Tax & Accounting Blog

Preparing for Black November: Determine Your Tax Reach

Blog, ONESOURCE, Sales and Use Tax, Sales Tax Calculation November 4, 2016

In this blog post we will discuss the importance of determining your tax reach.  Your activities within each tax jurisdiction drive the requirements for whether you must register to collect indirect tax and correspondingly remit the tax.  The minimum activity that creates nexus and the need to register with a tax jurisdiction continues to evolve so it is critical to understand your tax footprint in each jurisdiction.

Black Friday shoppers will frequently develop a game plan to ensure they score the best deals in the shortest amount of time. As retailers continue to offer great deals capturing the attention of consumers, it is critical they know their specific activities in each tax jurisdiction and have a game plan for compliance. The rules regarding what creates the need for tax registration continue to change so having a plan that can adjust is imperative. These are some common questions tax jurisdictions use to determine whether a business must register though keep in mind that the specific rules vary by jurisdiction:

  • Does the business have a physical presence in the tax jurisdiction (e.g. office, warehouse)?
  • Does the business own equipment in the tax jurisdiction (e.g. vehicles, equipment)?
  • Does the business have representatives operating on its behalf in the tax jurisdiction (e.g. salespeople, independent contractors)?
  • Does the business utilize employees or third parties to solicit sales in the tax jurisdiction (e.g. sales calls, trade shows)?
  • Does the business provide services within the tax jurisdiction?
  • Does the business deliver merchandise to the customers in the tax jurisdiction?
  • Does the business have sales into the tax jurisdiction that exceeds the threshold requiring registration?

It is a good idea for businesses to review their strategy to be compliant with indirect tax regulations before a period of increased sales. Regular assessments of the indirect tax footprint helps manage the bottom line by minimizing the risk of tax exposure.

Want to learn more about Black November and what you need to know to prepare? Check out our earlier posts.

Preparing for Black November

Preparing for Black November (Part 2)

Knowing Your Products and Customer Base

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