TAS 257 : Sales Tax 101 + The Biggest Questions Answered with Mark Faggiano

tas-257-private-label-sales-on-amazon

One of the most unaddressed and confusing issues when it comes to selling any kind of products online is the collection of sales tax. One of the reasons it can be so confusing is because every State has its own set of regulations surrounding sales tax as well as its own process business owners need to go through in order to register and pay their taxes. That description alone should show you how difficult it is to remain in compliance. State sales tax issues are one of the most frequently asked questions Scott receives so he decided it was time to get someone on the show who could answer the basic questions about sales tax. That someone is Mark Faggiano of Taxjar. You can hear their conversation on this episode.

I have to collect State sales tax? Really?

Sometimes the fact that the internet is worldwide makes it seem like State and National jurisdictions don’t apply to what goes on, on the World Wide Web. But the fact is that when a product is purchased that transaction is taking place in a particular place. In other words, the purchaser is sitting at a computer or other device within a specific jurisdiction. It makes sense that States would want to collect sales tax when that happens. So yes, as a seller of products you really do need to be collecting sales tax with each product you sell. But how do you do it? That’s what this episode of The Amazing Seller is all about, so be sure you listen.

As an Amazon seller, what States do you need to collect sales tax for?

When it comes to knowing what States you should collect sales tax for it comes down to a couple of issues. First is the issue of “nexus.” Nexus refers to the place where you as a business are actually doing business. The most obvious qualification for where your business nexus is located, is the State in which you reside and do your work. But what if you have employees in a different state, or a warehouse in yet another State? And what if Amazon is warehousing your products in a number of States? As you can see, it gets very complicated. But Mark Faggiano from Taxjar is on the show to help us sort it all out. He’s Scott’s guest on this episode.

Do I really need to register with a state to pay a very small amount of sales tax?

What if you discover that you’ve sold enough products in a particular state – let’s say Maine – to owe $15 in tax to the State of Maine. Does that mean that you should register with the State of Maine so you can fork over that $15? Technically, probably so. But there’s another way to look at it that most people who do product sales for a living feel is safe and ethical. You can hear abou the varying approaches to the issue on this episode as well as hear all of them explained in detail. What are you waiting for? You should listen to this one.

What if I had lots of sales in the past and never collected sales tax at all?

It’s entirely possible that many people who sell products on Amazon – either private lable or retail arbitrage – are just now hearing about the possibility that they may owe sales tax to various States. If that’s you, here’s something important you should consider. What kind of sales volume have you done in various states in the past? That may impact whether you should be concerned about the issue or not. But at the very least it’s an issue you should look into because of the possibility that a given State may decide to audit you to come after their Sales tax money – and that could be even more costly than paying the tax of your own accord. Find out how you should think through the issues on this episode.

OUTLINE OF THIS EPISODE OF THE AMAZING SELLER

  • [0:03] Scott’s introduction to this episode and his guest, Mark Faggiano of TaxJar!
  • [1:14] How Scott came to do this episode in the first place.
  • [3:29] How Mark got into the business of dealing with sales taxes.
  • [6:03] What is meant by “nexus?”
  • [10:37] How do product sales impact the States I collect tax in?
  • [12:44] Can you limit where Amazon moves your product inventory?
  • [15:00] The 2 camps sellers tend to fall into when it comes to State sales tax compliance.
  • [19:30] Does Amazon send State sales tax on my behalf as a seller?
  • [21:57] How many States does Amazon have warehouses in?
  • [23:42] How Taxjar helps sellers keep track of their tax liabilities.
  • [25:41] Stories of Amazon sellers who are being audited for sales tax issues.
  • [28:10] What’s the easiest way to register in various States?
  • [30:44] The first steps for brand new Amazon sellers.
  • [32:32] How you can get your tax data for free from Taxjar.
  • [33:25] How to deal with past sales on which you may owe tax.

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TRANSCRIPT TAS 257

TAS 257 : Sales Tax 101 + The Biggest Questions Answered with Mark Faggiano

[INTRODUCTION]

[00:00:03] Scott: Well hey, hey what’s up everyone! Welcome back to another episode of The Amazing Seller Podcast, this is episode number 257. Today we’re going to about a really big topic that a lot of people have asked me questions about, and I really don’t have all the answers and that’s why I invited on Mark Faggiano from Taxjar, all about sales tax, so…

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…we are going to give you a full rundown of like sales tax 101, plus he’s going to answer some of the biggest questions from sellers right now whether you are a new seller, whether you are an old seller.

