Do Foreign Companies Have to Deal with US Sales Tax?

TL;DR

Learn about sales tax nexus for international sellers in the US, including physical, economic, and marketplace nexus, and how to get compliant.

Transcript

hi this is kashim from electric gurus i hope you are all having a great day are you a non-us seller that want to sell into the us but are confused about what sales tax obligations you might have in this video i am going to tell you exactly what creates nexus for you meaning what creates obligation for you and how to get compliant with sales tax and... Read More

Key Insights

• 🌍 International sellers in the US need to be aware of physical, economic, and marketplace nexus.
• 🌍 Economic nexus is particularly important for international sellers and thresholds vary by state.
• 🆘 Conducting a nexus analysis can help determine registration obligations.
• 🚕 Avoid collecting sales tax before reaching nexus thresholds and registering in unnecessary states.
• ®️ Resale certificates can be obtained without registering in every state.
• 🫥 EIN number, choosing a state for registration, and having a US bank account and mailing address are important steps for compliance.
• 🈺 Mercury online banking offers an easy option for international businesses to open a US bank account.

Questions & Answers

Q: What are the three types of nexus that international sellers need to be aware of in the US?

The three types of nexus are physical nexus, economic nexus, and marketplace nexus. Physical nexus is created by having a physical presence or assets in the US. Economic nexus is based on sales revenue or transaction volume in a state. Marketplace nexus can be created for marketplace facilitators.

Q: How can I determine if I have economic nexus in a specific state as an international seller?

You can refer to a document called "10 Steps to Make Sure Sales Tax Doesn't Burn Down Your Business," which provides thresholds for economic nexus in each state. Compare your sales and transaction data to determine if you have hit the threshold in any state.

Q: Do I need to register and collect sales tax in all states?

No, you do not need to register everywhere. It is recommended to conduct a nexus analysis to identify the states where you have nexus and need to register. Not all businesses need to register in every state.

Q: Can I obtain a resale certificate without registering in every state?

Yes, there are other ways to get a resale certificate. One option is to use the Streamlined Sales Tax (SST) form or an MTC form. As a foreign seller, you can provide your passport number without a US identification number.

Summary & Key Takeaways

• International sellers entering the US market need to understand three types of nexus: physical, economic, and marketplace nexus.

• Physical nexus is created by having a presence or assets in the US, while economic nexus is based on sales revenue or transaction volume in a state.

• Marketplace sellers should be aware that marketplace nexus can also create obligations, but individual website sales should be considered separately.