International Sellers
Michael J. Fleming is the founder and president of Sales Tax and More, a full-service consulting and solutions firm with a passion for state tax. He is one of the country's leading authorities on sales tax issues such as consulting and research, registrations, returns, nexus, drop-shipping, eCommerce, and service providers.
Michael is a renowned writer and speaker, and he regularly presents on webinars. He is also the host of the Sales Tax and More Podcast, where he shares his wisdom and learnings with his audience in order to help them navigate the tricky world of taxes.
In this episode…
Mike Fleming and Ellie Moffat talk about international sellers and some of the problems that they face.
Here’s a glimpse of what you’ll learn:
Who’s considered an international seller?
What are some of the common issues that international sellers are dealing with?
What is a good strategy for international sellers who are trying to get compliant?
Where can sellers look for any additional resources? What should they be looking out for to take their next steps?
Connect with Michael
Episode Transcript - Audio Version
[00:00:00] Welcome to Sales Tax and More, your go to resource for all things state tax related. Now, here is your host, Michael Fleming. Hi Mike Fleming here, founder of Sales Tax and More. And today's co host of the Sales Tax and More podcast, where we talk about everyone's favorite topic, which is of course, sales tax. And, today we're going to talk about international sellers and some of the problems that they face. But first let me introduce you to my co host Ellie Moffat.
Hi, everyone. Thank you so much for being here. We really appreciate having you as listener. And I'm going to say from the top here today, if you like, if you like listening to our podcast, please like, and
[00:01:00] subscribe to it. It helps us out tremendously. And for Sales Tax and More, for those who don't know us, we are a full service consulting and solutions firm. We have a great team here of experienced tax professionals who are very dedicated to fulfilling your state tax and related needs. So we do a lot of sales tax returns, sales tax registrations, consultations, research, and like our name states more. So if you have questions about our services, please reach out and ask.
We'd love to hear from you. We'd love to work from you. And all that being said, Mike, who are we talking about when we say international sellers? Okay, so when we talk about international sellers, we're talking about anyone located outside of the United States who is selling into the United States or Canada or Puerto Rico. So that's who we consider international sellers. Companies located in the United States selling overseas. We're not including them in
[00:02:00] our definition, although they. Technically our international sellers, we only work in Canada, the United States and Puerto Rico. So that's what we're going to be concentrating on today. Perfect Thank you. Yeah. I think it's, it's helpful to have some clarification for some of our sellers out there. So what are, what are our international sellers seeing? What are some common issues that they are dealing with? Well, number one, I think the biggest issue is the thought that they're not subject to the nexus laws here in the, United States.
Many of them may have checked, you know, 5, 6, 7 years ago. They didn't have a physical presence here in the United States, so they didn't worry about it. Whereas since 2018, I guess, oh, we're coming up on six years now, June of 2018, everything changed and you don't need a physical presence in the United States anymore in order to have a requirement
[00:03:00] to, to collect and remit sales tax. You just have to cross certain monetary and or transaction thresholds. And those thresholds on the transaction side can be pretty low. So that's the biggest thing, not realizing that they're, they're required to collect the tax. The second biggest issue is that once they realize they, they have a responsibility to collect and remit the tax, actually remitting the tax money.
A number of the states out there will not allow wires directly from a foreign bank. So how do you pay the states? A lot of them don't allow credit cards. Some of these foreign sellers utilize, payment type companies like, Payoneer. But those companies, a lot of states don't work with them because they only do the ACH credit. And most of the states only do
[00:04:00] ACH debit. So how do sellers actually get their money to the states? Well, a lot of times they have to work with a company like us. They can wire us the money, all of our clients. We had set up a sub account under our primary account. So all the money is segregated and the money comes wired in directly from their foreign bank.
And then we turn around and pay the states on their behalf. And we do this for our domestic customers also, because it just makes the process a whole lot easier, especially when states are questioning if they actually got the money or not. It just makes it easier for us to accounts to prove it. But there's an extra issue with the, with companies that are located out the United States that.
They just can't get that money directly to this, to a lot of states. Some states maybe. There's always an exception to every rule, but in general, they can't pay the states directly. So what would, what would
[00:05:00] a good strategy be for international sellers who are trying to get compliant then? Number one would be just know, what, you know, economic nexus is learn what creates responsibility to collect and remit tax.
