State Sales Tax Reciprocal Agreements 2019

State Sales Tax Reciprocal Agreements 2019: What You Need to Know

State sales tax can be a complex and confusing issue for many individuals and businesses, especially when it comes to online sales. In an effort to simplify the process and reduce the burden on taxpayers, some states have implemented reciprocal agreements for sales tax. Here’s what you need to know about state sales tax reciprocal agreements in 2019.

What is a reciprocal agreement?

A reciprocal agreement is a cooperative arrangement between two or more states, in which they agree to honor each other’s sales tax laws. This means that if a business in one state sells to a customer in another state that has a reciprocal agreement, the business only needs to collect and remit sales tax to their home state, rather than registering and filing in the customer’s state as well.

Which states have reciprocal agreements in 2019?

Currently, 24 states have reciprocal agreements in place for state sales tax. These states include:

– Arizona

– California

– Colorado

– Florida

– Georgia

– Illinois

– Indiana

– Kentucky

– Maryland

– Massachusetts

– Michigan

– Minnesota

– Missouri

– North Carolina

– North Dakota

– Ohio

– Pennsylvania

– South Carolina

– Texas

– Utah

– Virginia

– Washington

– West Virginia

– Wisconsin

How do reciprocal agreements work?

Reciprocal agreements vary by state, but generally follow a similar process. When a business sells to a customer in a state with a reciprocal agreement, they only need to collect and remit sales tax to their home state. The home state will then remit the appropriate amount to the customer’s state through the reciprocal agreement. This eliminates the need for the business to register and file in multiple states.

What are the benefits of reciprocal agreements?

Reciprocal agreements can be beneficial for both businesses and states. Businesses can save time and money by only having to comply with their home state’s sales tax laws, rather than registering and filing in multiple states. States benefit by reducing the burden on taxpayers and simplifying the sales tax process, which can improve compliance and increase revenue.

What are the drawbacks of reciprocal agreements?

While reciprocal agreements can simplify the sales tax process, they do have drawbacks. For example, a business in one state may have a lower sales tax rate than a customer’s state, which could result in lost revenue for the customer’s state. Additionally, reciprocal agreements can create confusion and complexity for businesses that sell in multiple states with different sales tax laws.

In conclusion, state sales tax reciprocal agreements can be a useful tool to simplify the sales tax process for businesses and states. However, there are also drawbacks to consider. If you are a business owner, it’s important to understand the sales tax laws in each state where you sell. And if you are a consumer, it’s always a good idea to double-check your state’s sales tax laws to ensure you are paying the correct amount.