You are going to probably hear some answers to those questions that you might have been asking yourself or maybe that you have talked about in so maybe that I have been talked about in some forums or Facebook groups or any of that stuff. I really wanted to have Mark on because I know that he definitely publishes a lot about this topic because he has a service called Taxjar which I use by the way but I’m going to really dig deep because I know a lot of you want to know this and so do I.

That’s what I plan doing here, is asking Mark these questions and getting to the bottom of it, as the best that we can. A little funny story here, before we jump into the conversation that I had with Mark. This all happened because I’ve been sending people to the Taxjar blog for probably about a year and a half, if not longer. Because any time I get as sales tax question I always point them to the blog because they have such great information to clarify the best that I have seen out there.

So I’ve been pointing people there and I haven’t been an affiliate or anything like that up until recently and actually Jennifer Done who is one of their team members reached out to me and said, “Hi, we’ve been having some people come over and saying that they came from the podcast and just wanted to thank you for that and actually she sent me out a swag kit, it was a Taxjar T-shirt which is kind of cool, which I love it by the way, and a hat.”

So, she just reached out and said, “Is there any other thing that we can do to support you?” I said, “Yeah. Let me have Mark on the Podcast. I would love to have him.”

[00:02:04] Scott: That’s what we’ve done. That’s how this kind of all happened, just kind of give you a little bit of an insight and it’s all happened. Just wanted to throw that out there and let you guys know that I’m really excited to have Mark on. You guys are going to get so much value. The one thing I do need to through in here is a little disclaimer. So no way, shape or form, is Mark or myself giving legal advice here. We are just giving you information as we see it.

Reach out to your attorney for legal advice and they can direct you in the best way possible and also you have to use your own common sense here. Again just a little disclaimer there. All right of the way, let’s go ahead and listen to this awesome conversation that I had with Mark Faggiano.

[INTERVIEW]

[00:02:45] Scott: Well, hey Mark, thank you so much for taking time out of your day to come on the podcast, what’s up man how are you doing?

[00:02:51] Mark: Hi, great Scott, great to be here, everything is good today thank you for asking.

[00:02:55] Scott: That’s awesome. I’m excited to have you, we’ve got a lot of questions coming in, and you are the sales tax guy I guess that people kind of go to and kind of ask questions. I know we said before we got on here we both should say that we are not CPAs, we are not experts in this as far as like giving expert advice or legal advice. But you do have a lot knowledge in this space you have a piece of software called Taxjar that actually helps with this, and you have a lot of information on your blog.

A lot of information so again I think you are the perfect person to answer a lot of these questions about this. So before we jump in though maybe you can kind give us a little bit of a background as far as like you know how you even got into this thing, as far as like sales tax for ecommerce businesses.

[00:03:38] Mark: Yeah sure, great question. I’m actually an entrepreneur by heart and have started a number of businesses over the last 10 plus years. The thing that really gets me excited is as a former small business owner, is figuring out ways to help businesses grow, and one of the ways to do that right is to build products that eliminate things that are pain, and things that get on the way of growth. And a lot of those are back end administrative things. Sales tax probably the best example especially for an ecommerce business.

A lot of customers from previous businesses always said things like, “Hey, you know you are solving this problem have you ever looked into sales tax,” and when the timing was right, and it was time to start another business, looked into it and said, “Man this one that too many people that I know and respect their needs are being completely ignored, we need to go try to solve these problems to make it easier.”

[00:04:43] Scott: It is too, it’s a little weird. There’s a lot of different people out there that talk about physical products and then charging sales task because it is internet sales and where do you have to pay and when should you start to pay and kind of all those questions? I think people in the digital world as far as digital products, they don’t really need to worry about this as much obviously if you are selling to people on your own home state and stuff like that.

You are doing business there but with Amazon and that’s primarily what people are selling or people are selling on, when listening to this podcast. Some are starting their own e-commerce as well but mainly about Amazon, when people get started they are thinking on themselves, this is great and all but now I’m starting to hear about this thing called Nexus and I’m starting to hear…

It’s very confusing. I gotta admit I mean I was confused, I reached out to my father and I’m like, “Hey, can you spend some time and dig through this Taxjar blog and kind of figure out exactly the approach that we should be doing as far as like when we should be doing this.” I do feel that pain. It is confusing and I think that you see that as too, with all of the questions. Maybe we can make this less confusing today in a condensed version obviously if people want to learn more I’m sure we can direct them over to your blog.

