Understand how the US state sales tax laws impact your purchases and how you can achieve compliance with your state and local taxable jurisdictions.
Please note sales tax only applies to those VAAs in the US in specified states. To see if you are in one of those states, please follow the decision tree in "How Do You Proceed" below.
SALES TAX NEWS UPDATE! TTI Success Insights hired a sales tax consulting firm to research how IDS reports should be classified in various states. Based on their research, IDS reports will be reclassified from a SaaS product to Information Services. This means that more states will now exempt IDS reports from taxation even without you completing a Certificate of Exemption with TTI Success Insights. Be sure to see the updated chart below to check your state.
The main points from this article are:
- Starting January 1st, 2021, TTI SI will check if taxes need to be collected on invoices and certain products in the 23 states TTI SI has economic nexus.
- Not all products TTI SI sells need to have taxes collected. See the chart in "Taxable Products and Services."
- To exempt all products sold to you, you need to have a “signed” Certificate of Exemption on file with TTI Success Insights.
- If IDS reports are currently exempt in your state and you don’t mind having any tangible products you buy from TTI SI taxed, you need to do nothing.
- Use the flowchart in “How Do You Proceed” to help decide if you need to get a sales tax license if you don’t already have one.
Have a question on this? Check out our FAQ here!
Background - Why Now?
Until recently it has been common to avoid sales tax on interstate sales. A product could be shipped from a seller in Arizona to a buyer in another state and no sales tax would be paid to either state. In the past, state taxing authorities relied on a three-way test - sales within that state, employees present in that state and physical assets located within that state - to determine if a business located in another state was required to collect and pay sales taxes to that state, commonly referred to as “nexus.”
As catalog and e-commerce grew, the states began to discard the old three-way test in favor of a single factor test – sales within that state. Sellers resisted the changes made by the states and many lawsuits were filed. The matter was settled by the U.S. Supreme Court in June 2018.
The Supreme Court, in its South Dakota vs Wayfair decision, overruled the physical presence rule and determined that a remote seller’s economic and virtual ties to a state could be a sufficient basis for nexus. This is called economic nexus.
Sales tax nexus is the connection between a seller and a state that requires the seller to register then collect and remit sales tax in the state. Certain business activities, including having a physical presence or reaching a certain sales threshold, may establish nexus with the state.
As a result of these findings, changes in what is subject to sales tax and aggressive pursuit of tax revenue by the states, TTI Success Insights will be working with Avalara, a firm who specializes in US State Sales Tax compliance. Avalara will provide expertise on a multitude of issues including if a sale is taxable, where it is taxable, the amount of the tax (if any), filing the appropriate forms and remitting any tax that might be owed.
Certain sales are exempt from sales tax. Each state has its own rules defining what sales are, or are not, exempt from sales tax. In addition, each state has its own rules and forms for resale certificates or exemption certificates.
As a part of managing TTI Success Insights’ sales tax compliance, Avalara will be maintaining a file of exemption/resale certificates through Avalara CertCapture. Each time TTI Success Insights prepares an invoice Avalara will automatically check to see if a current exemption/resale certificate is on file. If it is, the sale will not be taxable. If there is not a certificate on file, the items listed on the invoice will be subject to the sales tax laws of the state of the purchaser.
What does this mean for you?
In order for your purchases to qualify as a resale or exempt sale, TTI Success Insights will be obtaining a valid exemption/resale certificate from VAAs in specific states. If you need to apply for a sales tax permit, see your state’s URL.
TTI Success Insights, as the seller, has a relationship with you, the Value Add Associate, not your clients. As such, TTI Success Insights is responsible for taxing VAAs in the appropriate states. TTI Success Insights has sales in specific states that meet the new Sales Tax Nexus Laws enacted in 2017 and upheld by the Supreme Court in 2018. This requires the seller to collect and remit sales tax on taxable items in specific states.
Beginning January 1, 2021, sales from taxable states (usage in December 2020, invoiced in early January 2021) will be subject to the sales tax rules. TTI Success Insights intends to treat all sales to VAAs who have a valid exemption/resale certificate on file through Avalara CertCapture as “sales for resale” and therefore tax-exempt unless indicated otherwise. If you indicate to us that you do not intend to resell the product you are buying from us, that is you use the product in the operation of your own business, TTI Success Insights will treat the sale as taxable.
The TTI Success Insights invoicing system will automatically charge sales tax in the “ship to” state. If there is no “ship to” address, the system will default to charging sales tax in the “bill to” state. VAAs with different addresses for billing and shipping will need exemption/resale certificates for all “ship to” addresses to avoid being charged sales tax.
State Sales Tax Links
The below list includes the states of which TTI Success Insights will be complying for taxation purposes. If your state is not listed, then this is an indication that TTI Success Insights is not required to file with that state at this time. Included below you will find the state listed, the name of the taxation department, the phone number and the hyperlink to visit the state's taxation administration website.
