The free tool creates a detailed list of the sales tax liability of the individual US states for companies. The data will be made available by email.

The term nexus stands for terms such as context, connection or interdependence. Economically, the concept of a nexus arises from the US Constitution and means that there are enough tax-relevant activities in one area of application to be able to tax a person or a company. The free online tool "Sales Tax Risk Assessment" from Avalara helps companies to check where they have created such an economic nexus through sales in the USA and therefore have to pay sales tax. The tool creates a detailed list of the sales tax liability of the individual states of the USA and sends this to the companies by e-mail. This should make it possible to quickly understand in which countries the sales are likely to result in sales tax obligations.

The background to this is the ruling in the South Dakota versus Wayfair, Inc. lawsuit from June 2018, according to which states can also collect sales tax from online retailers. Forty-four states and the District of Columbia have passed sales tax laws that require companies to use their customers' location as part of setting compliance requirements. In addition, individual states have begun enforcing laws for online retailers to collect sales tax on third-party online marketplace sales. And 41 states and the District of Columbia have passed sales tax laws that require online retailers to collect and pay sales tax on behalf of marketplace sellers.

According to Avalara, the online tool �Sales Tax Risk Assessment� helps tax professionals and (online) companies that make sales in the USA to understand and deal with potential sales tax obligations. In a first step, the companies indicate on the website of the online tool where they make sales and where they transfer taxes. After entering the data, the company is then notified by email where its sales transactions may result in a tax obligation: Users receive a detailed PDF report on where they have likely created an economic nexus or where there is a risk of creating one. A color-coded map should also visualize the tax risk.

Source: www.avalara.com

Image source : ec.europa.eu