What are some of the common things that you see people asking questions? I have some questions here too but I’m just curious like what are you seeing you are getting like over and over again.

[00:06:13] Mark: There’s a lot of things. We hear from, I don’t have a number but at least probably a handful of FBA sellers every day through our support channel asking some variation of, “I’m brand new to FBA” or, “I have been with FBA for a long time and I’m just hearing about nexus,” exactly what you mentioned Scott. “Boil this down for me. Tell me if the rumors are true right because I’m really confused,” and they also mention like, “Look, I just want to do the right thing.I don’t want to get screwed here, I’m working way too hard on my business, I don’t want to omit something here that’s going to come back to bite me in the future.”

Folks are often looking for clarity around when is the right time to collect? When they don’t have to collect. What is Nexus and also like where do I go from here? Okay like alright, “Fundamentally I understand what I need to do, how does this relate to my business? How do I get Amazon working for me the way it should be when it comes to sales tax?” Then “how do I get compliant after the transaction of filing returns.” That’s where we focus a lot of time on educating sellers and happy to dig in so as much I did she need to.

[00:07:34] Scott: One of the biggest ones here right now that we can probably clarify is what Nexus? Maybe you can kind of dig into that a little bit.

[00:07:40] Mark: Nexus is a connection or a presence in a state that basically causes you to be required to comply with their sales tax laws. If you have Nexus in a state you are supposed to follow their laws, if they have sales tax laws. Not every state does, 45 states do. You are supposed to follow those laws which means getting a sales tax license in that state which is required of you to be able to collect sales tax from your customers.

Collect that tax, then file returns to the state when they tell you to, so they will give you some type of frequency. Monthly, quarterly, annually, what have you. That’s what Nexus is all about. What causes Nexus is the obvious follow up questions to that, right? The tradition definition is you sitting in your chair in your office, or if you have, whether it is in your house or you actually have an office in a building or renting an office. That’s Nexus, that means that you have presence or a connection to the state that you are living in.

Everybody listening to this, if they live in state that has sale tax laws has Nexus in their home state. Now what will cause them to have Nexus in another state? Things like employees, things like potentially affiliates depending on what state. Things like if they have some sort of retail location in another state. Some of us are combination of retail and ecommerce. Things like trade shows also the one that catches everybody’s attention when it comes to Amazon is the use of FBA.

[00:09:40] Mark: What’s happened is the states have written into their laws, this is not something that comes from us, what we do on the blog is basically dig out the laws and present them to sellers. They’ve said, “Look if you’ve got stuff stored in a warehouse in our state, that’s the same as if you are sitting here in your office in your state or if you had an employee in your state.”

The definition is equal and that causes Nexus and that means that you are supposed to go through that process that I talked about, which is get a sales tax license, collect from your customers on items shipped to that state and then file returns to that state. That’s the big one, that’s the ‘oh no’ moment that we hear about you know so many times per day because Amazon doesn’t do anything to warn you about that when you sign up for FBA.

[00:10:38] Scott: Right the one thing, just clarify this, so let’s say you have inventory in another state, the only time that you are going to have to pay sales tax is when you collect it from someone that lives in that state that bought that inventory out of that state, correct?

[00:10:53] Mark: Yes. Well, no. Actually all that matters is that an item gets shipped to that state. If you are in California and let's’ just say you are able to limit your inventory through FBA to be only in California and only in Texas. All that would matter is that you collect when the item gets shipped to either state, it doesn’t matter where it comes from.

[00:11:23] Scott: Okay but what I’m saying is like when would you collect the sales tax. If someone bought and they live in New York and that inventory came from Texas, would they still pay sales tax because they live in New York but they bought it from Texas? I thought it was only like you lived in that state like you went into the store and you bought something so you are charges sales tax from that state?

[00:11:43] Mark: Got you. In you scenario, if someone is in New York and buys from you, the only way you would collect sales tax from that buyer in New York is if you had Nexus in New York also.

[00:11:57] Scott: Got you, okay. That makes sense. Some people get confused that they think like okay, I’ve got inventory in Texas, now any sale that gets shipped from Texas…

[00:12:06] Mark: I got you okay.

