Hey pen friends,
You may have heard about some new US sales tax laws starting to take effect. As “Empower through Education” is one of our core values, we wanted to explain some of these changes happening at Goulet Pens.
Why the change?
First, a quick background. Historically, you needed to have nexus in a state to collect & remit sales tax. Nexus was essentially defined as having a physical presence, like an office, warehouse, employee, or a brick & mortar store. For us, our physical presence is in Virginia, so we’ve only collected sales tax in Virginia. All other states were exempt from sales tax.
On June 21, 2018, the Supreme Court ruled in the South Dakota v Wayfair, Inc case that states can create what’s called “economic nexus.” This means that by transacting enough business in a state, regardless of whether you have a physical presence there, that action can create nexus, and thus trigger the requirement to collect & remit sales tax.
Each state has their own laws about what constitutes economic nexus, depending on order volume or revenue or other requirements, which also means not all retailers are affected equally. Over three dozen states have implemented laws since the Wayfair decision, and many more are currently working on legislation. It’s just a matter of time before all states implement economic nexus laws. We’ve consulted with a state & local tax-expert CPA to determine where we are liable.
What states are affected?
It’s going to be a bit of a rolling change, as each state’s laws kick into gear and we comply with registration.
Effective immediately (as of September 2018), we’ll be collecting & remitting sales tax in the following states:
- Rhode Island
- Virginia (though we’ve always been doing this, as this is where we are located!)
Effective October 1, 2018:
- New Jersey
- North Dakota
Effective November 1, 2018:
- North Carolina
- South Carolina
Effective December 1, 2018:
Effective January 1, 2019:
- West Virginia
Effective February 1, 2019:
- District of Columbia
- New York
Effective April 1, 2019:
Effective June 1, 2019:
Effective July 1, 2019:
- New Mexico
Effective August 1, 2019:
Effective October 1, 2019:
More states are continuing to work on legislation, so this isn’t a final or exhaustive list; it’s just what we know about as of today. (last updated 10/1/19)
We do not currently collect any taxes for countries outside the US, with the exception of the 10% GST for Australian orders (which went into effect July 1, 2018) and 15% GST for New Zealand orders (which went into effect December 1, 2019).
What kind of tax rate can I expect?
It varies by state, and even by city/county or what the items are. Some states tax shipping, some only tax the products. We have partnered with Avalara, a sales tax software, to do all the calculations in real-time. As you check out, you’ll see this in the final step.
Despite additional administrative/accounting costs on our end, we are just absorbing it and we are not planning on passing these costs on to you through product or shipping price increases.
We hope that you’ll continue shopping with us, and please don’t hesitate to let us know if you have any questions.