I just had a long email conversation with avalara
It does not do cash basis sales tax if your state requires/allows it, some do
It does destination based sales tax based on zip+4 - which if you understand zip+4 is just a location within a city. Zip+4 is used by the USPS to name mail routes, it does not indicate whether you are inside or outside the city limits
If you have sales tax free days, as long as everything is sales tax free, no problem, but if some of your items are not qualified - oops
Below is a link to the law from the State of NJ that 23 other states have agreed with.
My take on it is you are on the hook for prior uncollected sales tax that you didn’t charge. I could be wrong but that is how I read it.
What has not been addressed is the 800lb gorilla in the room!
Lets just say you meet the criteria to file a sales tax return that is not your home state. Now what. You file that sales tax return. That state knows you are now doing business there. Do you now have to file an income tax return & pay the state income taxes on the money earned in that state?
Why wouldn’t they want a piece of that pie, as well?
I do hope more states publish articles like this soon so there's ample time to prepare. It will get complicated, but hopefully local and state governments will come through with the proper documentation.
Absolutely agree. Reverb is collecting all sales tax. So I am in Texas. I usually collect these sales tax amounts. But if we sell an item through Reverb, Reverb is collecting it. Very confusing as I feel like I should be doing that for my state. And it kinda messes with my books. I don't like it.
It is already in effect. Every state has different rules about how much you can sell in amount or quantity before you need to collect sales tax for that state. Talk about making your head swirl...I don't even know how to keep track of every state like that.
I add the appropriate amount of Use Tax to items purchased online where the vendor did not charge any sales tax by increasing the amount of the item in the expense tab. I have an account I call Use Tax Payable and record a corresponding negative amount to that account, so the final amount of the bill is correct. I make a note in the memo field of the bill with the purchase price (amount before tax). Then when it comes time to pay quarterly sales tax, I run a quick report on Use Tax Payable account, which gives me a list of all the bills which had Use Tax Payable and can sum up the purchase prices I put in the memo column for each item. My state has a line on the Sales Tax reporting form to include Use Tax purchases, so I enter total of purchase prices on that line and pay use tax. I have to make Sales Tax Adjustment in QuickBooks and use the Use Tax Payable account for the adjustment. This is a Rube Goldberg way of doing things. When will QuickBooks have an easy way to do this ... just by checking a button ... and including Use Tax Payable account just like it has Sales Tax Payable? That would be a huge improvement for my business.