24 THE QUEENS COURIER • APRIL 19, 2018 FOR BREAKING NEWS VISIT WWW.QNS.COM
Why Tax Nexus Rules
Matter to Your Business
BY JOHN SAVIGNANO, CPA
For decades, companies were
only required to collect and
remit sales tax if they had physical
presence in a state. But
with the advent of online sales
and e-commerce, that requirement
is rapidly changing. A
growing number of states have
passed tax nexus legislation,
which redefines the circumstances
under which a company
is subject to sales tax.
One method that has become
increasingly popular is economic
nexus legislation, which
determines tax obligations
based on a business’s economic
activity-typically sales-within
a particular location. A state’s
ability to impose tax collection
formerly required the sellers
to have a physical presence
in that state. But economic
nexus rules apply to sellers
that maintain substantial sales
in a location within the taxing
state.
States that have implemented
income tax economic nexus
policies tend to vary with their
approach, with some states
having bright-line tax thresholds
and others allowing for a
broader interpretation.
Since various states have different
thresholds for in-state
sales, including gross revenues
and number of transactions,
that make business subject
to sales tax, companies must
understand the regulations
of every state in which they
have-or plan to have-some sort
of economic presence. Now,
however, companies have to
also track their sales and economic
activity to determine
where they have sales tax obligations.
While New York state has
not instituted any economic
nexus legislation for sales
tax as of March 1, 2018, it is
important for New York sellers
to be aware of the nexus
rules in other states. Failing
to do so can put a business
at risk of not collecting and
remitting the proper amount
of sales tax, which can lead to
significant penalties down the
road. Businesses that believe
they have outstanding unpaid
sales taxes should consult a
tax professional about potential
amnesty or voluntary disclosure
programs.
John Savignano is a partner
with Savignano Accountants
& Advisors located at 47-46
Vernon Blvd., Second Floor, in
Long Island City. If you have
any questions or require additional
information, please call
John at 718-707-0955.
TAX TIPS
Attorney At Law
25-59 Steinway Street
Astoria, NY 11103
718-278-3900
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Call Now & End Your Tax Nightmare!
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Co-Author of the
best selling book
“Breaking the Tax Code”
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Salvatore P. Candela, EA, ATA, ABA
Enrolled Agent - Tax Advisor
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