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Sales Tax Compliance

Sales Tax Compliance: What It Is & 5 Steps to Get It Right

Sales tax compliance isn’t just about filing on time—it’s about knowing where you owe tax, what you owe, and how to report it accurately. With more businesses operating across state lines and online platforms than ever before, sales tax complexity has skyrocketed.

At Eshel, Aminov & Partners LLP, we work with companies of all sizes to bring clarity and structure to the chaos. In this guide, we’ll walk through the key principles of sales tax compliance and the five steps every business should follow to stay ahead of audits, overpayments, and penalties.

What Is Sales Tax Compliance?

Sales tax compliance is the process of correctly collecting, reporting, and remitting sales tax to the appropriate state or local authorities. Unlike federal taxes, sales tax rules are determined at the state and local level—and they vary significantly across jurisdictions.

To stay compliant, a business needs to:

  • Know where it has nexus (a tax obligation)

  • Understand which of its products or services are taxable

  • Register and file returns accurately and on time

  • Keep detailed records and documentation in case of audit

How to Assess Your Sales Tax Exposure

Before you can comply, you need to understand your risk. Ask yourself:

  • Do you have physical or economic nexus in multiple states?

    • Economic nexus is often triggered by $100,000+ in sales or 200+ transactions annually

  • Are your products or services taxable?

    • Some items are taxable in one state and exempt in another (e.g., digital goods, SaaS, food, or clothing)

  • Are you registered where you need to be?

    • Many businesses overlook jurisdictions where they’re technically required to file

If you're unsure, a sales tax nexus review can help uncover exposure before problems arise.

5 Steps To Ensure Sales Tax Compliance

Here’s a proven framework we use to help clients reduce risk and build an efficient, scalable compliance process:.

1. Centralize Your Sales Data 

Gather all sales records—including invoices, customer addresses, tax exemptions, and transaction details—into one system. Accurate data is the foundation of any successful compliance strategy.

2. Identify What’s Taxable (and Where)

Not all products or services are taxable. Filter your data to exclude exempt transactions, out-of-scope sales, and non-nexus states. This step prevents over-collecting or underreporting.

3. Apply the Right Rates

Sales tax rates vary by state, city, county, and even ZIP code. Some jurisdictions follow destination-based sourcing rules. Make sure you’re applying the correct rate for each transaction.

4. Prepare and File Sales Tax Return

Each jurisdiction has its own form, deadline, and frequency. Some require monthly filings; others are quarterly or annual. Consider using automation tools to streamline this step..

5. Remit Payment and Maintain Documentation

Timely payments are critical to avoid interest or penalties. Retain proof of filing, exemption certificates, and audit logs to support your returns.

Why Sales Tax Compliance Matters More Than Ever 

Since the South Dakota v. Wayfair ruling, economic nexus laws have dramatically expanded the number of businesses required to collect sales tax in multiple states—even without a physical presence. Add to that the rise of e-commerce, digital goods, and complex product bundling, and compliance becomes a moving target.

Noncompliance can result in:

  • Retroactive tax bills

  • Penalties and interest

  • Loss of resale or exemption privileges

  • Disruption during M&A or due diligence processes

Need Help Managing Sales Tax Across States?

At Eshel, Aminov & Partners LLP, we help businesses:

  • Assess and monitor nexus across all 50 states

  • Register for sales tax licenses and keep them current

  • Implement automated compliance solutions (e.g., Avalara, TaxJar)

  • Manage multi-jurisdictional filings and audit defense

If your sales tax compliance process isn’t keeping up with your growth, we can help you streamline it—so you can focus on scaling, not scrambling.

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