Have you had any of these thoughts about your business’ sales tax or use tax obligations:
“I’m a service provider; I don’t need to collect and remit sales tax.”
“We were only in the state at a trade show for one week – we don’t have physical presence in the state, so we don’t have to collect sales tax.”
“I bought equipment for my company in another state, since they don’t have sales tax. I saved 6% by doing this!”
Sales and use taxes are a murky area with few clear-cut rules. As a result, you or your business may not be in compliance with states’ sales and use tax regulations.
Sales tax is a tax that is levied on the sale of goods or services. Unfortunately, states have differing definitions of what is included as a taxable good or service. A general rule of thumb is that the sale of tangible personal property (that is, physical assets that are movable) is taxable. The provision of services is generally not subject to sales tax unless a state has a regulation or law that specifically subjects the service to sales tax.
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