HOST Managed Service
Blank to keep toggle closed
Are you a fit for HOST Managed Service?
You are a fit if…
Sales Tax is a Source of Stress
You want to check Sales Tax off your list (for a low monthly fee)
You are concerned about potential sales tax liabilities accruing
You are using or vetting TaxJar, Avalara or Vertex and/or need help managing, selecting or switching among the automation provider(s)
Will I have a dedicated Sales Tax Accountant?
Yes. You will be partnered with a dedicated Sales Tax Accountant who is devoted to your business.
How does HOST Managed Service differ from sales tax software implemented by TaxJar, Avalara and Vertex? Why is Sales Tax Automation not enough?
Their automated calculation and returns solutions are mission critical for rates and remittance, but that is not enough for most businesses. HOST Managed Service is partner-agnostic and works seamlessly with all of the major providers.
For e-commerce and remote sellers with nexus beyond their home state, there often remains an additional 150-300+ hours per year required to properly manage the sales tax landscape and avoid costly audits. HOST Managed Service fills the gap with our 23 years of experience (read: peace of mind) at a significant discount compared to the opportunity cost of your leadership/ownership’s time.
If you need a team of experts to handle everything from your tax-filing calendar to nexus nuances to notices, call or email us any time.
We are considering switching automation provide...is it time consuming and can you assist?
Yes, we can assist. Making the switch to another provider or to a HOST managed solution can happen in a few short weeks given that most of the nexus and initial onboarding burden has already been addressed. If you are considering a switch and would like our team of experts to assist or manage the migration, email or call us any time.
Sales Tax Registration
Blank to keep toggle closed
How long does the process take to register my Company for sales tax?
The process to register a Client for sales tax generally takes 5 to 10 business days once a completed information packet is received from the Client, depending upon the number of registrations and our current backlog. Once a Client has signed the engagement letter, an Account Manager will connect within 2 business days to start the process.
Aside from the cost to register, are there any other fees?
|Arizona (AZ)||$ 12.00|
|Colorado (CO)||$ 62.00|
|Connecticut (CT)||$ 100.00|
|Indiana (IN)||$ 26.00|
|Rhode Island (RI)||$ 10.00|
|South carolina (SC)||$ 50.00|
|Washinton (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?
After receipt of the signed engagement letter, the Client will complete an information packet to provide basic company data, including EIN, entity address and owner personal identification information. Depending on the Client’s entity type, most state registrations require personal information, including social security number from at least one owner/officer.
Once the engagement letter is signed, when am I billed and what if I have other states to register in the future?
Clients are billed once the prescribed number of registrations are submitted to the states for processing. After registrations are complete and processed, as a courtesy, HOST will help the Client set up their online accounts with the states. Setting up the online accounts is dependent upon receiving all the information the states will provide to the taxpayer after registrations. Clients can simply email us with additional states if you would like for us to keep your information on file.
Can you also handle sales tax return filing?
We do not handle filing sales tax returns for ongoing filings. However, we can assist in filing historical returns for the Client (as needed) to bring the Client current with the states. We can also recommend the best provider for ongoing returns based on your needs.
Once the registration process is complete, how do you work with third-party vendors that perform the return filing?
We can assist to ensure the correct information is provided, so the Client can set up their accounts with the third-party provider.
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; would I still need to register for 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?
Tax-free purchases of otherwise taxable goods for sale needs to have a resale certificate in place. Although free to obtain, you would have to confirm if a registration with your home state would suffice, or if you would need to register in another state.
I sell in every state online; 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.
I sell strictly via marketplace facilitation (i.e. Amazon), so do I still need to register for sales tax?
That depends on the state and the Client’s amount of sales through the marketplace facilitator. Some states include marketplace facilitator sales towards the thresholds of creating economic nexus. If you sell via a marketplace facilitator only, the facilitators currently collect in 44 out of the potential 51 states. Of the remaining 7 states, 4 do not impose sales and use tax (New Hampshire, Oregon, Montana, and Delaware), so that leaves 3 (Florida, Kansas, Missouri). Please note, states still require sales tax registration if you have any other sales outside the marketplace facilitator channel that meet the sales/transaction threshold of economic nexus.
Nexus Analysis / Nexus Exposure Analysis
Blank to keep toggle closed
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
Blank to keep toggle closed
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.