Sales Tax Registration FAQ
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How long does the process take to register my Company for sales tax?
The process to register for sales tax takes anywhere from one to four weeks after HOST obtains all the necessary information. The processing time varies by state.
Aside from the cost to register, are there any other fees?
There are a few states that require a fee to register for a sales tax permit. These costs will be paid directly to the state during the registration process via credit card or bank account. Some states do not accept credit cards and the bank account information will be necessary. See below for the list of states that have associated fees.
|Arizona (AZ)||$ 12.00|
|Colorado (CO)||$ 62.00 (varies)|
|Connecticut (CT)||$ 100.00|
|Indiana (IN)||$ 26.00|
|Rhode Island (RI)||$ 10.00|
|South Carolina (SC)||$ 50.00|
|Washington (WA)||$ 90.00|
|West Virginia (WV)||$ 30.00|
|Wisconsin (WI)||$ 20.00|
|Wyoming (WY)||$ 60.00|
What information does your team require for the registration process?
All of the information needed for our team to submit sales tax registrations for your company can be found here. Some of the basic information needed includes FEIN, company name, states in which you would like us to register, and social security numbers of all officers. Completing this form in full is the first step for HOST to submit sales tax registrations on your behalf.
What forms of payment are accepted for HOST's registration services?
HOST accepts payments through the registration form. We accept credit card payments as well as direct bank transfers.
If I have additional state registrations in the future, how do I request HOST's assistance?
Reach out to firstname.lastname@example.org You will be provided with a link specific to your business where you can add state to register as well as update your business information as needed.
Can you also handle sales tax return filing?
We offer a variety of filing plans to fit to your company’s specific needs. Click here to schedule a call with our team today.
Do I have to register for sales tax every year and can I de-register?
No, you generally do not need to register for a sales tax account each year. Once you are registered, you have an account with the State until it is closed. It is important to note that some states require you to renew your license on an annual basis, but that only requires a renewal payment once a year. While it is possible to de-register, or close, your sales tax account in a state, you will want to consult with a sales tax professional before doing so. One of the only clear instances when you should close a sales tax permit in a state, is if you completely close down your business.
I am an international seller and do not have a physical presence in the United States. Do I still need to worry about sales tax?
Yes, if you have met the state provision for Economic Nexus (sales and/or transaction threshold), you need to register in that state regardless of where your company is based. One requirement for businesses to register for sales tax is to be assigned an FEIN by the state. International taxpayers can easily obtain an FEIN through the IRS over the phone.
Do I need to register for any other type of tax (i.e. income) when registering for sales tax?
Please note, HOST only handles sales and use tax. You would need to consult a CPA to determine if you would need to register for other taxes, such as income tax. In some states, economic nexus thresholds apply to both sales tax as well as other taxes like income, franchise, etc. In some states, opening a sales tax account will automatically open an income and/or franchise tax account as well.
I just need a resale certificate, so do I need to register for sales tax in that state?
There are a few states in which you have to register to obtain a proper resale certificate. HOST has a standlone application set to go live in Q1 2023 to assist retailers with obtaining valid resale certificates. Email email@example.com to learn more.
How do I know which state to register in?
You must register in states where you have established a physical presence nexus or economic nexus. If you aren’t sure if you have reached economic nexus, click HERE to schedule a call with a HOST representative. We can conduct a custom sales tax nexus study for your business.
I sell online nationwide. Should I just register in every state to be safe?
Where you register is dependent upon where your company has established nexus. Once you establish nexus in a state, you are obligated to collect and remit tax on taxable items you sell in the state. If you are unsure about where to register, we can perform an Economic Nexus Study to determine if you meet the provisions employed by each state.
Will I owe back taxes if I register in a new state?
The obligation to pay back taxes to a state is contingent upon your historical nexus footprint. If you register with a historical effective date due to previously establishing nexus, you will owe taxes, penalty, and interest assessed from that date forward.
I only sell on a marketplace facilitator, like Amazon. Do I still need to register for sales tax?
As of 1/1/2023, marketplace facilitators are responsible to collect and remit sales tax, in every state that has a sales tax, on behalf of merchants making sales on their platform. If you are unsure as to whether or not you have a historical liability that should be addressed, book a meeting with us today to discuss potential next steps.
