Determine your business’s nexus in each state. Nexus refers to the connection your business has with a state that triggers sales tax obligations. This usually means having a physical presence, like an office or warehouse, or exceeding certain sales thresholds within the state.
Next, consult the official state websites. Each state maintains its own list of reciprocal agreements. These lists are your primary source and offer the most accurate, up-to-date information. Don’t rely on third-party sources.
Understand the specifics of each agreement. Reciprocity doesn’t always mean complete exemption. Some agreements might only cover certain types of sales or have specific limitations. Carefully read the details of any applicable agreement.
Maintain thorough records. Keep detailed records of all sales transactions, including the state of origin and the type of goods or services sold. This protects you in case of an audit.
Seek professional tax advice. Navigating sales tax laws across multiple states is complex. A tax professional can help you stay compliant and minimize your tax burden.
| Arizona | None |
| Colorado | Kansas, New Mexico, Oklahoma, Utah |
| Illinois | Iowa, Indiana, Kentucky, Missouri, Wisconsin |
| Nevada | Oregon |
| New Mexico | Colorado, Oklahoma, Texas, Utah |
Note: This table provides a small sample. The absence of a state from this table doesn’t indicate a lack of reciprocity agreements. Always check each state’s official website for the most current information.
Regularly review sales tax laws. State laws change frequently. Staying informed is crucial for compliance and avoiding penalties.
