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I am looking for either answers or a research source that will help me determine when I am required to collect sales tax. Company X sells a manufactured product all over the country; however, all of the manufacturing takes place in State X. Sometimes Company X provides for the installation of the product, but it mostly contracts a third party to perform the installation, and occasionally no service for installation is required. Thus, installation of the product depends on the clients. Company X sells the product to independent clients as well as cities and universities, for example. How can I determine which states will require Company X to collect sales tax and which ones won’t?
“Nexus” is the connection between a company and a state that requires the filing of tax returns.
By the way, since you mention installation services, you probably should consider income tax filing responsibilities as well as sales & use tax requirements. The nexus requirements vary by type of tax and also by state, but generally, installation can produce filing responsibilities for both types of taxes.
Also, if you determine that the company has been overlooking filing responsibilities, you should consider anonymous negotiations with the various states to abate prior years’ taxes, penalties, and interest. Otherwise, you could be looking at a significant assessment if you just “sign up” with the states.
If you need further help with the nexus determination or anonymous negotiations, contact firstname.lastname@example.org and we will be happy to assist.
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