Understanding the New Nexus Laws for Online Sales
Nov 15, 2019Posted by Forno Bravo
Sales Tax Rules are Changing for Online Orders
The internet commerce has been a bit of the wild, wild West in terms of sales tax laws for a long time. With customers coming from around the world, manufacturing in one jurisdiction, sales and customer service teams in another, warehousing and shipping often in a third location, figuring how to calculate and collect state sales taxes have been a difficult nut to crack. But as more commerce has moved away from Main Street, cities and lawmakers have started to wrestle with the problem and are proposing solutions to get their share of the online pie.
What is a Nexus
Definition: In general, Nexus simply means a connection. An economic nexus is basically a connection between a taxing jurisdiction, like a state, and an entity like a business that must collect or pay the tax.
It used to be that online businesses had to have a physical presence (offices/warehouses) in a state to create this nexus. However, due to a recent ruling from the Supreme Court, the conditions that trigger a nexus have expanded considerably to match the realities of the modern world.
Many states have now passed laws that make the amount of sales or number of sales (among other conditions,) the means of establishes a nexus, and thus, a resulting tax obligation, instead of just a physical office. The trick for businesses is that these laws are not uniform between states. Also, the laws continue to change as they move through the various state legislatures and it is quite the task to keep on top of them.
Bottom line, more online sales will be subject to sales taxes, and many of these laws go into effect January, 2020.
What Does This Mean for Me
If you are planning to buy an oven in the near future, you may want to buy it in 2019, and save yourself money before the laws change in the new year. At Forno Bravo, our customers hail from all over the country. We are following these cases and laws closely to remain in compliance and will update our online store and new quotes as the new rules come into effect.
