If you think sales nexus only applies to online businesses or in the states you set up shop, think again.
Last month, the Supreme Court overturned a 1992 sales nexus decision (Quill v. North Dakota) that prevented states from collecting tax from out-of-state sellers. With the landmark South Dakota v. Wayfair decision, states are saying, “I’ve got the power!” The June ruling came out in favor of states, granting them power to require out-of-state retailers to collect sales tax from resident buyers. This is a big deal – here’s why.
Implications of New Sales Tax Nexus Legislation
It’s not just about where you operate anymore, but where your buyers are.
If you sell goods or services (regardless of sales channel), the Wayfair ruling applies to you. Online sellers (e.g. Amazon third-party sellers) are heavily impacted by this decision because they inherently sell to customers in different states, but it’s likely to touch anyone who sells across state borders or lives in a state that has a sales tax.
That’s because the Quill “physical presence test” for sales tax collection and remittance (limited states from charging sales tax to out of state sellers) was overturned in the Wayfair decision and replaced with an “economic sales tax nexus”, allowing states to expand their sales tax rules and impact more out of state sellers.
Economic nexus takes the throne.
Economic nexus is typically based on sales or gross receipts that are earned from sales to customers within a specific state. Each state sets its own rules for the minimum sales activity required to initiate sales tax requirements, and sales nexus thresholds, exemptions, and effective dates vary from state to state.
Economic nexus isn’t the only way you’ll be evaluated, either – states will continue to enforce existing nexus rules, regardless of economic nexus. This means that your business is now faced with having to navigate a slew of new and changing state regulations that dictate:
a) Where you must collect tax,
b) Whether your goods are taxable, and
c) How you are required to handle the new tax computation, filing, and remittance obligations.
So, how will your business keep track of all the changes and make sure it’s in compliance? It’s not that easy for a sales-nexus novice to handle alone.
Next Steps for Business Owners
1) Assess state tax requirements that apply to you: With each state serving up different sales nexus rules, keep tabs on which ones need data from you. Then, take inventory of where you do business (selling, servicing, manufacturing, warehouses and storage, etc.)
2) Get help from a tax professional: MoneySolver’s SalesNexusSolver™ can help with determining where you’re required to collect sales tax and whether you need to file or amend returns. Getting help up front can prevent problems in the future, like owing a debt or being audited, and a competent tax professional can help you track and analyze your sales nexus liability in this rapidly evolving state tax environment.
Get ahead of the curve before it hits – and hurts – your sales and business you’ve worked so hard to build. Talk with our sales tax professionals for a free consultation today at to see where the rules may have changed on you, or check out our other business services at MoneySolver.org.
If you haven’t figured it out from every U.S. adult sweating profusely over their W-2s, receipts, and calculators, April 17 is Tax Day this year. But what does it take to get Tax Day right?
Here are six things to do before the April 17 deadline rolls around:
- File your taxes: Tax Day is all about – you guessed it – having your taxes filed to the IRS and your state. Ensure you’ve received all paperwork needed to complete tax returns, including W-2s from employers, social security information, and more. Enlist the help of a tax preparer to make sure you’re in compliance with IRS and state requirements.
- Fund your IRA or Roth IRA: You still have time to contribute to your retirement accounts for deduction write-offs – woohoo! After the April tax deadline, you won’t be able to take advantage of this benefit for the 2017 tax year.
- Businesses: File your Q1 estimated taxes for 2018: April’s Tax Day is a double whammy for business owners as Q1 estimated tax payments and individual tax returns are due. You don’t want to start off the year on the wrong foot with the IRS – they’ll remember your compliance if you ever need future tax debt resolution.
- File for an extension if you need it: No way you’re getting your tax forms submitted by Tax Day? You can apply for a filing extension that will give you two extra months to get things taken care of. If you don’t file for a needed extension, you’ll be on the hook for Failure to File penalty plus interest. And remember: There is no such thing as an extension on paying tax debt.
