Sales tax for business owners can be a bit frustrating, especially when new laws are passed and expectations are high. However, the sales tax laws are a necessary obligation for companies to follow.
The Marketplace Fairness Act, a new legislation that was passed by the Senate, allows states to increase a sales tax collection for purchaser and seller in both online and catalog-based selling. Retailers have become alarmed at the implications this bill will cause and to costs and liabilities it will place if passed by the House and then signed into law. Tough tax audits are to be expected as well.
There will be certain legalities set forth for business to business commerce.
In reference to tax exemptions, purchasers now have to uphold a tax exemption certificate which is a tax law requirement. This certificate is to be provided to the seller. In turn, the seller must request the certificate in order to justify the purchaser’s exemption from sales tax on merchandise.
It is not uncommon for B2B online sellers to forgo exemption certificates. According to federal law, states are not able to require an online seller to collect sales tax in those states where there is an absence of a physical presence, or nexus. Where a company has no nexus, there are many B2B online and catalog sellers who look at tax exemption certificate as unnecessary.
The Future of B2B Online Retail Taxes
A time will come though, when B2B online and catalog sellers will be forced to take on the same responsibilities as retailers to collect sales tax, regardless of having nexus. Paying close attention to the Marketplace Fairness Act or other legislation of similar extent is important.
B2B companies will need to maintain tax exemption certificates for their customers. Be aware of instances such as when a buyer purchases a product that is not covered by an exemption, but they still use the certificate. An example would be when a manufacturer buys office supplies for their own use.
B2B companies need to keep their websites up to date on which easy to use forms are needed for submitting information on tax exemption certificates. Also, B2B companies should always designate a specific place for storing information so that it is easily accessible when needed for tax audits.
The expert staff at Midwest Retail Services aims to meet your B2B expectations and goals, each and every time.