Tons of helpful info for WooCommerce store owners wanting to learn more about how sales tax relates to their business.

1. SALES TAX 101 FOR
STORE OWNERS
with
MARK
FAGGIANO
CEOOF
MONDAY, JANUARY 11, 2016

2. TODAY’S AGENDA
• General rules of sales tax
• Do you have nexus?
• Collecting sales tax
• Filing returns
• Sales tax resources
• AMA
January 11, 2016Copyright © 2016 TaxJar. TaxJar is a trademark of TPS Unlimited, Inc. 2

3. QUICK INTRO: MARK FAGGIANO
• Passion: using tech to solve problems
for small business!
• Founder of TaxJar
• Not a CPA or tax professional
• Talked to thousands of online sellers, pros, auditors, states
• Here to help you make decisions
January 11, 2016Copyright © 2016 TaxJar. TaxJar is a trademark of TPS Unlimited, Inc. 3

4. GENERAL RULES OF SALES TAX
January 11, 2016Copyright © 2016 TaxJar. TaxJar is a trademark of TPS Unlimited, Inc. 4

5. RULE #1: HEADACHES ARE COMMON
• No federal sales tax laws (yet)
• 45 states (and DC) = 46 sets of laws
• Nexus
• Taxability
• Rates
• Due dates
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6. RULE #2: WHAT’S TAXABLE?
• Tangible items are taxable
• Common exceptions are clothing and food
• Services are mostly not taxable
• Are the tides changing?
• Shipping, giftwrapping can be taxable
January 11, 2016Copyright © 2016 TaxJar. TaxJar is a trademark of TPS Unlimited, Inc. 6

7. RULE #3: NEXUS IS EVERYTHING
Your business has a presence or connection in a state that’s
significant enough for you to be required to comply with their
sales tax law
• Got nexus = comply
• No nexus = go do something else
January 11, 2016Copyright © 2016 TaxJar. TaxJar is a trademark of TPS Unlimited, Inc. 7

8. RULE #4: NEXUS VS. REMOTE SALES
• Sell to a state with nexus = collect sales tax
• Live in CA means collect on items shipped to CA
• Your state is the best place to start compliance
• Remote sales = no sales tax….yet
• Remote sales are sales to any state you don’t have nexus
• Live in CA; don’t have to collect on sales to WA (unless you have
nexus)
January 11, 2016Copyright © 2016 TaxJar. TaxJar is a trademark of TPS Unlimited, Inc. 8

9. RULE #5: PASS-THROUGH TAX
• Pay what you collect
• Never pay out of pocket!
• Sellers are ‘collection agents’
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10. RULE #6: THIS CAN BE AUTOMATED
Starting is the hardest part
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11. WHERE DO I HAVE NEXUS?
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12. WHEN YOU HAVE NEXUS…
• Register for a sales tax license
• Enable collection on your cart or marketplace
• Collect sales tax when you have nexus
• File a return
• Pay what you owe
January 11, 2016Copyright © 2016 TaxJar. TaxJar is a trademark of TPS Unlimited, Inc. 12

13. COMMON NEXUS TRIGGERS
• Retail store
• Employee
• Salesperson
• Affiliate
• Trade show
• Drop shipping
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14. January 11, 2016Copyright © 2016 TaxJar. TaxJar is a trademark of TPS Unlimited, Inc. 14

15. DROPSHIPPING
• Two sales take place
• Your vendor sells to you
• You sell to your customer
• Who has nexus?
• Great time to speak with a tax professional
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16. DROPSHIPPING SCENARIOS
• Neither vendor or seller have nexus
• No tax collected
• Vendor has nexus; seller doesn’t
• Seller provides exemption cert
• Vendor doesn’t have nexus; seller does
• Seller collects
• Both vendor and seller have nexus
• Seller provides exemption cert & collects from customer
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17. MULTI-CHANNEL NEXUS
• Nexus for one channel means nexus
for your entire business
• Ex – ‘FBA nexus’ gives your Woo business nexus
• Collect on all your channels for the same states
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18. COLLECTING SALES TAX
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19. GOLDEN RULE OF COLLECTION
Collect sales tax when the item sold is shipped
to a state where you have nexus
January 11, 2016Copyright © 2016 TaxJar. TaxJar is a trademark of TPS Unlimited, Inc. 19

20. MEET SALLY STORE OWNER
• Based in Akron, OH
• Only has nexus in OH
• Complying in 1 state
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21. NEXUS SALE
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Akron, OH Lakewood, OH
Collect sales tax

22. REMOTE SALE
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Akron, OH Waltham, MA
Collect sales tax

23. SALLY’S BUSINESS IS GROWING!
• Uses a 3rd party fulfillment service
• Stores inventory in NV
• Nexus in 2 states: OH, NV
• Complying in 2 states
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24. NEXUS SALE
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OH or NV OH
Collect sales tax