- Request an IRS payment plan if you can’t pay: Financial hardship may prevent you from affording tax payments this year. If this is the case, request an IRS payment plan to get the ball rolling and avoid things from getting worse. If no effort is made on your part to resolve the problem, the IRS will begin to charge penalties and interest on the amount owed, even if there are no collection actions like liens and levies.
- Get help from a tax professional: Make a sincere effort to get tax debt resolution and the IRS will cut you some slack. Get help from a tax relief company like Tax Defense Network who can work with the IRS on your behalf, helping you learn your options for getting taxes back on track.
So, are you ready for Tax Day?
Call Tax Defense Network for a free consultation on filing returns, resolving tax issues, or handling business taxes at 877-588-1098.
Across the country, CPAs are crunching (and crunching, and crunching) numbers to assess how their clients can benefit from the new tax reform law. And for business owners, becoming a pass-through entity is even more enticing than ever.
What Are Pass-through Organizations?
Nearly 95 percent of businesses in the U.S. are pass-through organizations, and for a good reason. The structure is designed to reduce double taxation, or taxing a business both at a corporate level and on the owners’ level.
Instead of a twofold hit, company profits (and losses) are sent straight to owners or shareholders without a pit stop at the corporate level. Business owners then file and pay taxes through their individual returns (not corporate returns). Sole proprietorships, partnerships, and S corporations all enjoy this no-double-taxation life.
Tax Reform Wins: How Business Owners Can Save Money
2018 is looking up for business owners all over the board. Through the new bill, pass-through entities can deduct 20 percent of the business income that is passed to their individual return. This makes it a great option for low- to mid-income businesses (single-filing threshold is set at $157,500 and the joint-filing threshold at $315,000).
Pass-through structure not in your cards? C Corporations will catch a break with the new tax bill, with a cutting the corporate tax rate cut from 35 percent to 21 percent. A tax professional can help calculate your breaks if you’re above the 20-percent deduction threshold, or if your business is under a different tax classification.
Not every situation has a cookie-cutter solution when it comes to business taxes. If you’re a business owner, a tax professional can also help you decide on the most cost-efficient business entity and what tax reform means for you.
Learn more about taxes for businesses at BizSolutionsNetwork.com.
If you’re a business owner, you know taxes are a part of the gig. And for S Corporations and Partnerships, the spring tax deadline is even earlier than for most (hint: it’s soon). Let’s unpack what these business entities need to know for filing by March 15.
- Filing the correct forms: S Corporations file taxes using Form 1120S while Partnerships file Form 1065. Spouses who own an unincorporated business that is not treated as a Qualified Joint Venture also file Form 1065. File a Schedule K-1 of your designated return to report on information for each partner/shareholder, including the income, losses, deductions, and credits. This information is reported on your separate, individual tax returns.
- When Partnerships don’t have to file: If there was no income or expenses for the Partnership, you don’t need to submit Form 1065.
- Avoiding the Failure to File penalty: We get it – sometimes, it can be hard to hit those tax deadlines. By filing on time by March 15, you can avoid penalties and interests later down the road. The IRS will issue a “Failure to File” penalty of $200 for each month the return is late.
- Applying for an extension: Don’t panic if you’re not ready to file. You can submit a completed Form 7004 by March 15 to request a six-month extension of your business taxes (putting the due date at Sept. 17). Note that this will not extend your time to issue Schedule K-1s.
- Filing electronically: Filing electronically is preferred by the IRS. In fact, Partnerships with more than 100 partners are required to e-file their forms. The same goes for S Corporations with $10 million or more in total assets or that file at least 250 returns a year.
- Dodging an IRS audit: Just like filing individual taxes, businesses must ensure their returns are accurate to avoid audits and penalties. If you do find yourself or your business in a rut with IRS issues, a tax professional can help solve it.
- Asking for help: If you need help preparing your return or figuring out your tax-related documentation, it’s easy to get help from a tax preparer. These professionals can help file any type of tax forms and meet quickly approaching deadlines.
And if you run into issues later? Tax professionals like the team at Tax Defense Network can work with the IRS on your behalf to resolve issues and find agreements that work for you and your business.
Learn more about business taxes at our new BizSolutionsNetwork.com