sales tax boot camp for etsy
TRANSCRIPT
Sales Tax Boot CampFor Etsy Sellers
Today‟s Topics
• “General Rules” of sales tax
• It‟s all about nexus!
• How much sales tax to collect
• Filing sales tax returns
• Here to help and resources
• Q&A
General Rules
“General Rules” of Sales Tax
• Sell to someone in your state = collect sales
tax
• No minimum required
• Sell to someone out-of-state = don‟t
collect….yet
• 45 states + 45 sets of laws = too many rules!
• Sellers are „collection agents‟
“General Rules” of Sales Tax
• How much you collect depends on a lot!
• Filing deadlines usually tied to sales volume
• Some states have discounts for early payment
• All states have penalties for late payment
• Save everything in case of audit
“General Rules” of Sales Tax
• Most selling platforms help you collect sales
tax
• No selling platform helps you file or pay
• Once you collect, you‟re on your own!
Understanding Nexus:
When to Collect
Nexus: When to Comply
• Your business has a presence in a state
significant enough that you‟re required to
comply with state sales tax law
• Register your business
• Collect sales tax on orders shipped
to that state
• Pay what‟s been collected
Nexus: When to Collect
• Nexus for one platform means nexus for
your entire business
• Ex – „Etsy nexus‟ gives your own website
nexus
• No nexus in a state means you
don‟t have to collect
Common Nexus Types
Home or Office Inventory
• Where you live and/or
operate your business
• Live in San Jose and
sell out of your house
• Comply/collect in CA
• Inventory is in a 3rd
party warehouse
• Live in San Jose with inventory in PA
• Comply/collect inCA & PA
Dropshipping doesn’t apply to either scenario
Collecting Sales Tax
Example
• Example: Jenny Etsy is based in Akron,
OH
• She runs her business from her home
• She‟s complying in 1 state: OH
Home State Sale
ARKON CLEVELAND
Collect Sales Tax
Nexus to non-Nexus
OHIO FLORIDA
Don‟t Collect Sales
Tax
Calculating Sales Tax
How Much Do I Collect?
• Tax rate usually = state + local + special
• Origin-based state
• Tax rate = seller‟s location
• One rate for entire state
• Destination-based state
• Tax rate = where item is shipped
• Variable rate
• California
Origin: Sale in Ohio
AKRON SHAKER HEIGHTS
Rate collected: 6.75%
• State: 5.75%
• Summit County: 1.00%
Destination: Sale in New York
STAMFORD BUFFALO
Rate collected: 8.75%
• State: 4.00%
• Erie County: 4.75%
Collecting on Etsy
Good News!
• You can collect sales tax through Etsy
• You can set taxability of shipping per state
Bad News!
Bad News!
• It‟s up to YOU to correctly determine rates
for collection
• Can only collect flat rate per state or zip
code
• No real-time calculation
• Etsy will NOT tell sellers how much or
where they should collect
Recommended Steps
• Go to Your Shop > Payment > Sales Tax
• Choose a state or a zip code
• Enter the highest possible tax rate
• taxjar.com/sales-tax-calculator/
• Only applies to new items
• Double check old items are set to be taxable
Filing Sales Tax Returns
Filing Returns
• Combine and file a single return per state
• Not separate returns per channel
• Filing on time can equal a discount
• blog.taxjar.com/state-sales-tax-discounts/
• File zero returns!
Filing in Destination
• Huge pain!
• Calculate taxable sales and sales tax
collected by jurisdiction
• Gets worse if you‟re multi-channel
WA eFile
Last Thing…
Trying to comply >
knowingly not complying
TaxJar: Here to Help
• Automatically pulls and organizes sales
and tax data from your Etsy account
• Creates daily sales tax reports subtotaled
by local jurisdiction (county, city, etc)
• Estimates what you SHOULD have
collected
• Pro channel for accountants
Dashboard
Actual vs Estimated
Actual vs Estimated
• Not sure if you‟ve set up your sales tax
collection correctly
• Want to check liability in other states
• You‟ve collected sales tax on only some of
your orders
TaxJar: Here to Help
• TaxJar.com
• 30-day free trial (no credit card required)
• Monthly or annual subscriptions
• Pricing based on transaction volume
• Starts at $9.95/month for 1k transactions
TaxJar: Special Offer
Get an extra 1 month for FREE
1. Signup for TaxJar and email
• Extra 15 days FREE
2. Two Options for another 15 days FREE
• TWEET: I just signed up for @TaxJar
• Like TaxJar on Facebook
Resources
SalesTaxCommunity.com
Talk with other FBA sellers!
blog.taxjar.com
Weekly posts on sales tax
and compliance
Q&A