[00:12:06] Scott: That’s not necessarily true right it is only when someone lives… You got to imagine it like you said, like I have almost like a retail store now in Texas. If someone walks into my store in Texas, that person has to pay sales tax, when I collect that sales tax as business, then I send that into that state for collecting that sales tax.

[00:12:27] Mark: Yeah that’s actually a better way of explaining it, probably I should have had you do it.

[00:12:31] Scott: Yeah, right. I just want to clarify that I’m understanding it correctly because I’m like, “I think that’s how it works.” It makes sense. Now you brought up another good point here and this in that one of the questions. I’ll just kind of bring it up while discussing it. Okay let’s say that I limit where I want to send it. It costs a little more to do that I think it is like 30 cents per unit, something like that in FBA. I say, “You know what I want to ship all my stuff to that one state.”

I only really have to then file in that one state as like I like have business there and I can collect sales tax there but we both know that Amazon has been known to shift our inventory around, right? Is there a way to eliminate that or is that just the way it is so now if find out that they shipped it to another state, I automatically then have to go and fill out sales tax registration for that state?

[00:13:24] Mark: To the best of my knowledge, and you’re far more advanced on this than I am, as an active seller. There is no way to effectively limit where they are moving around the inventory.

[00:13:37] Scott: I didn’t think so, yeah.

[00:13:39] Mark: We deal with thousands and thousands of Amazon sellers. I can’t remember off head anybody saying that they’ve been able to solve that issue.

[00:13:48] Scott: Okay when that does happen and we notice that now we have inventory in other states that’s when we should come and say, “Okay I guess I better register in that state to comply with their state laws and stuff.”

[00:14:05] Mark: This triggers to going back to the original question, this triggers the debate on, “When exactly should I pull the trigger and go and do it?” This where we actually spend a lot of time and well actually folks call us or we’ll get them on the phone if they email us and just kind of walk through this process. Happy to go through that if you want it. We find that and again that… Again that comes from tons and tons of sellers, thousands.

People fall into two categories. One is, “Look I just want to play this by the book. I don’t even want to take any chances here, so you tell me I need to comply in Nevada and I’m in California, I going to do it tomorrow. I just don’t want to go bed thinking about it.” There’s that group and by the way that’s for… They don’t care if they only have to file a dollar in the file, they just don’t care. Then there is the other group, this is the kind of the more realistic camp. The one that I would fall into if I was going to be a seller and knowing what I know now.

This is, “Look, I’m going to be… I get I’m not going to debate the law. I’m in California and I have got a ton of stuff in Nevada and I have got customers in Nevada. You’ve got my attention, I know I’m supposed to be doing this. But I’m going to base my decision on when to comply based on volume. So I’m looking at Taxjar, and Taxjar calculates for me what I should have collected in Nevada and it’s $35 this year. Okay I’m not going to go through the work that it takes to get set up in Nevada and send them a check for 35 bucks. If by some chance they find out about me, and decide to come after me for my 35 bucks plus interests and penalties, I can afford that, I’m willing to take that chance. But I’m also going to keep an eye on Nevada.

So, if that number gets to a point,” and I’m just making up a random number. “If it is $500 and that starts to make me feel uncomfortable because now that’s depending on where I am on with my business, that’s real money that I can exactly just reach into my pocket and pay out, now that’s time for me to start complying.”

[00:16:34] Scott: Yeah and that makes sense. Again I think everyone has to go with their own comfort level of what they think is right, what they think they want to allow as far as like a buffer or whatever like that. You brought up another thing so what Taxjar does which I do like is it shows you, it calculates what you should have collected, and then that way there you can kind of base you decision on that.

It doesn’t necessarily report to the states, like, “Hey these guys have collected this,” but what it’s doing is it’s really taking the data that’s being brought through your account and it’s seeing where all of these orders are coming from and then it kind of segments them into these different states. Then it shows us what we are supposedly collecting. Is that correct?

[00:17:19] Mark: Yeah, that is exactly right. We found that pretty early on the business that this was a pretty important part for our sellers. Like just give me the tools I need to make this decision and we said, “Okay.” So we built exactly what you are describing. We’ll tell you where your items are being shipped out of, which gives you Nexus and we’ll also tell you what you should have collected or what your current liability is in that state.

From there, you can make a decision. You are looking at Nevada again to use that same example, it says $7, forget it. I’m not going to worry about it. Some people turn on they see a $1,000, that’s got their attention. They are saying, “I’m not comfortable with this and that’s exactly what I need to be able to go ahead and make that decision to go ahead and comply.”

