to sales tax?

Whether services are subject to sales tax depends on the state. Some states tax a wide range of services, while others tax very few or none at all. Commonly taxed services include repair, installation, and personal services. Check your state's tax guidelines to determine if the services you offer are taxable.

When do I need to pay use tax?

Use tax is a tax on the use, storage, or consumption of goods and services when sales tax was not collected at the time of purchase. You typically need to pay use tax if you purchase taxable items from out-of-state vendors or online retailers who do not charge sales tax. The use tax rate is usually the same as the sales tax rate in your state or locality.

Which states have no sales tax?

The states that do not impose a state sales tax are Alaska, Delaware, Montana, New Hampshire, and Oregon. However, some local jurisdictions within Alaska may still impose sales taxes.

How do I know what sales tax rate to charge?

The sales tax rate you charge depends on the location where the sale occurs. This includes the state, county, city, and sometimes special district rates. To determine the correct rate, you can use tools like state government websites, sales tax rate lookup services, or tax software that calculates the combined rate based on the delivery address of the goods or services.

How do I know if my business has sales tax nexus in a state?

By conducting a sales tax nexus study, you can pinpoint the states where you have surpassed the nexus thresholds. You will need your physical locations and sales records from previous years to analyze both revenue and transaction numbers per state.

What is Nexus?

Nexus is the connection between a taxpayer and a state, ultimately deciding when the state has the jurisdiction to levy taxes on the taxpayer.

Am I required to register in a state for sales and use tax if I only have sales in that state?

It depends on the amount of sales and number of transactions.

Before 2018, a taxpayer was only required to register for sales and use taxes if it had a physical presence in the state. Generally, a physical presence was established by having people or property in the state on a regular and systematic basis. As a result, true remote sellers did not have a sales and use tax registration requirement. In 2018, the Supreme Court ruled in South Dakota v. Wayfair, Inc., 585 U.S, a mere economic presence was enough to establish a sales and use registration and collection responsibility. The Court did not provide guidance on the exact economic thresholds that need to be met to cause a registration and collection responsibility. Instead, it ruled that South Dakota’s threshold of $100,000 in annual sales or 200 individual transactions in a year was reasonable. As a result, each state has developed its own economic nexus thresholds.

Therefore, we strongly suggest working with a state & local tax expert to review these requirements on a state-by-state basis to ensure proper registration steps are taken to be in compliance.

What is the difference between sales tax and use tax?

Sales tax is a tax imposed on the sale, transfer, or exchange of goods and services. It is typically calculated as a percentage of the purchase price and included in the final cost for the end user or ultimate customer.

The sales tax rate varies depending on the location, with individual states and jurisdictions setting their own rates. In the United States, sales tax is not imposed at the federal level but is rather a state and local tax.

Use tax is a tax imposed on the use, storage, or consumption of goods and services acquired without paying sales tax. The rate often mirrors sales tax and is typically enforced by the state or jurisdiction where the goods or services are used.

The purpose of use tax is to ensure that individuals who purchase goods and services from out-of-state vendors or online retailers contribute the same tax amount as if they made the purchase locally.

How We Help

We Provide a Variety of Sales and Use Tax Consulting Services

Reverse Audits

A review of your company’s purchase history within the statute of limitation period for both expensed and capital transactions to identify if the you’re overpaying sales and use tax. If we identify potential overpayments, we’ll collect the data and invoice documentation needed to substantiate the claim, prepare and file the refund claim, and work with the state to collect the refund on your behalf.

Audit Defense

We represent companies under a sales and use tax audit with a state or local jurisdiction. We’ll be your advocate on sampling plans, taxability determinations, and error projections to ensure you’re not being over assessed by the state or local jurisdiction during the audit.

Nexus Survey

We’ll review your operations and historical sales information to provide guidance on whether your company is required to register, collect, and remit sales and use tax in a particular state and local jurisdiction. If nexus has been established in states where you’re not currently compliant, we provide an estimate of the tax exposure by state so you can decide how to settle any prior tax deficiencies.

Voluntary Disclosures

If an existing sales and use tax liability is identified through our nexus survey or you’ve already identified a pre-existing sale tax liability, we can help facilitate a voluntary disclosure agreement with a state or local jurisdiction, securing limited look back periods, abatement of penalties, and in some states, reduction of interest.

Taxability Matrix

We provide taxability determinations for agreed upon products and services by state in an easy to use excel format that is supported by citations to the authoritative guidance used to render our tax conclusions. These matrices can be used by requisitioners, AP processors, and the tax department to update sales and use tax compliance software.

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Sales and Use Tax Consulting Services

Talk to a Consultant

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FAQs

We Provide a Variety of Sales and Use Tax Consulting Services

Meet Your Sales and Use Tax Advisor

State and Local Tax Resources

See what a relationship with Clearview can do for your business.

Sales and Use Tax Consulting Services

Talk to a Consultant

MyFitnessPal Streamlines its Sales and Use Tax Compliance

How to Determine Your Sales Tax Nexus

Minimize Your Tax Burden by Maximizing Your Exemptions

FAQs

We Provide a Variety of Sales and Use Tax Consulting Services

Meet Your Sales and Use Tax Advisor

State and Local Tax Resources

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See what a relationship with Clearview can do for your business.