Understand the sales tax implications immediately. Non-reciprocity means you’ll collect sales tax in states where you don’t have nexus, but those states don’t reciprocate the exemption you might have in your home state. For example, if your business is in Nevada and you sell to a customer in Arizona, and Arizona doesn’t reciprocate Nevada’s sales tax exemption, you’ll collect Arizona sales tax.
Identifying Non-Reciprocal States
Check each state’s Department of Revenue website for specific reciprocal agreements. The information is usually available in their sales tax guidance sections. These agreements are often presented as tables comparing states and their reciprocity status. Don’t rely on outdated information; update your knowledge annually. Consider using tax compliance software; many automatically handle these complexities.
Managing Sales Tax Obligations in Non-Reciprocal States
Register for sales tax permits in any state where you have sales and no reciprocity exists. Accurately track sales in each state, separating taxable transactions from exempt ones based on each state’s specific guidelines. File and remit sales tax reports on time; penalties for late filing can be substantial. Utilize tax automation software to streamline compliance and reduce errors. Regularly review your tax strategies with a tax professional to address any emerging issues or changes in state regulations.