[00:18:12] Scott: Yeah I know and that’s exactly kind of way how I approached it. Again people that are listening I mean whether you are selling on Amazon or not if you are selling physical products online this still depending on what your warehouse is or your inventory is being, if you are using your ship center or something like that, the same thing applies. It’s not just Amazon. It’s just what we are talking about. I was actually talking to one of my students the other day and she was talking about… She had Taxjar, and she was going through your blog and stuff like that. She was a little confused because she was thinking that because she seen that there was inventory being kind of shifted around and she can see that in there that she immediately thought that she had to.

Now we can debate that and say well technically you should, but you are saying it’s like it’s one of those things that if you see it in your dashboard in Taxjar it doesn’t mean that they are going out to the state and saying like, “Hey just want to let you know this is what is happening.” It’s more like for your eyes.

[00:19:15] Mark: Oh yeah.

[00:19:15] Scott: The other thing that she was confused on, this is a big one too for anyone else that might be thinking this, which you know what may be down the line this will happen. I don’t know if it will because Amazon is really putting this burden on us and saying like, “You know what you guys better know what’s the right thing to do.” I think they should come up with a better solution but they are not. What she was thinking was, “If I check that box in back end of my seller’s account and I say that I want to start collecting sales tax in Arizona, well then Amazon is going to send them the money after they collect it,” and that’s not the case. The case that I understand, correct me if I’m wrong Mark, is they are basically giving us the money in our two week payment and then it’s up to us to send that money in.

[00:19:56] Mark: That’s right. Absolutely right and to address the first part there, there is no way we would go to the state and tell somebody they have Nexus. We would never have business if we did that. We’ve got over five thousand paying customers. It’s just not in our best interest.

[00:20:17] Scott: Right.

[00:20:17] Mark: So that’s good feedback and maybe we need to make that a little bit more obvious. So yeah this gets to another hurdle that a seller has to clear. They are getting the money. They not even know they are getting the money from Amazon. Now also they know it’s time to go ahead and file a return and pay what they’ve collected. This is where it can be challenging because to file a return in certain states in a majority of the states it’s not a super simple process.

The kind of high-level view of that is that a seller has to report to the state how much they’ve sold and collected by jurisdiction of the state. It’s not as simple as saying, “Hey I sold $50,000 to your state and I collected $900 here you go.” The state wants to see that $900 broken down by possibly a thousand different jurisdictions which is just total nonsense when you think about it.

Amazon gives you a report to do that but you’ve got to compile the data manually by jurisdiction. You have to go through each sale line by line to say, “Okay this one goes to jurisdiction one this one goes to jurisdiction ten,” and that’s how we automate so that you don’t have to do any of that but definitely to your point, a common point of confusion, people are wondering where the tax money is going and you know what do they do? What does it take for them to get prepared to go and make sure that they are filing on time?

[00:21:57] Scott: How many current states, do you know off head, that Amazon has warehouses in? Last time I looked I thought it was fourteen

[00:22:06] Mark: Gosh, it’s changing literally by, it feels like the week.

[00:22:11] Scott: I know.

[00:22:11] Mark: There’s been a surge as well recording this. There have been a surging in new warehouses that have come online. I think we are above fifteen at this point and it’s not going to slow down. I know. Making draw investments in their infrastructure and their goal is to have two day, one day, same day delivery in as much of the country as they can.

[00:22:35] Scott: That means more warehouses and more locations so that they can spread out your inventory to get it there quicker.

[00:22:42] Mark: Right.

[00:22:42] Scott: That’s what they are doing, and I have experienced that actually Mark my wife ordered something in the morning and it was here by dinner time. It is insane.

[00:22:49] Mark: Yeah so it is absolutely nuts. I just moved from San Diego and the amount of time… Probably five times a day where we would see an Amazon van go by and even there are people in their own cars with an Amazon sticker driving around.

[00:23:07] Scott: It is crazy and that’s what they are doing, they are spreading the inventory and they have some calculations I’m sure it is kind of like see where more of the market is buying certain items and stuff, I get that. Just understand that as we’re growing business whether it’s on Amazon or whether it‘s wherever you are storing your inventory, that’s what we are talking about today it’s just collecting that sales tax

It’s your responsibility to do that just by checking the box inside your seller’s account that does not mean that Amazon is going to do the work for you. That’s where it really Taxjar does come in. Now I know the last time I checked, not all states you are set to basically automate that process. Some of them you are but some of them you are not. Can you talk about that just briefly?