Sales Tax Filing Services
What is included in HOST's ongoing filing services?
HOST offers 3 different filing plans: Essentials, Essentials+, and Enterprise. The offerings per plan are outlined below.
|Sales Tax Return Filing||Sales Tax Return Filing||Sales Tax Return Filing|
|Peace of Mind Guarantee||Peace of Mind Guarantee||Peace of Mind Guarantee|
|Sales Data Reminders||Sales Data Reminders||Sales Data Reminders|
|Sales Tax License Renewals||Sales Tax License Renewals||Sales Tax License Renewals|
|Filings Notice Management||Filings Notice Management||Filings Notice Management|
|Filings Email Support||Filings Email Support||Filings Email Support|
|Self-Serve Onboarding||Self-Serve Onboarding + Kick-Off Call||Self-Serve Onboarding + Kick-Off Call|
|Discounted Registrations||Discounted Registrations||Registrations Included|
|$125 Monthly Minimum||$125 Monthly Minimum||Contact Us for Minimum|
|Monthly Filing Summary||Monthly Filing Summary|
|Sales Data Formatting||Sales Data Formatting|
|Variance and Liability Monitoring||Variance and Liability Monitoring|
|Sales Data Retrieval||Sales Data Retrieval|
|Monthly Nexus Monitoring|
|SKU Mapping Support|
|12 month contract|
How much work will I have to do every month?
Depending on the filing plan you chose, you can be as hands off as you would like. With our Enterprise plan, HOST does all of the heavy lifting for you including monitoring your economic nexus thresholds and registering you at no additional cost.
How will HOST get my sales data every month?
Again, depending on the filing plan, HOST can fully assist with obtaining and formatting your sales data on your behalf. We also offer a “Sales Data Retreival” add on to the Essentials plan for this purpose.
What does onboarding look like for HOST's filing services?
Onboarding generally consists of the steps below.
1) Passing HOST all information for states currently registered for sales tax.
2) Schedule a time for HOST to authenticate ourselves to log in to the portals.
3) Sales Data – Depending on your filing plan, HOST will either provide you with specific instructions as to how to provide us with your sales data each month or obtain access to your sales platforms to retreive the sales data ourselves.
4) Final steps – HOST will set expectations as to what you can expect on a recurring basis and conclude onboarding.
Does HOST pay the tax on my behalf or will I have to pay the tax separately.
For all filing plans, HOST handles both filing sales tax returns and paying the liability to the states. We will pay the states with bank information that you provide to us during onboarding.
What are the contract terms for HOST's filing plans?
For Essentials and Essentials+, it is a month to month commitment. For Enterprise, a 12-month contract is required.
Nexus Analysis / Nexus Exposure Analysis FAQ
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What is a Nexus Analysis?
There are two types of nexus analyses: economic and physical. For economic nexus, the nexus analysis would analyze your sales and associated transactions by state from 2017 to present to determine when and where you met the necessary thresholds for economic nexus as prescribed by each state. Despite the Wayfair decision impacting most states in June 2018, some states had previous economic nexus laws in place. This analysis would ONLY determine economic nexus by which your Business is located in one state/international and only sells by way of mail or electronic means into another state.
A separate analysis would be needed for physical nexus by which you would have physical presence in a given state and need to determine when and where that presence was established. Employees (including salespeople, maintenance and repairs), inventory, buildings and/or equipment located in a state constitutes physical nexus.
Why do you need my sales from 2017 or earlier?
Failure to register for sales tax, if unchecked, may result in a state sales tax audit. Technically, a state can audit you from the point you started doing business in the state, so typical state statutes do not apply. This is more problematic for physical nexus, but for economic nexus, the state can only look back from the point the economic nexus law went into effect and when your business crossed that threshold, typically the prior 12 months of sales/transactions. Most state statutes for sales tax are three years, but there are a few state statutes at four years. In completing an analysis for either economic or physical nexus, it is best to have the data from the date you started selling to ensure the deliverable is correct.
My sales are non-taxable, so why would I need a study?
