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U.S. sales tax is a state and local consumption tax, not a federal system, creating thousands of jurisdictions with varying rates and rules. Businesses must understand taxability of goods, services, and exemptions, plus whether they establish nexus.
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Nexus determines sales tax obligations and can arise from physical presence, economic thresholds, or digital activities. Remote sellers, including international businesses, must comply with state laws, particularly after the 2018 Wayfair decision expanded states’ enforcement powers.
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Compliance requires obtaining an EIN, registering in relevant states, determining customer locations, charging the correct tax, issuing compliant invoices, and filing timely returns. Zero reports may be necessary even when no taxable sales occur.
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Automation tools like Quaderno simplify compliance by calculating correct tax rates, monitoring thresholds, issuing invoices, tracking customer location evidence, and alerting businesses to tax changes worldwide, allowing companies to focus on growth rather than administrative burdens.
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