When physical and online sales start to accelerate, remember what Churchill said, “the price of greatness is responsibility.” In other words, as your small Business grows and revenues increase so to do your tax responsibilities.

You will incur multi-state Sales Tax responsibilities and need to stay up to date with the Sales Tax rates and taxability rules throughout all of those states.

As time goes on, your business activities might change, or even cease. In this case, you will avoid unnecessary time and expenses by following processes set out by the States to properly amend or cancel a Sales Tax License in those jurisdictions where your business is registered.

Only Collect Sales Tax Where Your Business is Registered

When a business has a ‘connection’ with a state, generally the business must register to calculate, collect and remit sales tax. What qualifies as a connection, or nexus, varies by State, with many States recently broadening their rules to include economic activity following the U.S. Supreme Court ruling in Wayfair, issued in June 2018.

Absent a formal connection, a State often also allows voluntary registration for Sales Tax. Whether voluntary or not, however, a business should generally not collect Sales Tax on behalf of a State or Local jurisdiction unless the business has registered to collect tax.

Once registered for Sales Tax, the State or Local will issue a License or Certificate of Authority to collect and remit tax. If a small business’ details change then typically the business must take proactive steps to a) amend, or b) surrender or destroy the business Sales Tax License or Certificate.

When to Amend Your Sales/Use Tax License

Most jurisdictions require that a business amend the Sales/Use Tax License within a defined timeframe, usually 20 days, whenever business details change, including any of the following:

• business name;
• business address, including a new additional business location;
• federal identification number;
• business telephone number;
• owner, officer, or responsible person information; or
• business activity

Some changes require the State to issue a revised License, for example, if the business changes its name. Alternately, when the business detail that changes does not actually appear on the License (business telephone number; owner, officer, or responsible person; business activity, for example), the State will not typically issue a new License, but will just keep the change in their business files.

When to Surrender or Destroy Your Sales/Use Tax License

You generally must surrender or destroy your Sales Tax License if, amongst other reasons, you:

• stop doing business;
• sell, transfer, or assign your business; or
• change the form of your business (for example, change from a sole proprietorship to a corporation).

More simply, these changes require that you deregister the business. When you deregister, some States will cancel a License when the business simply notes ‘final’ on the last return, while other States provide a formal deregistration process.

In all jurisdictions, you are responsible for filing until deregistration is complete, regardless of the fact that any of the returns will be zero. Failure to file, even zero dollar returns could result in collection issues, as well as interfere with the release of Bond monies paid for the original License. How the deregistration process works varies by jurisdictions.

At the State level, it’s generally best practice to check with the Sales Tax registration unit for each State. Below are links to the State Sales Tax web pages and, more directly, the Sales Tax registration webpages:

This listing excludes the NOMAD States, those States without a State Level Sales Tax: New Hampshire, Oregon, Montana, Alaska & Delaware

Summary

As your business grows in the e-commerce market, know that QuickBooks Sales Tax is here to help you meet your multi-state sales tax responsibilities by providing you with up to date Sales Tax rates and taxability rules throughout the U.S.

Should your business activities change or cease, remember that you will avoid unnecessary time and expense by responsibly following the processes to properly amend or cancel a Sales Tax License in those jurisdictions where your business is registered.