10 Critical Sales Tax Questions That Foreign E-Commerce Sellers Must Ask
Foreign Amazon sellers must address these critical sales tax questions below. Obtaining the best answers for your situation is a must for your U.S. e-commerce success. You also must know the proper sequence of steps to take for sales tax compliance. Here are our 10 Critical Sales Tax Questions for you to ask as a foreign e-commerce seller:
Even with 44 marketplace nexus states, there is still a responsibility to register in a few states and even collect and remit in two states.
2. Are Federal U.S. Taxes Required to be Paid by Foreign E-Commerce Sellers in the U.S.?
IRS Tax Treaties with other countries are key components in getting to the right answer.
3. Is an EIN/Tax ID via the IRS Required to Collect and Remit U.S. Sales Tax?
Before you ring the bell with the IRS, you must understand why and when this is required. Most don’t fill out the SS4 application properly, and fixing it is a nightmare with the IRS. Learn the issues to avoid here.
4. What are the Best Options if Behind with U.S. Sales Tax?
Many options may get you in serious trouble. However, only a few options are the right choice. The first step is a sales tax nexus analysis. Learn more here.
5. Why is a U.S. Virtual Address Recommended Before You Apply for U.S. Sales Tax Permits?
This is one of the biggest frustrations that every seller with a foreign address will experience. Fortunately, this can be avoided.
6. Are State Tax Returns Required in Addition to Sales Tax Returns?
This may trigger unnecessary state audits down the road.
7. Is a U.S. Bank Account Recommended for Remitting Sales Tax?
This will simplify your sales tax compliance even if a few U.S. states don’t have marketplace nexus. This is only available with a U.S. entity.
8. How Long Does it take to Apply for Sales Tax Permits as a Foreign E-Commerce Seller?
This will be very expensive if you don’t get your timing right. Don’t assume streamline is a great free alternative. It is actually a must slower process even if your “account” is set up right away. Not having an SSN or ITIN will take much longer in several states as a paper application is required.
9. Will I be able to use a Remitting Software Company to Remit Sales Tax at the Lowest Rate to File State Returns? Will this crush your budget for compliance?
Your costs will go from $20 per return to $50 or $100 per return if you are not structured properly in the U.S. The real costs come into play when you are behind on sales tax, both with software costs and costs to file past sales tax returns, plus the past sales tax, penalties, and interest due.
10. How will the states go after you for past sales tax due?
It is a known issue that foreign sellers are not as concerned about past sales tax because of the difficulty to chase a seller for sales tax in another country. Take notice that California has not started to freeze funds from a U.S. bank account for sellers. What happens if states can do that with your Amazon Seller Central account directly? The key is compliance and diversification to protect your business.
The best way to receive more insights into these questions and their importance as a foreign seller is to schedule a strategy session on your best options. Imagine having clarity in 30-45 minutes so you may move forward with confidence. Learn more here.