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Common Business Tax Questions: State Obligations and Taxability

business tax questions obligations

At SalesTaxSolutions.US, it’s our pride to work with ecommerce clients across a huge range of industries and business sizes to assist them with sales tax, tax returns and numerous other parts of tax compliance. One of our top services to many clients is simply providing answers to common questions, including those on tax rates and similar areas.

Especially if you’re new to the realm of professional business tax assistants, you might initially be wondering what you should even be asking them about. This can seem like an intimidating area to some business owners, particularly if it’s new to you. For those in this position or even just those looking for a little refresher before a consultation with a tax professional like ours, this two-part blog series will go over some of the most common questions we get from clients in the realm of sales tax, state tax and related areas.

Why Do I Have a Filing Obligation in This State?

One of the single most common questions we get from clients across the country: Why does my business have a filing obligation in a given state? Some business owners assume that because their company is not physically located in a state, they have no obligation to file sales or business taxes in that jurisdiction. This isn’t the case at all! You may be required to file in a given state if your company has clients or customers in that jurisdiction, even if you don’t have a physical presence there.

There are a few different methods that states use to determine whether or not a company has a filing obligation in their jurisdiction. The most common are Nexus rules, which determine if a company has sufficient ties to a state to warrant a tax filing obligation. Other factors that can come into play include the amount of business done in-state, the type of product or service offered, and even the company’s ownership structure.

If you’re unsure of whether or not your business has a filing obligation in a particular state, it’s always best to consult with an experienced tax professional. They can help you navigate these murky waters and ensure that you’re meeting all of your compliance obligations.

Why is a Given Item Taxable?

Another area we often assist clients with is whether a given product or range of products is taxable based on their state’s laws. Determining taxability can be tricky, as it can vary from state to state and even depend on the product category.

There are a few key factors that we look at when determining if a product is taxable:

  • Is the product considered tangible personal property?
  • Is the product something that’s typically subject to sales tax?
  • Does the product have a specific exemption from taxation?

Again, if you’re unsure about whether or not a particular product is taxable in your state, it’s best to consult with an experienced tax professional. They’ll be able to help you navigate through the often complicated web of state sales tax laws.

In part two of our series, we’ll go over some additional areas you may have questions about. For more on these, or to learn about any of our ecommerce sales tax or other tax services, speak to the team at SalesTaxSolutions.US today.


Christopher Stout

Christopher Stout has 25 years of experience as a sales tax accountant, working across a wide variety of industries and sales platforms. He's personally prepared or supervised the preparation of over 60,000 sales and use tax returns in his career.

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