Sales Tax in the United States

TABS prepared a memo to help try and explain the complicated system of sales & use taxes in the United States. There are now over 11,000 taxing jurisdictions in the United States. At the end of the memo is a decision tree that is useful in helping you determine whether your company is obligated to collect and remit sales tax.

Although we hope that you find this memorandum helpful, it is not intended to present any legal or tax advice and is not a substitute for an expert opinion tailored to your company’s specific operations. Before your company begins selling in the United States, you should consult with one of TABS’ sales tax team members.

As sales and use tax laws, rules and regulations are constantly changing your company should review its sales and use tax policies periodically. Thereby, each state handles their own sales tax regulations.

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The following is an index of the sales and use tax questions that we attempt to answer for you in this document:

1. What is Sales Tax?
2. How Does Sales Tax Differ from Use Tax?
3. How Does Sales Tax Differ from VAT?
4. Are all Sales Subject to Sales Tax?
5. So, if our company simply collects sales tax we are good?
6. Is our company better off not collecting sales tax and would your customers benefit from this?
7. What if our company sells to customers in another state?
8. What is ‘nexus’?
9. What was South Dakota v. Wayfair and how might it impact my business?
10. What is Economic Nexus?
11. How does our company process the money collected as sales tax?
12. What if our company sells via Fulfillment By Amazon (FBA)?
13. When do I have to pay Sales Tax to a vendor?
14. How do sales and use taxes affect my financial reporting?
15. What if we are audited?
16. How can TABS assist me with Sales and Use Taxes?
17. Should I be collecting Sales Tax: A Roadmap

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