Latest Blog Post

Economic Nexus Puts Spotlight on Exemption Certificates

Companies with tax exempt sales are not immune to economic nexus requirements, making exemption certificate management more important than ever.  Manufacturers, for example, may now have new registration requirements in some states if economic nexus thresholds are met. Many states measure these thresholds based on total gross sales (taxable and non-taxable). Some states even require companies that make wholesale-only sales to register. 

Make no mistake, most states are requiring remote sellers, including manufacturers, who meet economic nexus requirements to either collect sales tax for in-state transactions or maintain valid exemption certificates from customers.  

Lack of exemption certificates is typically the largest area of assessment under a sales tax audit. A good system needs to be in place to collect, validate, store and manage these documents.  

For a list of states with economic nexus laws, as well as the thresholds, look at Cherry Bekaert's free Nexus ChartsCherry Bekaert's Nexus ChartsHere are important questions to answer about your company's exemption certificate management procedures:

1. When were exemption certificates last reviewed?
Many state exemption certificates are only good for three years. Even if they do not expire, it is a good idea to periodically review your documentation to support all exempt sales. Often times when a new customer is set up, an exemption certificate will be received for State A; however, after doing business with them for many years, you are selling products into States A,B,C,D, and E. Do you have certificates to cover states B-E?

Economic Nexus Puts Spotlight on Exemption Certificates

Companies with tax exempt sales are not immune to economic nexus requirements, making exemption certificate management more...

Lauren Stinson, CMI
By Lauren Stinson, CMI
on May 29, 2019
How Trade Shows Trigger Sales Tax Nexus

In many states, attending trade shows can create sales tax nexus, requiring sellers to collect and remit sales tax to the...

Lauren Stinson, CMI
By Lauren Stinson, CMI
on April 18, 2019
Avoiding the Biggest Sales Tax Risks for Manufacturers

Where should a manufacturer start looking for sales and use tax mistakes that are wasting money and increasing risks for...

Lauren Stinson, CMI
By Lauren Stinson, CMI
on October 29, 2018
Is Now the Right Time for Do-It-Yourself Sales Tax Compliance?

On June 21, 2018, the Supreme Court of the United States (“SCOTUS”) issued their decision in the case of South Dakota v....

Terrisha Pulte, CMI
By Terrisha Pulte, CMI
on August 06, 2018
Best Practices to Navigate the Post-Wayfair World

Over the last months, plenty of attention has been focused on the enormous impact to sales and use tax from the Supreme...

Lauren Stinson, CMI
By Lauren Stinson, CMI
on July 27, 2018
What Do Manufacturers Need to Know about the Wayfair Decision?

Nexus suddenly appeared on many manufacturers’ radars when the Supreme Court decided with South Dakota vs Wayfair case to...

Lauren Stinson, CMI
By Lauren Stinson, CMI
on July 12, 2018

Leave a comment

Written by