Security Business

MAY 2019

Find news and information for the executive corporate security director, CSO, facility manager and assets protection manager on issues of policy, products, incidents, risk management, threat assessments and preparedness.

Issue link: https://sdi.epubxp.com/i/1120225

Contents of this Issue

Navigation

Page 43 of 83

44 Security Business / www.SecurityInfoWatch.com / May 2019 Your Money residents; and, while a sales tax on goods has been around the longest and is generally the more commonly regulated, many sales taxes also apply to those providing services. The Wayfair ruling replaced the physical presence requirement for when states can tax remote sales and adopted an “economic nexus” standard based on the amount of business done in a state. The ruling suggested strongly that a South Dakota law requiring remote sellers meet thresholds of $100,000 in annual in-state sales or 200 transactions be followed. Soon, every security business may be required to collect sales and use taxes – even if the only connection to the state is a Web page and a customer; in fact, the business may have to collect sales tax even if there is no Web presence. While the rules vary from state to state, actively attending a trade show in a state or having representatives (who may not even be employees) can require collecting sales taxes. Sales taxes on services have only become common in recent years and are currently less likely to have specific regulations. Services are generally not taxed unless the service is specifically noted as taxable by the state. For example, in South Dakota, New Mexico, Hawaii and West Virginia, all services are considered taxable unless a specific exemption exists, similar to the sales tax rules for goods. For security businesses that provide goods or services that are exempt in a particular state, those exempt sales must be properly documented. Because most states structure their sales tax laws differently, the need to document exempt sales will likely impact many more security businesses offering services rather than those selling goods. Although not a simple task, security business purveyors of both goods and services will need to register in each state where their operations exceed the sales threshold. Enter the Nexus Despite many states being starved for revenue, economic nexus laws continue to rely on the volume of sales, the number of transactions, or both. Approximately 20 states with economic nexus share South Dakota’s $100,000 in sales, 200 transactions threshold. Remote sellers with less than $100,000 in sales or fewer than 200 transactions in the state usually do not have to collect and remit sales or use tax in the state. While it might appear relatively easy for a security business that sells only in its home state and South Dakota, businesses with customers in multiple economic nexus states face real challenges. Most economic nexus states closely follow South Dakota’s example, but several have adopted different thresholds. For example: • In Alabama, a remote seller must do more than $250,000 in sales in the state and engage in certain activities (e.g. solicitation) to trigger economic nexus. • In Connecticut, the threshold is at least $250,000 in revenue and 200 or more “retail” sales into the state as well as systematic solicitation in the state. • In Minnesota, the economic nexus threshold is 10 or more sales totaling $100,000 or 100 or more “retail’ sales. Obviously, determining when economic nexus has been established in a state is complicated by this lack of uniformity; and, once economic nexus has been established, the process for registering to do business varies from state to state. Soon, every security business may be required to collect sales and use taxes – even if the only connection to the state is a Web page and a customer; in fact, the business may have to collect sales tax even if there is no Web presence.

Articles in this issue

Links on this page

Archives of this issue

view archives of Security Business - MAY 2019