Sales tax is what a company owes the state for sales made within it and the burden is normally passed onto the consumer as an additional mark up on the price at the time of purchase. A sales tax calculator can be used to calculate the final price before time of purchase.
The sales tax calculator algorithm is easily explained as an additional percentage per dollar. So if the sales tax is four percent, the final cost of an one dollar item would be one dollar and four cents, a two dollar items final cost would be two dollars and eight cents.
Sales Tax Nexus
Any time sales tax law comes up matters can get a little bit complicated. Then there is the question of nexus and what exactly sales tax nexus is. The simple explanation is that sales tax nexus is the relationship between a state and a private entity such as a corporation. The nexus is part of the state law that indicates whether a certain business is required to pay tax in a particular state or not.
Wayfair Sales Tax Case
A good example is the wayfair sales tax case, in which the online corporation Wayfair was brought to court to settle whether they owed taxes to the state or not. The ruling in this case was that a state can demand a seller without a physical presence in the state to pay taxes if a certain number of transactions or amount of revenue is accrued. The Supreme Court decided that 200 transactions or $100,000 in net sales was grounds for a state to demand taxes be owed to them.
Sales Tax Deduction
Many states have implemented a sales tax on goods in the form of a sales tax law and it is illegal for a company not to report or pay the taxes on sold items. As explained prior, normally the corporation will pass the tax burden onto the buyer however states have allowed a sales tax deduction from state and local taxes to benefit consumers.
By using itemized deductions a consumer can claim sales tax paid over the course of the year and receive a refund check or lower the overall cost of their taxes. Sales tax deductions should never be overlooked, especially in years where a consumer paid large amounts of sales tax.
Sales Tax Outsourcing
There are many companies that exist to handle the burdensome tax forms for corporations at the end of the year. By sending taxes to a company that specializes in that area not only is time saved but their amount of experience can benefit a corporation because these companies may find ways to cut the amount that is owed.
The sheer amount of transactions that certain companies will make in a given year can be mind boggling and employees may not understand the intricacies of tax law like a company that is dedicated to that alone so sales tax outsourcing has become a common practice among corporations.
Conclusion
Sales tax can be a complicated matter for anyone but hopefully with the help of this article it can be a little better understood. It is a subject most probably wish would disappear but it is unlikely to happen, at least not in the foreseeable future