Having previously served as Tax Director for a publicly traded e-commerce retailer, Mike not only brings his technical expertise to each client relationship, but also the practical wisdom of having successfully addressed these issues for the company. Mike understands that every technical tax issue a company faces has practical implications which must be weighed and must often control the decision and implementation process. E-commerce and drop-shipping companies often face difficult issues involving, among other things, nexus of the parties involved in the transaction, resale exemption certificate responsibilities, taxability of products, and sourcing of the transactions to the correct state. The most problematic of all of these issues is nexus, partuclarly the economic nexus standards now enforced in nearly every state.
Mike has advised some of the largest e-commercer retailers, with revenues of seral $Billion, as well those in start-up and emerging growth. Nexus, registration and automated compliance typically drive the consulting centered on these engagements. Regardless of a retailer's physical presence (created by employees, inventory and even independent reps providing customer-centric services on behalf of the business), nearly every state is now enforcing economic nexus, meaning that your customer's location and your sales now determine the states in which you must register to collect and remit relevant sales tax. While most states have also adopted marketplace standards to shift these responsibilities to marketplace facilitators, such as Amazon and eBay, this does not eliminate a seller's obligation to also register to collect and remit relevant sales tax, to the extent they sell on their own website or other platforms that are not considered a marketplace facilitator (eg, Shopify, Magento).
Dropshipments and Resale Exemption Certificates
Drop-shipping wholesalers must register and - or at a minimum - collect appropriate resale certificates from their retailer customers in every state in which they have nexus, or their sale to the retailer customer is deemed a retial transaction subject to sales tax. As such, it is incumbent on dropshiping wholesalers to identify the states in which they have nexus and the appropriate resale certificates that they must obtain from their customers. In contrast, retailer customers must identify where they too have nexus, the appropriate resale certificates to provide their suppliers to prevent sales tax on their purchases for resale, and the relevant sales tax to collect on retial sales to customers. All of these obligations are heightened and further complicated by the economic nexus and marketplace standards that states are enforcing.
Mike is a subject matter expert on nexus and will help your company identify the states in which you have obligations, as well as what those obligations are. Our firm can identify and simplify your obligation to register, comply, and obtain or provide approriate resale certificates in relevant scenarios. Mike can lead the implementation and automation of the compliance obligations to help your company optimize results, minimize exposure, and focus on higher-value functions of the business.