[00:23:51] Mark: Sure. In all of the states we’ll provide the data that you need to go ahead and file returns on your own. We’ll take out that work that I talked about before. In most of the states we’ll go one step further and file automatically for you for an extra fee if you elect to do so. It’s up to you, you have the decision to file on your own or have us do it. We’ll be at all the states and short order, something we are working really hard on and that’s…

[00:24:21] Scott: That would be sweet if that was the case. Actually I hired a VA to help me with that and it is. It’s work. I mean like California especially seems like they make it really hard number one to get your sales tax number. Then they make it hard for you to send it in. There is another state too, like everything is by paper still like they won’t even let you… I’m like that’s just… It’s insane to me, they make it so hard.

I would like to see in the future is again something where you can log in to one portal, you can register all the states that you need to like in one spot. Make it easier like they want to collect the money, they should make it easier in my opinion, the states that is.

[00:25:03] Mark: No questions so that’s the real rub on this whole thing is you don’t hear a lot of people debating whether or not tax should be collected. Nobody really has a hard time with that but to your point, it shouldn’t be a second job for me to just try to comply. It doesn’t make any sense. The pessimist in me is pretty convinced that simplifying this whole thing is probably not at the top of their priority list for the federal government to take over from the states but who knows.

[00:25:41] Scott: Now have you had anything out there… I mean you would probably hear more than I would because you pay more attention. Have you heard anybody getting audited and if so like how does that happen like do they just contact you by mail, is it through the phone, like how does that work?

[00:25:56] Mark: Yeah. We hear pretty routinely from folks who are either just relieved or receives a letter from the state or going through they’ve hired in an attorney and they want to talk to us about potentially getting a couple years prior data from Amazon for example so that they can go through the audit. It does happen. I would say not a ton, but it has more than people think. I do talk to a lot of sellers that say well nobody gets audited.

That’s actually not true. How does that happen? I hear a few cases typically. One is, this sounds so dumb but it’s true. An auditor maybe buying something from you on your site and they know that you are supposed to collect sales tax and then you don’t at check out and then they say, “Oh.” They may look into well this looks like a legitimate site, “I wonder how much revenue they should be generating for the state. We are going to reach out to them and send them a letter.”  We also hear of competitors ratting out other companies.

[00:27:14] Scott: That’s crazy. That doesn’t surprise me though.

[00:27:16] Mark: Also just in general the larger more sophisticated states, are actually starting to catch up on like ecommerce. It sounds hard to believe but they… Look, they are all desperate for money and they are looking for new sources of revenue and they see this, “Wow, this is sort of untapped territory here. We need to educate ourselves and look at…” the larger brands and larger sellers are probably at the most risk. They are going to focus their time on the largest amounts of money if you will.

Right but they are not going to come after the guy that owes them 25 bucks. It is definitely happening and we see it more now than we did 3 years ago when we started the business.

[00:28:09] Scott: Now here is a question. Like okay, if someone wants to register in these states, what’s the easiest…? Is there a service out there that currently helps with this? I actually talked to my CPA about this. I’m like, “You know you should really come up with service for this because this is a pain the neck and people would want to pay for it including myself.” He started looking into it, started actually looking to maybe hiring someone. He is doing it for a couple of clients just as a test and he is like, “Scott, this is just a pain in the butt going across the board.” It takes time and it takes a lot of money like I think California is like $800 or $1000 for the tax ID.

[00:28:48] Mark: So some states are easier than others. No surprise there, we actually we get so many requests on this that we’ve partnered with a couple of firms that are experts on this.

[00:28:59] Scott: Okay

[00:28:59] Mark: And typically runs anywhere between $75 to $100 per state to get the permit. If folks want to dive into this, they just need to reach out to us so we can point them in the right direction.

[00:29:16] Scott: Yeah I was going to say, maybe what we can do we’ll throw something into the show notes and people want to get in touch with you anyway they can but they can put something in there about getting that done because that’s a pain point, clearly, as I reached out to my CPA and I’m like, you know this is a really like sticking point for a lot of people. That’s why people just don’t do it because they just start the paperwork, and they’ll be like you know what I’m just going to chance it. I’m going to take a chance because it’s just a pain.