Arizona Department of Revenue at (602) 255-3381 https://azdor.gov/transaction-privilege-tax/tpt-license/applying-tpt-license
California Department of Tax and Fee Administration at (800) 400-7115
https://onlineservices.cdtfa.ca.gov/_/
Colorado Department of Revenue at (303) 238-7378
https://www.colorado.gov/revenueonline/_/
Connecticut Department of Revenue Services at (860) 297-5962
https://drsbustax.ct.gov/AUT/welcomebusiness.aspx
Florida Department of Revenue contact center at (850) 488-6800 or you may reach the Registration Division at (850) 717-6628
http://floridarevenue.com/dor/taxes/registration.html
Georgia Department of Revenue contact center at (877) 423-6711
https:llgtc.dor.ga.gov
Idaho State Tax Commission at (208) 334-7660
https://idahotap.gentax.com/TAP/_/
Illinois Department of Revenue at (217) 785-3707
https://mytax.illinois.gov/_/
Indiana Department of Revenue at (317) 233-4015
https://www.in.gov/dor/
Maryland Central Registration Unit at (410) 260-7980
https://interactive.marylandtaxes.gov/Business/bFile/OSC/SelectApp.aspx
Massachusetts Department of Revenue at (617) 887-6367
https://mtc.dor.state.ma.us/mtc/_/
Michigan Department of Revenue at (517)-636-6925
https://www.michigan.gov/taxes
Minnesota Department of Revenue at (651)-282-5225
https://www.revenue.state.mn.us
Missouri Department of Revenue at (573) 751-2836
https://mytax.mo.gov/rptp/portal/individual/register-taxpayer-user
New York State Department of Taxation and Finance at (518) 485-2889
https://my.ny.gov/Dashboard/dashboard.xhtml
North Carolina State Department of Taxation and Finance at (877) 252-3252
https://www.ncdor.gov
Ohio Department of Revenue at (503) 378-4988
https://tax.ohio.gov/wps/portal/gov/tax/
Pennsylvania Department of Revenue at (717) 787-1064
https://www.pa100.state.pa.us/ESignaturePA/Account/LogOn
Tennessee Comptroller of Public Accounts at (615) 253-0600
https://www.tn.gov/revenue
Texas Comptroller of Public Accounts at 800-252-5555
https://mycpa.cpa.state.tx.us/securitymp1portal/displayLoginUser.do
Virginia Department of Taxation at (804) 367-8037
https://www.ireg.tax.virginia.gov/VTOL/tax/Login.xhtml
Washington Department of Taxation at (360) 705-6741
https://dor.wa.gov/
Wisconsin Department of Taxation at (608) 266-2776
https://revenue.wi.gov
Taxable Products / Services
In some states, Information Services products such as reports delivered through IDS are taxable. All items such as DISC Universal Language Manuals, posters, and any other tangible goods are required to be taxed. Some states require a small tax, some a larger tax, and some require no tax. The table below shows the respective tax guidelines by code and product for each state with which TTI Success Insights will comply.
| Avalara Code | SI010004 | ST087634 | ST080000 | P0000000 | OD020000 |
| Descriptor | Information Services (IDS Reports) | Online Training (LEARN & Virtual Certification Training) | Training and Seminars | Tangible | Dues / Fees |
| Arizona | No | Taxable (new) | No | Taxable | Taxable |
| California | No | No | No | Taxable | Taxable |
| Colorado | No ** | No | No | Taxable | No ** |
| Connecticut | Taxable @ 1% rate | Taxable | Taxable | Taxable | No |
| Florida | No | No | No | Taxable | Taxable |
| Georgia | No | No | No | Taxable | No |
| Idaho | No | No | No | Taxable | Taxable |
| Illinois | No | No | No | Taxable | No |
| Indiana | No | No | No | Taxable | Taxable |
| Maryland | No | Taxable (new) | No | Taxable | No |
| Massachusetts | No | No | No | Taxable | Taxable |
| Michigan | No | No | No | Taxable | No |
| Minnesota | No | Taxable (new) | No | Taxable | Taxable |
| Missouri | No | No | No | Taxable | No |
| New York | No | No | No | Taxable | Taxable |
| North Carolina | No | No | No | Taxable | No |
| Ohio | Taxable | Taxable (new) | No | Taxable | Taxable |
| Pennsylvania | No | Taxable (new) | No | Taxable | Taxable |
| Tennessee | No | No | No | Taxable | No |
| Texas | No | No | No | Taxable | Taxable |
| Virginia | No | No | No | Taxable | Taxable |
| Washington | No | No | No | Taxable | Taxable |
| Wisconsin | No | No | No | Taxable | Taxable |
No** indicates some local jurisdiction taxes may apply.
Please note that this tax transaction is between TTI Success Insights (Seller) and you, the Value Added Associate. As a business owner, it is your obligation to tax or not tax your clients based on your relationship with them. It is recommended that you seek guidance from your CPA or taxation expert.
How Do I Proceed From Here?
You will need to use CertCapture to complete a Certification form and certify to us that you have a Sales Tax Permit for the states needed. You will receive an email from Avalara CertCapture with your required next steps and a personalized URL in that email.
You have been and will continue to be responsible for collecting, reporting, and remitting sales taxes on sales you make to your clients according to the laws of the states your clients are located. Since there is significant variation between states, variations in the definition of taxable products, and complex laws, it is strongly recommended that you seek the advice of your accountant or other tax professional.
The below decision tree may help you to decide what actions you need to take.
