Is There a Legal Way to Avoid Sales Tax?

Is There a Legal Way to Avoid Sales Tax?
Written by Rohan Mathew

Sales tax is the taxation rules for sellers in the United States, which apply to both local businesses and out-of-state sellers. So, you have the responsibility to collect sales tax from each product transaction you have if you have a business of selling products in the US. Then you will need to pay the sales tax to the state or local jurisdictions where your business is operating. You can check TaxConnex.com for more useful information about sales taxes and other business taxes.

Is there any way for you to avoid sales taxes? Yes, there are some suitable methods to avoid sales tax, but it doesn’t mean that you would flee from your responsibility to pay the sales taxes. Here are some tips you can follow to avoid sales tax in the United States:

  • Do Business in a State that Doesn’t Have any Sales Tax Regulations

Most states in the United States have their own sales tax regulations that any business needs to follow. The sales tax rates might differ from state to state, meaning that some states might require businesses to collect less sales taxes than other states. Also, there are economic nexus sales taxes that out-of-state sellers need to pay depending on the regulations in each state.

However, there are some states in the United States that don’t have any sales tax regulations at all, meaning businesses don’t need to collect any local or state sales taxes when they operate in these states. These states are Oregon, New Hampshire, Delaware, Alaska, and Montana. You can avoid sales taxes if you focus on running your business in these states.

  • Stop Transactions before You Reach the Sales Threshold

For interstate sellers, the economic nexus laws require them to collect sales taxes once they’ve reached a certain sales threshold in the state. The sales threshold is for the full year calculation. So, if the state has the sales threshold of $100,000, you only need to collect and pay sales taxes to the state if you have received the transaction amount of more than $100,000 during the year of doing business in that state.

To avoid paying sales taxes, you can stop transactions before reaching the sales threshold in each state each year. This way, you can avoid collecting and paying sales taxes to the state.

  • Some of US Cities Don’t Apply Local and State Sales Tax Rules

Some cities in the United States also don’t have any local and state sales tax rules that businesses need to comply with. So, if you are doing business in these cities, you are free from collecting and paying any sales taxes to the local government. 

The cities that don’t have any local and state sales tax include Portland, Anchorage, Oregon, and Alaska. So, you can focus on running your business in these cities if you want to save money from paying sales taxes. 

Conclusion

These are some tips you can follow to avoid paying sales taxes in the United States. With the economic nexus laws, even online businesses need to collect sales taxes if they are doing business in other states. 

So, following these tips might give you some good ways to save on sales tax payments each year.

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Rohan Mathew

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