Sign South Dakota Profit Sharing Agreement Template Now

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everyone sharing with PwC well first of many fast cast that will be offering to help educate you on this brave new world of sales text you're probably here spending these next 15 minutes together because you've heard about or maybe even experienced some of the effects of the rapidly changing world of sales tax and you want to know what to do about it you're going to educate you and tell you about a new way to feel just as confident as this guy about how you're staying compliant with sales tax laws everywhere that your company sells so what exactly am I on about well we know that with the rise of e-commerce and the ability for all types of companies from SAS software vendors to old line retailers to sell online more and more business is being done remotely also know that almost every state in the u.s. relies on sales tax revenue to fund a large part of their budgets has shifted from consumers running down to the corner store to grab whatever they need or buying the cd-rom to install software remember those tangible transactions have become a smaller share of the economy and that has meant that states began to see declines in sales tax revenue because the laws were unclear about how to tax these new online digital transactions looking for ways to make sure their state was able to collect sales tax on this new modern way of buying and selling a whole lot of stuff all culminated in Supreme Court decision called South Dakota versus Wayfarer in fact in our next fast cast I'm going to tell you a whole lot more about that case and get into some of the underlying principles it examined and that got us to where we are today Cass will be at this same time one week from today I promise it's going to be a fun and enlightening one so make sure to sign up at the link that we're going to email to you after this event even if you can't join live sign up and we'll send you the recording afterward all right so the Supreme Court's decision in South Dakota versus Wayfarer in June of 2018 cleared the way for states to start changing their laws to get you the remote seller to have to collect sales tax when you sell the customers in those states simple right well we wouldn't be together right now if it were sort of it is that each of the 45 states in the District of Columbia the charge sales tax has come up with a different set of rules that you the remote seller have to follow in order to legally sell in that state in fact they're still coming up with new laws and regulations going back and changing a lot of existing ones too here are just a handful examples of some of the new or modified laws that states have put in place you can see that shortly after the Supreme Court decision in June of 2018 Mississippi implemented a law that said if you sell more than two hundred and fifty thousand dollars in that state in the prior twelve months we've triggered Nexus and you have a collection requirement shortly thereafter North Carolina came out with a different law that said a hundred thousand dollars or two hundred or more separate transactions would trigger that obligation then just a month later Connecticut came out with a different law that said two hundred and fifty thousand dollars and two hundred transactions in the previous or current calendar year and then in July of this year Connecticut lowered its threshold to $100,000 and there's a whole bunch more examples just like that and I'm not going to go into a ton of detail on those but I do want to talk a little bit about Kansas you might have heard about the recent sales tax law changes there and they're a really good example of just how dynamic and frankly challenging all of these changes are for anyone who Styles remotely quick summary of what's going on in Kansas is that their Department of Revenue issued a notice that online and other remote sellers with no physical presence in Kansas need to start collecting moving sales tax but that Department of Revenue didn't put a threshold on a requirement so strict reading of the notice would require everyone outside of Kansas to register with the state and collect sales tax if they sell even $1 worth of goods in the state the general has weighed in and said that the policy is invalid in situation an example of just how challenging it is to follow all the changing tax rules it's not just economic Nexus rules that are changing dates are changing the definition of what is taxable as well for example Connecticut now taxes digital services and they're not alone nineteen states impose sales tax on shaft products and the trend is definitely that more states are going to be looking at that and likely implementing laws around tax ability of sass this all adds up to what the Street Journal editorial board is calling a revenue grab on small businesses it's worth reading our editorial so we're going to send you a link to that that you can read the whole piece even if you don't have a wall street journal subscription so look for that email from us after after this fast cast all right and now we've got a poll question so I'm going to open up this survey and I'll leave it open for about a minute so that you can answer the question how many states are you currently collecting filing and remitting sales tax in go ahead and click an answer there leave the poll open just another moment give everyone a chance to answer move forward you okay I'm going to close the survey and we'll move on thanks for that thanks for going to an answering that question little deeper into how states think about the rules when it comes to sales tax for out-of-state sellers dates look at whether you have Nexus when determining whether you are required to be collecting and paying sales tax and Nexus comes in basically two flavors economic and physical presence so economic Nexus drives the tax collection obligation based on sales revenue and/or sales transactions whereas physical presence drives a tax collection obligation based on a seller's physical presence in a state economic next is essentially a new concept that has become very important