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10 Facts On Sales Tax (#5 is a must read)

amy andersson ptcfos
  1. Sales Tax is due the 20th of the month in April, July, October and January if you are on quarterly payments for the state of Pennsylvania. New York and New Jersey have totally different schedules!
  2. If you sell a product directly to the end consumer (a business or an individual), check the rules and regulations on what is taxable and what isn’t on the Department of Revenue website. Every state is different. For instance, in Texas, a portion of web design services are taxable, while in most states, services like this are not taxable.
  3. To look up sales tax rates in thousands of jurisdictions, use this calculator from Vertex. Fun fact: Alaska, Delaware, Montana, New Hampshire and Oregon have no statewide sales tax.
  4. In an origin-based state, like PA, sales tax is collected based on the seller’s location. You collect tax to the customer based on the state and local tax rates. In a destination-based state, like NJ and NY, sales tax is collected based on the buyer’s location. You collect sales tax based on your customer’s state and local tax rates.
  5. The Supreme Court ‘Wayfair Decision’ in 2018 in South Dakota changed the way states tax Internet sellers. Previous to this, Internet sellers only had to collect a state’s sales tax from buyers if the company had nexus in the state – usually property or employees in a state. Now, a physical presence is no longer all that matters. States can tax remote, online sellers. Economic Presence Nexus is the legal term for a businesses requirement to collect and pay sales tax on revenue, even if they don’t have a physical presence in that state. To see if your business is required to collect sales tax in a certain state, check out this tool from TaxJar.There are a lot of conditions affecting this decision. Here is a great article outlining them all. 
  6. Even if you sell software or an online program that isn’t a tangible item, do your research; it might still require you to charge sales tax.
  7. Your business must be registered in each state you will be charging sales tax in. And once you register, you better pay. Even if the amount is $0, you file $0.
  8. In some states, there is a discount if you have the sales tax payment directly taken from your bank account. You pay these taxes all throughout the year, not all at the end, and each business has a different schedule, depending on revenue.
  9. If you sell products through Amazon, Etsy, eBay, etc. they may handle the collection of sales tax and pay the government. Check with your state. But say you put the same product you sell on Amazon on your personal website, then you will be required to collect and pay sales tax on that.
  10. If you are a charitable, educational or religious organization and have received tax-exempt status from the IRS, you can apply for sales tax exemption certificate in the states you do business.


-Have a separate account just for sales tax.

-Talk to a state taxation specialist or hire a CFO (like PTCFOs virtual services) to help you navigate this very tricky landscape.

-File and pay. Don’t miss deadlines.


If you’d like me to take a look at your books, schedule a CFO Review with me. Or schedule one to simply chat about sales tax or other areas of financials that are keeping you up at night.