I was doing a seminar in southern state a few years ago. And there was a young woman in the class who had just been handed the sales tax responsibilities for her company. She was in AP and, I'm guessing, just a few years out of school.
She was pretty sharp and stayed with me for the whole day. But at the end, when I started talking about nexus, she looked a little green. After the class, she came up to me.
Nice woman: "Uh, we sell fishing tackle* and we have only been filing in our state, no others."
Mean me: "Uh, huh - then what you sell is generally going to be taxable"
Nice woman: "Right. It certainly is in our state. Uh, we have independent sales reps that are all over the country. Do we have nexus in all of those states? They're independent contractors if that helps."
Mean me: "Probably in most of them. And the fact that they're independent contractors generally doesn't make any difference. Depending on the state, one or two visits a year will be enough to do it. In other states, they're a little more laid back. How often to your people visit the states?"
Nice woman: "Oh, way more than a few times a year. Every state has outdoor shows and fishing tournaments. Our people are at all of them."
Mean me: "I hate to say it, but I think you've got nexus in pretty much every state that has a sales tax. All of them."
Nice woman: "But we only sell off our website."
Mean me: "Doesn't make any difference. Sorry."
At this point in time, tears started flowing. I've been doing these seminars for over a decade and I have never made someone cry. I can only imagine how terrified she was. She was going to have to tell her boss that they have to go from filing a return in just one state, to filing returns in 45 more. Ugh.
I spent about 45 minutes with her after the class talking about her options, giving her names of consultants that could help, and generally how to go about dealing with this. Essentially, I was patting her on the shoulder and saying "there there." I truly ruined her day. And I never heard from her again.
Don't let nexus ruin your day. If you ship to multiple states, make sure of your nexus status NOW. Because we don't want your staff crying.
There's no crying in Sales Tax.
*Fishing tackle was not the product. I'm substituting here to protect they're identity. And I used fishing tackle because I have LOTS of fishing pictures.
The Sales Tax Guy http://salestaxguy.blogspot.com
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1 comment:
Such useful advice once again. Getting your head around all of this can be a big challenge. I was just like your nice lady when I started my new job last year. I'm getting there now, everything is much less daunting. But I still appreciate finding new tips and pointers along the way though.
Kathleen Gardner @ Bid2Fish
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