since the Supreme Court's Wayfair decision Dakotah was the plaintiff in won that case a number of states decided just to follow South Dakota's lead in terms of implementing a set of economic Nexus rules and in South Dakota basically the rules are that businesses without a physical presence would trigger economic Nexus if they meet one or both of these criteria they've sold over $100,000 in gross revenue in the previous or current calendar year or they've made a sales for delivery into South Dakota consisting of 200 or more separate transaction but other states decided to take another approach and use different thresholds or completely different definitions of economic Nexus then as we saw a few slides ago states continue to change their laws around all of this as well physical presence and how it establishes Nexus has been paid to economic Nexus since the Wayfarer decision we can't forget physical presence because it still applies even in the absence of economic Nexus and it's not as straightforward as you might think even if you don't have an office or warehouse or employees in the state there are a number of ways that states will consider you to have physical presence there are way too many of those to get into today but we are going to go into more depth about physical presence in our next PATH cast so again make sure to sign up for that when you see now the email come through from us alright let's switch gears and talk about why this is all so urgent this is best explained through the concept of the liability clock what we mean by this is that every day you're selling in a state where you may have triggered Nexus but you don't know it and haven't collected sales tax from customers in that state you're accruing liability let's go through an example to illustrate this so we'll take our hypothetical example here and imagine that a state in acts new legislation on January 1 2019 they set an economic threshold of $100,000 or more but of course you're unaware of this legislation On June 27 you exceed the hundred thousand dollar sales threshold over the past twelve months in the state so by law you're obligated to collect sales tax in this state on new transactions starting on that June 27th date but you don't do that because you don't even know that there's this law or that you triggered Nexus ended up generating another 150 thousand dollars in sales after June 27th but again you're not collecting sales tax on those transactions because you're unaware and then on December 15th the state sends you a notice requiring you to pay out of pocket for all the sales tax on one hundred and fifty thousand dollars in sales plus penalties and interest let's look at this same hypothetical example in terms of dollars chart on the left we have sales by month for the whole year in that state and we know that we triggered Nexus at the end of June in this example so from July onward we should be collecting sales tax on every transaction you can see the sales tax is that orange bar on top of those red monthly sales numbers but since we don't know that we triggered Nexus we haven't been collecting so the state sends a tax notice in December and it's going to require that we pay all of the sales tax the cumulative orange bar plus penalties plus interest and we didn't show any actual numbers here but these ratios that you see on screen the relative size of these bars are representative of the real world and you can see that it can add up to roughly the revenue in that state for an entire month that you have to pay out-of-pocket in terms of the under collected sales tax and penalties and interest clearly this is not something you want to leave to chance so what should you do to get out ahead of any sales tax exposure key steps to getting sales tax right one is you need to determine whether you've triggered Nexus as we've talked about number two is you also have to understand the text ability of all the products and services that you sell in the state right some products and services are taxable some are not so you have to understand that and depending on the state sometimes tax ability actually impacts your Nexus determination sometimes it doesn't so these first two boxes of Nexus and tax ability really have to be considered together and and when you do that you're essentially getting your full exposure understanding in that state once you understand those things third step is once you've determined where you actually do need to be collecting and filing you're emitting then you register with that date or those states and you can also remediate right so any obligations that you do have that you find out about because you're being proactive about it you can do those states and sometimes States will have amnesty programs or voluntary disclosure agreements that can help you remediate those liabilities that you have maybe reducing penalties or interest on the taxes owed after you've registered in the state you've remediated of course you should be collecting from your customers so you need a system that will add the appropriate sales tax to your invoices or the transactions you collect all that money and then the last step is to file on whatever the required Cadence's with that state and remit payments to the state for that and PwC can help you each step of the way we built tax verse a new cloud-based platform that it that is specifically for help for fast-growing companies especially small companies expanding into new states and what tax Hristov helps you understand where when and why you need to file in a given state so help you get registered and do that remediation I was talking about will help you implement a system to calculate sales tax on every transaction and prepare filings and remittances with our 170 plus years of tax experience so that wraps up this past cast we kept it to right around 15 minutes as promised I hope you learned something new and got a better sense for how to get ahead of your sales tax obligations and just as a reminder make sure to join us for next week's fast cast on the South Dakota versus wayfarer decision and physical presence and what it means for your business thank you