Insights: Article

Sales Tax Compliance: Remote/Online Seller Resource

March 15, 2018

Woman shopping online on tablet

As states struggle to find lost sales tax revenue created through the emergence of ecommerce and the nexus restrictions imposed by the U.S. Constitution, one novel solution states are implementing is identifying individual purchasers of goods who have not paid sales or use tax. This strategy forces remote sellers, who are not registered to collect sales tax, to turn over customer lists or face stiff penalties. Some states put teeth into their efforts by imposing penalties, beginning at $20,000 and going into the hundreds of thousands of dollars. The idea is to make the customer list reporting burden so potentially onerous that the sales tax registration and resulting collections turn out to be a much cheaper and more attractive option. And, if you’re thinking they can’t do that, these types of reporting requirements have been held to be legal by the United States Supreme Court.

There are three levels of reporting requirements:

  1. Customer notice at time of sale
  2. Annual Customer Information Report
  3. Annual Report to the State

Are you comfortable with your accounting and reporting for your online/remote seller activities? Or do you have questions about compliance?

State sales and use tax laws are constantly changing. Please review state websites for additional information or contact Eide Bailly to see how our state and local tax team can help you comply. Eide Bailly has developed a quick analysis at a low cost to help companies understand their reporting requirements and to avoid potential significant penalties.

Contact your Eide Bailly professional or a member of our state and local tax team with questions.