I blame the state on that, I really do. The state, like I said, they need to make it online only not this send stuff through the mail and I think that they should be able do it that way, like you said. It’s an easy tax revenue for them to bring in if they would make it easier. I don’t know, they’ve got so many different channels probably to move through that one person isn’t going to make that happen but if they did,  they would , take it from a guy that, you know, not a smart guy, but I know enough to know that. Make it easy people will do it.

[00:30:12] Mark: Yeah, I agree, I mean you are preaching to the choir now.

[00:30:16] Scott: I know, all right. I think we answered a lot of the main ones. The main thing is here like and you addressed like when should I start collecting and you are saying like again you have to use your own judgment on this but really start looking at the data, start looking at the numbers coming through and you know when you think that you are at that number where you are not comfortable with then it might be time to go ahead and start registering for these.

Again let’s kind of revisit this so if I have inventory in 10 states, are you saying that I should register in all 10 states or you are saying that again wait until you see where you are and if you feel as though your comfort level is at that point.

[00:30:57] Mark: Yeah to sort of recap, I would say if you are just starting out, you’re brand new comply on your home state for sure. It’s the easiest dots for the states to connect. You are already filing income tax there, they know you exist. Get that one done and then yeah if you have inventory in 10 states and those 10 states have sales tax laws, you are supposed to be complying in those 10 states. Again you can either go all in or you know my personal preference on this one is to do ‘a wait and see’ approach. Monitor your volume and how much you should be collecting in those states and when you get to the point where you feel like I can’t ignore this anymore, then go for it, whether it’s a couple at a time or you end up going for all of them.

[00:31:47] Scott: What would be a way that I would see that if I wasn’t using Taxjar? Would there be in my reports I mean I can go through all of my past sales and stuff, but is there an easy that you know of or not really?

[00:32:01] Mark: No there is not an easy to do that. You’d have to go through your reports and you would also, the really tricky part is, you would have to calculate how much sales tax would have been collected, which would be you’d have to do a lock of every single transaction and then come slowly compile that together. That would be a pretty big task.

[00:32:23] Scott: Yeah but if they wanted to use Taxjar that does all that for you I know that personally. It’s actually a nice clean looking dashboard that kind of organizes everything for you. How long does that usually take to start pulling in the data?

[00:32:34] Mark: Usually you will see all of your… When you get a free trial, we’ll pull down the last 60 days of data and usually within 30 minutes sometimes less, so pretty quickly and then if you end up subscribing either on a monthly or annual basis we’ll pull down all of your transactions to the first of the year.

[00:32:58] Scott: Okay, cool. That way people can actually the past 60 so that will give him a good idea, especially if you are just starting out. I definitely recommend the service. I’ve been using it for well over a year and half now. Works well no complaints there on my part. Actually, you guys we are always updating it, and your information to me is really awesome. To have it all out there and to always be kind of on the cutting edge of the sales text because it is always kind of changing like you said.

Any last little bits advice that you would give someone that is kind of contemplating, getting started that’s already doing some business and they haven’t been doing it and they are like, “Oh my gosh like now what should I do?” I had some one the other day Mark say, “So now what should I do? Should I go back for the past year and see what I should have collected and then should I let them know that I should have collected this and then I pay in? Like what do I do there?”

[00:33:50] Mark: If you are in that situation I highly recommend that you get professional help.

[00:33:55] Scott: Okay.

[00:33:55] Mark: That’s something that we can help you find, I mean we are happy to make it referral.

[00:34:00] Scott: Okay.

[00:34:00] Mark: That’s where we see a lot of folks a mistake as will say, “Wow, I just found out about this acts… I’m doing a pretty legitimate volume here and you know this isn’t my first month of I’ve been doing this for a few years.” That’s where wrong steps one of costing you money and we’ve seen that happen. If you are in that case stop what you are doing, I will not communicate with the state at all and I would like the professionals do it on your behalf and again happy to make that referral for you.

[00:34:32] Scott: That’s totally good advice. Definitely seek out professional help and like you said you’ve got people that specialize in this. It’s important not to just reach out any like attorney or CPA. I think people that are familiar with this business helps kind of speed up that process because they’ve done it and they know it. That’s awesome. We are going to link up everything up too if you guys want to give Taxjar a try to put a link in the show notes onto this episode. You can go check it out and again you can always go over to taxjar.com and check all that stuff out over there as far as the blog. Do you have any other last little bits of advice you should want to give today Mark before we wrap this up?

