TaxEsqBlog -by Ronald J. Cappuccio, J.D., LL.M.(Tax)

Does your business have to begin collecting sales tax on all out-of-state online sales? You’ve probably heard about the recent U.S. Supreme Court decision allowing state and local governments to impose sales taxes on more out-of-state online sales. The ruling in  South Dakota v. Wayfair, Inc.  is welcome news for brick-and-mortar retailers, who felt previous rulings gave an unfair advantage to their online competitors. And state and local governments are pleased to potentially be able to collect more sales tax. But for businesses with out-of-state online sales that haven’t had to collect sales tax from out-of-state customers in the past, the decision brings many questions and concerns. What the requirements used to be Even before  Wayfair , a state could require an out-of-state business to collect sales tax from its residents on online sales if the business had a “substantial nexus” — or connection — with the state. The nexus requirement is part of the Comm...

Nexus - When are you "Doing Business" in a State or Country? Google is one of the biggest collection of companies in the world. Wisely, Google has divided itself into many companies to deal with the different tax laws not only in the 50 States of the United States but in dealing with worldwide taxes. By using proper tax planning, Google is effectively avoiding taxes in many countries. In order to be subject to taxation in a given country, a business must have "nexus" in that country. The word Nexus comes from the same root as "connection". Typically that means a company must have an actual physical presence in the country. Google has been very wise in its tax planning. It has its main business in Bermuda, a low tax country, and in the Republic of Ireland, also a low tax country. Google has set up a separate entity in the United Kingdom as a "technology and marketing" company. The idea is that technical services are performed by the UK su...