25. NEXUS SALE
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OH or NV NV
Collect sales tax

26. REMOTE SALE
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OH or NV Stockport, IA
Collect sales tax

27. CALCULATING SALES TAX
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28. COLLECTION LOGIC
• Buyer’s state determines tax rate (sourcing)
• Tax rate usually = sum of applicable rates
• State
• Local
• Other (i.e., education, transportation)
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29. ORIGIN VS. DESTINATION SOURCING
• Origin-based state
• Tax rate = seller’s location
• One rate for entire state
• Destination-based state
• Tax rate = where item is shipped
• Variable rate
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31. 31

32. FILING RETURNS
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33. FILING TO THE STATES
• Filing deadlines usually tied to sales volume
• Annual, semi-annual, quarterly, monthly
• Deadlines typically fall on 15-30th of the month
• The more you collect, the more often you pay
• Combine and file a single return per state
• Not separate returns per channel
• File zero returns!
• When you’ve collected $0 in sales tax
January 11, 2016Copyright © 2016 TaxJar. TaxJar is a trademark of TPS Unlimited, Inc. 33

34. PAY ON TIME = $$
Some states have discounts
for on-time payment
• Generally between 1-2%
• It’s free money!
January 11, 2016Copyright © 2016 TaxJar. TaxJar is a trademark of TPS Unlimited, Inc. 34

35. PAY MORE IF YOU’RE LATE
All states have penalties for late payment
• Booo!
• Late payment charges
• Interest on what wasn’t paid
January 11, 2016Copyright © 2016 TaxJar. TaxJar is a trademark of TPS Unlimited, Inc. 35

36. FILING IN DESTINATION STATES
• Huge pain!
• States rely on you to divide up the money collected
• Calculate taxable sales & sales tax collected by jurisdiction
• Gets worse if you’re multi-channel
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37. January 11, 2016 37Copyright © 2016 TaxJar. TaxJar is a trademark of TPS Unlimited, Inc.

38. 5/25/2016 38

39. AUDITS
Save everything in case of audit
• If you file it, you have to prove it
• Exemption certs are crucial
• Check taxjar.com/states
January 11, 2016Copyright © 2016 TaxJar. TaxJar is a trademark of TPS Unlimited, Inc. 39

40. HOW ARE YOU FEELING?
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41. January 11, 2016 41Copyright © 2016 TaxJar. TaxJar is a trademark of TPS Unlimited, Inc.

42. “WHAT ARE MY OPTIONS?”
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43. Head-in-the-sand is not an option

44. Best effort > no effort

45. Don’t drain your
resources trying to
comply

46. “HOW DO I GET STARTED?”
January 11, 2016Copyright © 2016 TaxJar. TaxJar is a trademark of TPS Unlimited, Inc. 46

47. START HERE
• Comply in your home state
• Branch out to new states if necessary
• What’s your risk tolerance?
• Voluntary Disclosure if you have a history
• TaxJar can help
• Register, collect, and file
• New Year is perfect time to begin
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48. WHO WILL KNOW?
• The decision to comply is up to you
• Risk tolerance is your guide
• States are getting more desperate
• eCommerce is growing
• Legislation is looming
January 11, 2016Copyright © 2016 TaxJar. TaxJar is a trademark of TPS Unlimited, Inc. 48

49. WOOCOMMERCE & SALES TAX
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50. COLLECTING ON WOO
• Tax collection can be enabled
• Tax table (rates) has to be manually populated
• All you need for flat rate charging
• Doesn’t account for rate changes
• Can view tax collected
• Cannot view by state or jurisdiction
January 11, 2016Copyright © 2016 TaxJar. TaxJar is a trademark of TPS Unlimited, Inc. 50

51. “WHAT CAN TAXJAR DO FOR ME?”
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52. from calculations to reporting & filing
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REGISTRATIONS
& EDUCATION
SMARTCALCS REPORTING AUTOFILE
Painless sales tax compliance for online sellers,

53. Thousands of happy customers, including...
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54. ARE YOU COLLECTING ACCURATELY?

55. HOW MUCH SALES TAX DID YOU COLLECT BY JURISDICTION?
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56. ARE YOU COLLECTING ACCURATELY?

57. HOW LONG DOES IT TAKE YOU TO FILE?

58. GET STARTED…FOR FREE!
• taxjar.com
• woothemes.com
• 30-day free trial (no credit card required)
• Monthly or annual subscriptions
• Pricing based on transaction/calculation volume
• Starts at $19/month for 1k transactions
• $19.95 per return
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