SALES TAX FAQ
Why are these services taxable?
Our services are subject to sales tax in certain jurisdictions as prescribed under local statute. Each state’s Department of Taxation, Department of Revenue or similar government entity has categorized our services as a taxable service and requires Earth Class Mail to collect sales tax on these services. If consumers are not charged sales tax on taxable items, they are obligated to remit “use” tax for these services under local statute.
I wasn’t charged sales tax previously, why am I now being charged sales tax?
Due to changes in state and local tax laws as well as our overall operations, Earth Class Mail now has nexus in Texas and New York. Some of these states have determined that Software as a Service and other computer related services are taxable and therefore require sales and use tax to be paid for those services. Customers located in one of these states should have been remitting Use Tax directly to the state for these taxable services since we historically did not charge sales tax. Now, Earth Class Mail will be collecting these taxes on behalf of our customers and paying them on to the state. For clarity, Earth Class Mail has not increased its price and does not receive any benefit from the application of sales tax, rather it serves as an intermediary to collect the applicable tax and pay directly to the state. This should not change the economics; the customer should have already been remitting use tax. These customers will not have to remit use tax prospectively.
What is nexus?
In general, nexus is the minimal amount of contact with a state that creates a taxable presence. Each state has its own unique rules and the threshold can vary state to state.
I am exempt from sales tax. What should I do?
Earth Class Mail accepts valid exemption certificates, resale certificates, and direct pay permits. If a customer is exempt for one of these reasons please email the proper documentation to firstname.lastname@example.org.
There was tax on my invoice and I am tax exempt. What should I do?
Customers should contact your customer success representative or email email@example.com and provide a valid exemption certificate, resale certificate or direct pay permit. A credit memo will be issued and the customer’s tax status will be updated.
I have been self-remitting Use Tax to my local jurisdiction. What should I do now?
Customers will no longer need to self-accrue and remit Use Tax for these purchases. Earth Class Mail will now be collecting sales tax and remitting to the state.
Do states provide a list of what is and is not taxable in their state?
Within the laws in each state, the taxability of products and services is enumerated. There are publications that summarize the states’ tax laws available through various vendors that provide tax research materials. States also have websites that provide access to the laws and regulations in their state.
What tax rate will be used?
Tax rates are determined by the primary address we have on file. Earth Class Mail will take into consideration any state, local and special district sales tax rates required for that jurisdiction.
What is the effective date?
The new sales tax to be added to the invoices for Texas and New York effective November 1, 2020.
Will I be back billed for previous invoices?
No. Earth Class Mail will not bill for sales tax not charged on previous invoices.
I am a reseller, does this mean I have to tax my customers? How should I handle sales tax for my customers?
Unfortunately we are unable to provide tax advice to customers. Sales tax is a complicated matter and takes into account many different aspects of a business. We recommend reaching out to an accountant or other business advisors who have a better understanding of the company’s activities.
How do I update my billing address in my Earth Class Mail account?
Customers can click HERE for information on how to update their billing address.