For physical nexus, it would not matter if your sales are taxable or not – you would need to register regardless to conform with state tax laws. For economic nexus, many states still review “gross sales” so even if your sales are non-taxable, you would still need to register. Many states are beginning to change their laws to only reflect taxable sales, but for the sake of compliance, it is best to know where and if your business constitutes nexus in a given state at the current time.
Will the nexus analysis show back tax liabilities?
No, the economic or physical nexus analysis will only show when, where and if you constitute nexus in a given state. An exposure analysis would be needed to detail possible back tax liabilities.
What is included in the Nexus Analysis deliverable?
The nexus analysis deliverable will include a chart of the states by which your business should be registered, along with the necessary reasons and associated laws prescribed by those states. It will also provide additional information regarding the other states in the analysis to monitor for future implications. Along with the deliverable, a one-hour call would be set up to answer any of your questions and provide guidance in regards to performing an exposure analysis, sales tax registrations and/or voluntary disclosure agreements.
What is a Nexus Exposure Analysis?
A Nexus Exposure Analysis will not only detail when and where the business has established nexus, but also calculate the back taxes, associated penalties and interest by state/year. For non-registered businesses with material taxable sales, this is the most optimal solution in determining options for tax compliance. The Nexus Exposure Analysis includes the same report data and discussion as does the Nexus Analysis, but now includes the quantitative data needed to make the best business decision in regards to tax compliance.
What if I just need the Exposure Analysis?
While we generally need to perform a Nexus Analysis first, some clients have already completed their own Nexus Analysis and just need for us to compute the back tax liabilities. For this, we would only need the states by which have established nexus, along with the date/month first established, and all sales data broken down by month/year from that time period.
Voluntary Disclosure Agreement FAQ
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What is a Voluntary Disclosure Agreement?
A Voluntary Disclosure Agreement (VDA) is an agreement made between the state and the taxpayer generally via a third-party representative that allows the taxpayer to proactively disclose prior-period tax liabilities, limit the statutory period for exposures, and typically abate penalty. With the agreement solidified, the taxpayer is effectively registered from that point forward. Taxpayers are kept anonymous until an agreement is issued by the state in most cases.
What is the difference between a physical VDA and an economic nexus VDA?
A physical nexus VDA limits the disclosure period to the states’ statute of limitation, which is generally 3 or 4 years depending on the state, regardless of the years exposed. An economic nexus VDA aligns the taxpayer’s liability with the date when the economic nexus provision went into effect or when the taxpayer eclipsed economic nexus thresholds, but no longer than the states’ statute of limitation periods. Either VDA generally abates penalty, which can run anywhere from 10% to over 20%.
What is the process to complete a VDA?
HOST will contact the state taxing agency on the taxpayer’s behalf to state the intention of settling back-tax liabilities per the VDA agreement. In most states, this initial process keeps the taxpayer anonymous with the state. The end goal is to limit the tax liability per when the taxpayer met the economic nexus threshold. Once the VDA agreement is accepted and signed, the taxpayer will register with the state in order to pay any back taxes.
The VDA would be limited to when the taxpayer established economic nexus, but not more than the state statute (3 to 4 years). (Conversely, a VDA for physical nexus would be limited to state statute.) HOST calculates the tax liability based on state and any applicable local taxes, and the state calculates the penalty and interest based on when the liability is ultimately paid. During the process, HOST will prepare and submit any required spreadsheets and/or past returns. As part of the accepted VDA agreement, penalty is generally abated; interest is statutory unfortunately. Prior to the calculation of the liability, the taxpayer would then need to gather any missing exemption certificates from vendors to further decrease the liability over the period. HOST will finalize the agreement on behalf of the taxpayer to accept the payment terms and remit payment for the back taxes.
How long does it take to complete a VDA?
It generally takes 6 to 8 months due to Covid-19, the states working remotely, and the state’s back-up documentation requirements.
Should I have a VDA performed if I owe back taxes?
If you owe tax, you owe the tax. Voluntarily disclosing with states resolves the past liability paid, limits the lookback period with penalty generally abated, and protects the taxpayer in the event of a future audit.
What if I don’t file a VDA and just register?
Dependent upon when a company triggered economic nexus in a state, a more viable option may be to register for the date nexus was triggered and file past-due returns to pay the liability owed. However, under this scenario, penalties are not abated as they generally are under a voluntary disclosure.