Can you collect and remit tax for a state even if not required to do so?
Nexus is required for a state to impose a tax collection requirement on a company. However, a state won’t prohibit a company from registering to collect tax if it doesn’t have nexus. So, yes, you can voluntarily register to collect and remit tax. In some cases a customer might request the seller to collect tax to minimize their use tax requirements. Or maybe the company had nexus due to the presence of an employee or location in state but it has now closed. These could be reasons to voluntarily collect the tax. But, you must register with the state prior to collecting the tax. For more information on registering to collect and remit sales tax, visit our How do I know if I should be collecting tax in a state? FAQ.
It is important to realize that once a company is registered to collect tax, it is subject to all the laws just as if it had nexus. Tax must be collected on all taxable sales and exemption certificates must be obtained to support any exempt sales. A company which voluntarily registers due to the request of one customer can’t just collect tax on sales to that customer. It has to collect on all sales into the state. The company is also potentially subject to audit.
There are some protections and limits to exposure for companies that register under the Streamlined Sales Tax system as a voluntary seller. See our What is the Streamlined Sales Tax Project (SSTP)? FAQ for more information.
Looking for more information on nexus? Check out the following resources: