eCommerce was never subject to the same rules as standard commerce, but this double standard has ended in the majority of states as well as Washington, D.C. Until now, if a company was not physically present in a state, it had no duty to collect sales tax online. The Supreme Court of the United States, however, has ruled in South Dakota v. Wayfair, Inc. that a physical presence in a state is no longer a necessity for sales tax obligations to apply.
In response to the ruling, 31 states and the District of Columbia have changed or will soon change their policies. Many had already prepared for the change prior to the ruling. Do I need to charge sales tax on my website? In most states now you do, and you have to in Washington, D.C. as well.
The New Sales Tax and Washington, D.C.
Smaller vendors selling in Washington, D.C. will not be subject to sales tax requirements. However, ecommerce sales tax rules in Washington, D.C. have gone into effect. As of the new year, 2019, any vendor with over $100,000 in sales in the city must collect sales tax online. In addition, vendors with under $100,000 in sales but with 200 or more separate sales transactions must also collect the tax.
These requirements do not necessarily reflect the rules and regulations in the fifty states. Nineteen states have no online sales tax at all, while those that do have the tax may differ in their details. Be sure to learn the rules in each jurisdiction where you do business.
Avalara to the Rescue
Filling out forms by hand leaves one vulnerable to human error. The complexity of all the thousands of separate and overlapping tax codes exacerbates the problem. Each state makes its own rules and allows the municipalities under it to do the same, resulting in an intricate web that a business can get caught in. Washington, D.C. online sales tax rules, though not especially complicated by themselves, apply only to Washington, D.C. Any mistake made during the collection and remittance of sales taxes can lead to costly fines.
All this hassle goes away when we collect sales tax online in an automated fashion. Computers can keep track of the thousands of jurisdictions with all their rules and regulations and do it without the element of human error. This is why over 20,000 companies have chosen to put their trust in Avalara to relieve the stress of online tax collection.
Avalara’s innovative software will integrate with your business pain-free. It will record all sales and choose the correct tax to apply to each without the need for paperwork and without any costly errors. In over 12,000 jurisdictions all over the world, and for millions of goods and services, Avalara saves you time and money by making all the right decisions.
Avalara also gathers data from every sale and uses it to fill out the necessary forms electronically. It then takes care of the remittances and maintains an accurate record of your exemption certificates.
Disclaimer: The information in this blog post is provided for general informational purposes only and should not be construed as legal advice from Forix or Avalara.