The Agony and Ecstasy of Business Expansion

Posted by Mary Thomas on Jan 5, 2017 11:00:00 AM

business-expansion.jpgWhen deciding to enter another jurisdiction or expand service offerings, it is imperative that a taxpayer understand their “new” tax responsibilities.

The correct tax treatment of a transaction is governed by the laws of the jurisdiction in which the transaction occurs. What may be taxable in one state may not be taxable in another state. Also, it is typical for sales/use tax rates to vary. The time to research the matter is before entering the jurisdiction or shortly thereafter, i.e. before the mistake are (1) material and (2) discovered by the taxing authority.

Each state, and sometimes cities and other jurisdictions within a state, have their own distinct tax rules. It is your responsibility to know and comply with the rules that apply to your transaction in the appropriate jurisdiction. Of course, the analysis is a lot easier if you don’t have nexus, i.e. enough contact in the jurisdiction to trigger tax collection and remittance responsibilities.

Topics: Sales Tax

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