What it is
The Sales-Tax / VAT Compliance Checklist is a practical guide to staying compliant with US sales-tax obligations, and VAT or GST where they apply, covering the full lifecycle: nexus, registration, exemption certificates, taxability, collection, filing, and remittance. Since the 2018 South Dakota v. Wayfair decision, economic nexus means you can owe tax in states where you have never had a physical presence, which makes a systematic compliance process essential rather than optional.
The checklist starts where compliance has to start, with nexus, the connection that obligates you to collect and remit in a jurisdiction. It walks you through mapping physical presence (offices, staff, inventory, including marketplace fulfillment warehouses), running an economic-nexus analysis against each state's sales and transaction thresholds (commonly $100,000 in sales or 200 transactions, though they vary), identifying where you have crossed a threshold but are not yet registered, and registering for a permit before you collect. It also covers Voluntary Disclosure Agreements for past exposure.
A compliance-lifecycle table then maps each stage, determine taxability, collect, handle exemptions, file, remit, document, to what to do and the common pitfall that catches businesses out. The checklist closes with filing-and-remittance discipline (a due-date calendar, zero-return filing, reconciling tax collected to tax remitted, renewing exemption certificates) and a self-audit, all anchored by the principle that collected sales tax is money held in trust for the state, never cash flow.
What it's used for
Sales-tax compliance has gotten dramatically harder since Wayfair, and the penalties for getting it wrong are steep. This checklist is used to find where you owe, register correctly, and file and remit on time.
- ✓ Determining where you have nexus, both physical and economic, state by state
- ✓ Running an economic-nexus analysis against each state's sales and transaction thresholds
- ✓ Registering for a sales-tax permit in every state with nexus before you begin collecting
- ✓ Charging the correct destination rate including state, county, city, and special-district components
- ✓ Collecting and validating exemption and resale certificates before exempting any sale
- ✓ Filing returns on the assigned frequency, including zero-tax periods, to avoid penalties
- ✓ Reconciling sales tax collected to sales tax remitted each period and renewing certificates before they expire
Who uses it
Sales-tax compliance spans finance, tax, and operations because nexus is created by where you sell, ship, and store. This checklist serves everyone responsible for getting it right.
Context & good to know
Everything in sales-tax compliance starts with nexus, the connection that obligates you to collect and remit in a jurisdiction. Physical nexus has always existed, created by an office, employees, inventory, or property in a state, but the 2018 Wayfair decision added economic nexus, triggered by sales volume alone. A common threshold is $100,000 in sales or 200 transactions into a state in a year, but the numbers and rules vary by state, so you have to evaluate nexus state by state rather than assuming a single standard. Marketplace fulfillment warehouses are a frequent trap, storing inventory in a state can create physical nexus you did not realize you had.
The cost of ignoring nexus is real and largely unrecoverable. Once you have crossed a threshold, the obligation runs forward and sometimes retroactively, and the exposure is back taxes plus penalties and interest on tax you never collected. You cannot usually go back and bill customers for sales tax months later, so the assessment comes out of your own pocket. For past exposure, a Voluntary Disclosure Agreement can limit the lookback period and reduce penalties, which is why the checklist flags it as a step once you discover you have crossed a threshold you missed.
Collection accuracy hinges on two things people routinely get wrong: rate and exemptions. Most states are destination-based, meaning you charge the rate at the customer's ship-to address, which combines state, county, city, and special-district rates, not a single statewide number and not your own origin rate. And every exempt sale needs a valid exemption or resale certificate collected and validated before you exempt it. In an audit, an exempt sale with no certificate on file becomes a taxable sale you now owe, so the certificate is the documentation that protects you.
Filing and remittance is where discipline matters most. You must file a return for every assigned period, even zero-tax periods, because a skipped zero return triggers a penalty. You reconcile sales tax collected against sales tax remitted each period to catch under-remittance or over-collection. And above all, the collected tax is money you hold in trust for the state, never your cash flow. Spending it is among the most severely penalized acts in tax law, often carrying personal liability for officers. Running a fresh economic-nexus study each year keeps stale analysis from quietly accumulating exposure, and accounting platforms with sales-tax automation can track nexus, calculate destination rates, and manage filings across states.