[00:35:12] Mark: No I think we’ve covered a lot of sort of the main points that a lot of sellers and I am sure folks are listening to this and have in mind as they are trying to get started, we exist to  help sellers. So like you mentioned Scott, our blog is jam parked with information…

[00:35:32]  Scott: It is.

[00:35:32]  Mark: If you have any questions just contact us at support@taxjar.com and you know we are happy to point you in the right direction and get you started so that you don’t have to feel frustrated any more.

[00:35:44] Scott: Yeah that’s awesome. Well, hey Mark I am so glad that I finally got on here. I have been wanting to touch pace with you for a while. We finally got our schedules to line up. This has been awesome. I appreciate you and I appreciate everything you’ve done and all the value that you have given, great service, great company and I just want to say thanks again I really, really do appreciate you coming on.

[00:36:01] Mark: Thanks Scott this means a lot and my pleasure.

[00:36:03] Scott: Alright man, take care.

[00:36:04] Mark: Same.

[00:36:05] Scott: Okay, so there you go. A great conversation, great discussion with Mark who really does have his hands, not his hands, he’s got his arms really deep into the sales tax thing. If there is anyone that I would pay attention to it would be him and Taxjar and that’s why I have been really directing people to the blog and really just having you educate yourself and then you make the decision or you maybe even give that to your attorney to look at because then they can weed through it for you. Now if you guys want sign out for a free account, there is a 30 day trial and no credit card required, you can hand over to theamazingseller.com/taxjar just like it sounds, tax-jar.

Again that’s theamazingseller.com/taxjar. That is the an affiliate link you will buy me a cup of coffee if you sign up through that link but will get a 30 days trial, no credit card required. So really, there is nothing to risk at all. Just go over there and give it a shot even if you just want to log in with this new account and have it pull in the data and have it show you where your inventory is and maybe what you should have been collecting or what you should be collecting like that’s very, very helpful.

So I would be definitely recommending doing that if anything at all. I would say definitely go to the blog and check that out. You can go into the blog by going through that link as well just click home and it will take you to the home page of the blog and all that stuff. Just a lot a lot of great information. I have been really promoting their service since day one and I haven’t received anything other than a T-shirt that I just got and a hat. It was really awesome for them to do that but again I don’t always just promote different products to promote them, I promote them because I use them and I believe in them and this was one of them. To show you that I really have to believe in something in order for me to talk about it and to recommend it and Taxjar even if you just go to the blog consume that content really, really great resource.

So the last that I will remind you is the show notes, the transcripts, head over to the amazingseller.com/257 and you will find all the goodies over there.

[00:38:12] Scott: I think this is a must download for the transcript by the way because there is a lot of great information in this conversation, in this discussion that I had with Mark and it’s probably worth printing it out and putting it right on your desks on where you can go through it when we need to.

All right so that’s it guys. That’s going to wrap it up another great episode. I want to remind you one last time that I’m here for you, I believe in you and I am rooting for you but you have to… Come on, say it with me, say it loud, say it loud, come on now, “Take action.” Have an awesome amazing day and I’ll see you right back here on the next episode.

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8 Comments

  1. Mark

    Hey Scott,

    Thank you for the great podcast. I have a question about collecting sales tax for companies that are foreign. I have a corporation in Canada selling on Amazon.com. Do I have to collect sales tax?

    Are you aware of any treaties between Canada and USA for sales tax?

    1. Scott Voelker

      Hey Mark, because the answer varies so much, tax related questions are best directed to your accountant.

  2. alex

    Hi Scott,
    thanks again for a very informative podcast.
    One question: If I do not want to charge/collect sales tax because of competition reasons, but I want to be 100% compliant and want to pay the state the taxes I should have collected.
    Is this doable? Is it mega complicated?

    1. Scott Voelker

      Hey Alex, you should be collecting sales tax where you need to, but it’s not overly complicated if you use a solution like TaxJar

      1. alex

        Hi Scott,
        I supposed I did not express myself correctly:
        As an amazon seller I would like to pay the sales tax out of my own pocket and not collect it from my customers.
        This way the sales tax becomes one more operating expense influencing my bottom line.
        If I do it this way, will filing and paying sales tax be any different than having collected them?

        Thanks again! I really appreciate all the time and effort you put into this community!

        1. Scott Voelker

          Hey Alex, you may want to have a chat with your accountant about that one. You could (in theory) do that, but you would need a way of knowing when to remit and when not to.

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