So in most states there, they have these thresholds and it's, the most common thresholds out there are $100, 000. Or 200 transactions. So 200 transactions, not very many transactions. You know, some companies have thousands of transactions. So, that's number one. Number two, a lot of companies realize that yes, they have a responsibility, but they have the thought process.
Well, who cares? What's the state going to do? I'm located overseas. How are they going to get their money from me? Well, states actually have a lot of powers. And, you know, if you're selling on Amazon, you know, there you have accounts
[00:06:00] receivable in this country, and we have seen states try to go after, clients, customers, the accounts receivable there, we have had states threatened to go to Amazon and take the accounts receivable there.
If you have any inventory in this, country. If you have, any merchant accounts in this country, so the states can actually, get to your money in certain circumstances. So you got to know, and maybe you get cut off from selling in this country. So, and I think this is going to get worse as time goes on.
Right now, you know, the states are still squabbling over getting all of the U. S. companies, compliant and making sure they're all collecting and, you know, there wasn't a lot of interest in, you know, Congress getting involved in interstate stuff, but I think the next big battle for international sellers, and we're talking a couple years out now, but, For all of these
[00:07:00] companies that are not compliant, the states can work backwards, and in theory, they can go back to the date that you started selling, or that you had nexus here.
So, I think that once, you know, this Wayfair issue works its way through, right now we're looking at 40 to 50 percent noncompliance, once we get to, you know, close to 100 percent compliance, I think that all of these companies in the U. S. are going to say, hey, this is not fair. These companies are foreign companies and, they don't, they're not hold to the same standard or they're held to it, but there's no enforcement policy.
And I think they'll go to Congress. And at that point, you know, Congress doesn't have to worry about being voted out of office because this is all foreign sellers. So I think that they can agree on something like that, and I think we'll see some sort of, legislator legislation at some point in the future that allow the states to go backwards and go after all of these
[00:08:00] international sellers who are not, who have not been compliant all of these years. So, you got to know what your responsibilities are. If you're selling in the United States, what could potentially happen? What could be your exposure and what are your options for becoming compliant? We'd love to talk to you about those things. You know, you can reach out to us, but, we also have, you know, articles out there and there are other companies with articles out there.
I mean, don't just take our word on it. You know, there, there's plenty of information out there that can make you, aware of what your obligations actually are. All right. And where, where can people look for any additional resources? How can we help them? What, what should people be looking out for next, for their next steps?
Well, we, offer a series of webinars. A lot of, companies come to us, to view our webinars, other podcasts that we do, we have a number of,
[00:09:00] publications, articles that we print, you know, in different areas, But not just us. I mean, you can do Google searches and look for the same type of information. So lots and lots, you know, educate yourself there, there are lots and lots of resources out there that you can access, you can start with us. I mean, on our website, we have, lots of links to different resources that we offer. We have podcasts on a number of different channels out there.
We have a lot of information out on YouTube. So you can start with our free resources. And if you have any additional questions, you can reach out to one of our salespeople and see what type of help you need. We offer research. We offer nexus consultations, nexus studies. We file sales tax returns. You know, and as I mentioned, we actually will set up a bank account for you. Now it's not something that you
[00:10:00] can use as a bank account. It's just something that we can pay your taxes from. You wire the money in, you get an accounting of how much money was used each month, so that you can, Make sure that, all of your money is being used, correctly to, to pay the different states out there.
So, lots of ways that we can help, lots of resources that are out there, both through us and, and through other individuals. Thank you so much, Mike. Thank you, everyone, for listening again, and we just mentioned it before, but just to reiterate it, we have a lot of solutions and services. We have a lot of free resources on our website that you can check out.
If you have questions about any of this, please reach out to me directly. My email is emoffat, E M O F F A T at salestaxandmore.com. You can also visit our website, salestaxandmore.com, and thank you again for joining us. Please like and subscribe. If you've liked
[00:11:00] what you've heard here today, if you liked what you've heard in the past and thank you again.
Thank you everyone. And, we hope to see you on the next episode of the Sales Tax and More podcast. Bye bye have a great day.