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How do I know if I should be collecting tax in a state?



How do I know if I should be collecting tax in a state?

You are responsible for collecting and remitting sales tax to a jurisdiction if you have established substantial presence in the state of delivery. Once established, you have created nexus. The threshold for this presence differs from state to state and a company’s presence in each state should be examined to determine if nexus has been established or not. A company clearly has nexus if there is a business location or there are employees living in or working in the state/jurisdiction. Once you establish nexus, you are required to register as a retailer with each state before collecting sales tax for that state.

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