Sales tax questions

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#1
Andrew  
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CA
I have a client who sells cards online. It's a new business and I noticed that she didn't charge sales tax. She's in MI. I'm not well-versed in sales tax for an online business with clients all over the country but I think she should have charged sales tax.

In 2018, The Supreme Court decision in South Dakota versus Wayfair changed the way sales tax is collected. Rather than only being required to collect sales taxes in states where they had a physical presence, companies may now be required to collect sales taxes on all purchases, regardless of the state in which the company and consumer are located.

If she has a client in CA, FL and MI, to whom is the sales tax paid? MI dept of revenue? And sales tax is based on location of client. So even though her CA client gets charged the sales tax for CA location, the tax is paid to MI dept of revenue?

How to fix this year? Client obviously had no sales tax exemption and paid sales tax on her supplies. This is a small business, about 4K/year in income. Any help greatly appreciated.
 

#2
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North Carolina
Many states have thresholds similar, in principle, to those required by SD, which is $100,000 in the state or 200 transactions. Each state will have its rules on how that is calculated, eg, rolling twelve months or last four quarters. She may have an obligation in one state but not another. The Tax Book has a handy summary in its deluxe edition.

If she charges, eg, CA sales tax to a CA customer, she must remit to CA, not MI.

EDIT: Just realized only $4,000 in income. Doubt she has any obligation beyond MI. Only states that have a dollar amount OR number of transactions are AR, DC, GA, HI, IL, IN, KY, LA, ME, MD, MN, NE, NV, NJ, NY, NC, OH, RI, SD, UT, WV, WI & WY. Some states have 200 transaction threshold & others have 100. So if she has no more than 100 in any one of the above states, she has no problem for the past. If business takes off, she might consider a service such as Avalara.
 

#3
Andrew  
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806
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CA
Thank you. It sounds like she'll only have the MI sales tax to MI customers to report.
 


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