National audit, tax, advisory and risk firm Crowe is warning businesses that sell goods and services into the USA that they may now be required to register and pay US Sales Tax in each US state where they have customers.
The issue facing UK companies stems from the Wayfair Supreme Court decision which creates an obligation for businesses to consider if they have an “economic nexus” – ie – directs economic activity or has income from customers in that US state.
If there is such a link, then US Sales Tax could become payable, together with an obligation to register and render returns. It is possible that US state income taxes could be payable as well.
Chris Mould, Audit Partner in the Cheltenham office of Crowe, said: “It is worth noting that there remains significant uncertainty about the scope of the Sales Tax rule changes, the different criteria for what constitutes an ‘economic activity’ and whether there may be retrospective effect.
“Businesses should be aware that each State sets its own rules, which is likely to lead to inconsistencies and a need to monitor developments.
“For now, Crowe recommends reviewing in what States you have made sales and monitoring developments in the laws and guidance for those States as to what constitutes an ‘economic nexus’.”
He said that Crowe was already advising UK companies who sell in the US through Crowe’s global network of offices.
“For sales tax background purposes, for those states which have enacted Wayfair statutes, the typical thresholds are 200 transactions or $100,000 in annual sales.
“However, it is vital to have access to local knowledge, such as we can provide through our Crowe global network via our partners in the US.”