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Remote Seller & Online Business Tax Solutions

Remote Seller and Online Business
(E-commerce) Income Tax /
Sales Tax Solutions

The recent technological advances has led to a significant increase in online sales and further growth is still expected for this industry. The ever-expanding and growing market of online providers, such as that of Amazon has opened the doors to an increasing number of sellers. Social media has also played a significant role and has given an incentive to the online sellers to emerge.

Do You Sell products or services online? Our Experienced CPA can Help You File Your Taxes!

The supreme court decision of the case of South Dakota vs. Wayfair (2018) has changed the concept and practices of the online sales tax for e-commerce in the U.S. as a whole. Now, States require remote sellers to report and collect sales taxes on online interstate sales regardless of the physical presence of the remote seller, when they have exceeded a certain sales threshold set by each state. Online sellers need to be aware of each state laws and requirements and be familiar with the whole administrative process (i.e., sales tax registration).

Thus, the sales tax process for e-commerce and remote sellers has become much more complicated and detailed. Streamlined Sales Tax Governing Board has been created to facilitate the interstate sales tax for e-commerce and provide a unified sales tax system. We have invested time and effort into mastering the inter-state sales tax new requirements.

Tax Avenger is here to help the online sellers to comply with the new rules and regulations and guide them through the administrative process of registering their online business in other states as well as report and pay the applicable sales taxes for each state.

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Michigan Sales Tax requirements for Remote Sellers and E-Commerce

  • For remote sellers who are residing outside of Michigan and don’t have a physical presence in Michigan and sell taxable products in Michigan, they should report and pay sales tax if the yearly amount of the sales exceeds $100,000 or the number of transactions was 200 items or more.
  • If the total business sales or the number of transactions exceeded the above-mentioned threshold, the business should report and remit sales tax to the state of Michigan. The frequency of reporting and paying sales tax is based on the amount of taxable sales in Michigan.
  • If the Taxable sales in the previous year were below $1,041, the taxpayer is an annual filer, and the due date to file and pay sales tax is February 28 of the following year.
  • If the taxable sales in the previous year were between $1,041 and $16,675, the taxpayer is a quarterly filer, and the due date to file and pay sales taxes is the 20th of the month following the quarter that they are reporting and paying sales tax for.
  • If the Taxable sales in the previous year were above $16,675, the taxpayer is a monthly filer, and the due date to file and pay sales tax is the 20th of the month following the month that they are reporting and paying sales tax for.
  • If a business has a physical presence in any state and is selling taxable products, then they are subject to report and pay sales taxes.
  • A taxpayer can register directly for sales tax through MTO (Michigan Treasury Online) and get the sales tax license.

SST (Streamlined Sales Tax) Agreement between the states.

  • After the new ruling of sales tax reporting resulting from the supreme court decision in the case of South Dakota vs. Wayfair of (2018), the remote sellers are required to report and pay sales tax to other states even though they don’t have a physical presence in those states if they cross a certain threshold.
  • This new requirement puts a burden on business owners. They are now required to understand and abide by the tax law for each state that meets the threshold of reporting. Also, the process of registration and how to report and pay the sales tax for each state makes the process more complicated.
  • The SSTGB or The Streamlined Sales Tax Governing Board has successfully generated a Streamlined Sales and use tax agreement (SSTUA), between state to streamline and simplify the sales tax administration to reduce the burden of the new tax compliance.
  • Moreover, the board goal in the future is to implement a unified system of Sales and Use tax, which will facilitate and increase the efficiency of the new sales tax reporting.
  • As of May 2019, 25 states have implemented the above Streamlined Sales Tax Procedure: Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, Nevada, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Rhode Island, South Dakota, Tennessee, Utah, Vermont, Washington, West Virginia, Wisconsin, and Wyoming.

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Tax Avenger is here to help the online sellers to comply with the new rules and regulations and guide them through the administrative process of registering their online business in other states as well as report and pay the applicable sales taxes for each state.

Economic Nexus

Economic Nexus for sales tax is defined as the level of connection between a taxing authority such as the state and the business or the person who is selling the taxable products.

  • For example, you have Economic Nexis in Michigan if the yearly amount of the sales exceeded $100,000 or the number of transactions had 200.
  • Economic Nexus Varies from state to state, for example, to be considered having economic nexus in California The total combined sales exceed $500,000 during the preceding or current calendar year, on the other hand in Massachusetts, sales exceeding $500,000 and 100 or more transactions during the current or previous calendar year.
  • This link https://www.streamlinedsalestax.org/for-businesses/remote-seller-faqs/remote-seller-state-guidance represent a chart that provides the e-commerce seller thresholds for the state that signed the agreement.
  • Even though only 25 states signed the agreement, 41 states have implemented economic nexus through economic legislation that governs the remote sales and e-commerce business
  • More states are expected to join the agreement in the future.
  • The taxpayer has the option of either register through the Streamlined Sales tax and filing an application through the Streamlined Sales tax registration system (SSTRS) and obtain the sales tax license through this system and Start reporting and paying sales tax to the SST State.
  • The other option is to register with each state separately and report and pay sales tax for each state using each one system.
  • For the Non-SST state, the taxpayer should register and directly pay sales taxes to the state.

Tax avenger has made significant efforts to understand and master the implementation as well as the effect of the Wayfair results since it’s implementation in September 2018. We consider ourselves among the best accounting and tax firm dealing with remote seller sales tax solution, as well as we keep ourselves up to date by following up any decision or changes made by any state, whether they are part of the SST or outside of it.

 

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7365 N. Lilley
Canton, MI 48187

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Tax Avenger works with clients throughout Michigan and beyond. We help individuals and businesses with income tax preparation, tax returns, accounting services, FBAR & FATCA Expats, payroll services, remote sellers, online business income, online sales tax, individual tax preparation, business tax preparation, Certified Public Accountant CPA services, tax resolution assistance, individual income tax preparation, small business income tax services, business startup assistance, financial statement support, Form 1040, Form 1041, Form 1065, Form 1120s, income statement preparation, LLC assistance, partnership income tax preparation, prior year return filing, prior year tax return preparation services, S-Corp income tax preparation, self-employed income tax preparation, small business accounting, and more!

Service Areas include: Canton MI, Plymouth MI, Westland MI, Wayne MI, Van Buren Charter Twp MI, Ypsilanti MI, Superior Charter Twp MI, Northville MI, Livonia MI, Romulus MI, and Beyond.

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