Have I screwed myself by not charging sales tax for out of state sales?

by tehcheez. Posted on Sep 13, 2020    1    7


I'm in Kentucky and have a small business that does less than 100k in sales a year, all online, and so far the only state I have been charging sales tax in is Kentucky.

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I looked at this website ( https://www.patriotsoftware.com/blog/accounting/sales-tax-laws-by-state/ ) and it seems like I don't have to charge sales tax unless I have a nexus in a state, and I currently think the only state I'll end up having one in is Minnesota since I've done about 8k in sales to that state and will probably hit the 10k mark by the end of the year.

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I have no employees, offices, inventory, anything in any other state except Kentucky. This is my first year of doing out of state sales and I'm kinda scared that I've royally fucked myself by not charging sales tax.


Comments

calemedia 2

You don’t pay state sales tax unless the sales within your state

Edit: unless it’s $100,000 in a different state

  tehcheez 1

That's what I thought but I had a freak out moment.

chrisldavis 2

Not true. The supreme court ruled a couple years ago that you must collect sales tax in any state in which you have an "economic nexus". Each state decides what determines an economic nexus, but almost all have settled on $100k in sales.

So the OP is fine for now, until he grows and sells more than $100k in another state.

vindico86 2

Is it not $100k sales OR 200 sales (orders) in another state?

chrisldavis 1

I’ve never seen anything about 200 orders but the info is freely available online. I’m in no danger of creating a nexus.

  tehcheez 1

Most states are 100k or 200 orders but some seem to have up to 250k and a couple states are as low as 10k

calemedia 2

I didn’t know that but $100k in each state is a long ways away lol but still good to know