With COVID-19 creating severe economic hardships for brick-and-mortar stores, Ecommerce seems the only viable option for such businesses. However, while Ecommerce comes with its own benefits, there are some things that make it challenging.
Leading financial experts point out that navigating the maze of sales tax norms, licensing, registrations, and adhering to other norms makes the entire process a bit overwhelming.
While big E-commerce platforms like Amazon, Walmart, and eBay have a battery of lawyers and consultants to help them, smaller businesses and platforms do not. This makes it not only tough but also complex and confusing to manage how rules and regulations work.
Nexus Tax Laws of 2018 and why Ecommerce Businesses should know about it
In 2018, the Supreme Court made probably one of its most significant judgments in the Wayfair versus State of South Dakota.
- It ruled that businesses that do not have a physical presence in states, yet sell to the citizens of the state and generate revenues are liable to pay Nexus Taxes.
- This was qualified by the statement, that a certain threshold of sales, revenues, and customers needs to be crossed before a business is liable to pay nexus taxes.
- The ruling became even more controversial when the Supreme Court left it to the states to fix the threshold. While some states have fixed it at a level that is understandable, others have gone gung-ho in raising taxes that do not seem fair.
By October 2019, 40 states of the American Union had Nexus Laws in place. It should be pointed out that court filings have been done to come up with a more detailed analysis of the taxes and are pending with the Supreme Court.
The Implications of Not Paying Nexus Taxes for Businesses
If you are a business that is not familiar with nexus laws and taxes, you need to hire the best sales tax consulting. We spoke to some of the best ones and found out about what happens if a business fails to pay nexus taxes.
- Fines and Penalties-
Inability to file for and pay nexus taxes can result in a state imposing fines, penalties, and interests on the tax due. In some states, this can go all the way back to the time when the Nexus Laws came into effect for the first time.
- License Cancellation-
If even after repeated queries and notices a business fails to clear its nexus taxes, the state can cancel the license and registration of the business operating within the state. While this looks quite harsh and is considered the final punishment, it does take place.
- Unwanted Harassment-
Government departments are connected and frequently work with one another to pressure businesses and entrepreneurs. This is why you can expect to receive call-ups and notices from other departments that are simply to harass the daylights out of you and your business.
The Available Options Open to Ecommerce Businesses
Unless the Supreme Court comes up with a new judgment that is deemed fair, Ecommerce businesses need to structure their tax filing processes in an organized fashion.
While it may be difficult for entrepreneurs to focus so much time on just this one aspect, they can always opt for help. Working with a seasoned and professional accountant or firm can allow them to deal with all the paperwork.
Using technology to stay on top of the game can also reduce the risks and errors that are part and parcel of the filing process. Businesses need to understand that Nexus Taxes are important and that they would need to adhere to the same at all costs.
I’m a 20-something stay-at-home mother and wife. I have an amazing husband, a beautiful daughter, two loving dogs, and a lazy cat. I wouldn’t change my life for anything! I love to read, listen to music, cook and blog!
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