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All About Sales Tax and Remaining Tax Exempt

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Table of Contents

  1. Introduction & Disclaimer 

    Art Storefronts has done a lot of research on, and has spent considerable sums seeking professional advisement on how artists should be charging sales tax in the United States.  The goal here is to provide you with the best advice we can. However, it must be understood that we are not tax accountants and we are not providing professional advice. You should still do your own research and if necessary, contact a tax professional in your local region.

    Below in this article we provided multiple forms that have been pre- populated with Art Storefronts information as the Seller. It is our recommendation that you download these forms, fill out your information as the Purchaser, and then UPLOAD to your site manager as instructed in section 7. How and Where to upload and Submit Your Resale certificates

    With each of the forms we have also included an example of a filled our form where a fictional artist with an art selling business has been entered in as the Purchaser. These are only examples to help you fill out the blank form, DO NOT USE THESE EXAMPLES TO UPLOAD THEM TO YOUR SITE MANAGER.

  2. The “Wayfair Ruling”

    On June 21, 2018, The United States Supreme Court ruled 5-4 in South Dakota v. Wayfair that states can mandate that businesses without a physical presence in a state with more than 200 transactions in state, or $100,000 in-state sales, collect and remit sales taxes on transactions in the state.

    In short, this was a very big decision. Prior to this, if a small business shipped goods into states other than their own, they would not have to charge sales tax. This created unfair advantages for internet companies over local retailers, and it also caused states to lose significant sales tax revenue. Fast forwarding to 2020, where so much business moved online as a result of the pandemic, states are now harshly enforcing their right to collect sales tax from any company selling into their states. 


    Regardless of this, it has and still is the case that you must collect and remit sales tax in the State you reside.  This applies to every business in every industry. It in unavoidable, and irrespective of how much you sell. Every business is supposed to register for a “Seller’s Permit” with their State, and after doing so, you will receive a “Resale Certificate” (depending on the State you are in, they may have a different name for this, but in general we refer to it as a Resale Certificate).   

  3. What is “Nexus”?

    Before we move forward, it is important to explain what “nexus” means in terms of sales tax. 

    A business has “nexus” in a given State if it is determined to have a “tax presence” in that State. 


    As described above, you will definitely have nexus in the State you reside in.   You will also have nexus in any State you ship products into (as determined by the shipping address) so long as you do more than $100k of sales for shipments into that state or 100 transactions on an annual basis.  Most artists will not meet this threshold for states outside of their own, and until you do, you don’t need to worry about it.

  4. How Does this Impact You and Art Storefronts?

    Up until now Art Storefronts had nexus only in Texas. However, we now have sales nexus in pretty much every state across the United States.  


    As a result of the changing eCommerce sales tax environment coming out of the landmark ruling in the South Dakota v. Wayfair Inc. case, as of February 1st 2021, Art Storefronts will  start collecting and remitting sales tax to customers who do not submit resale certificates for the following states:


    1. AL - Alabama
    2. AR - Arkansas
    3. AZ - Arizona
    4. CA - California
    5. CO - Colorado
    6. CT - Connecticut
    7. DC - District of Columbia
    8. FL - Florida
    9. GA - Georgia
    10. HI - Hawaii
    11. ID - Idaho
    12. IA - Iowa
    13. IL - Illinois
    14. IN - Indiana
    15. KS - Kansas
    16. KY - Kentucky
    17. LA - Louisiana
    18. MA - Massachusetts
    19. ME - Maine
    20. MD - Maryland
    21. MI - Michigan
    22. MN - Minnesota
    23. MS - Mississippi
    24. MO - Missouri
    25. NC - North Carolina
    26. ND - North Dakota
    27. NE - Nebraska
    28. NJ - New Jersey
    29. NM - New Mexico
    30. NV - Nevada
    31. NY - New York
    32. OH - Ohio
    33. OK - Oklahoma
    34. PA - Pennsylvania
    35. RI - Rhode Island
    36. SC - South Carolina
    37. SD - South Dakota
    38. TN - Tennessee
    39. TX - Texas
    40. UT - Utah
    41. VA - Virginia
    42. VT - Vermont
    43. WA - Washington
    44. WI - Wisconsin
    45. WV - West Virginia
    46. WY - Wyoming

     

    Therefore, any print fulfillment order (i.e. vendor purchase) where the shipping address is one of these States will be subject to sales tax. 


    It is important to know that if we charge you sales tax for a shipment into Texas (or any State where we have nexus), this means you SHOULD NOT charge tax to your customer in addition to us charging you.  You only should charge tax to your own customer if you have an approved Resale Certificate and are tax exempt with us. This is because your Resale Certificate makes you responsible for collecting the sales tax, rather than us. 

  5. How to Remain Tax Exempt

     

    Fortunately, we offer the ability for you to claim exemption from being charged sales tax. The process is quite simple and we have prepared the exact instructions, as well as the certificates you can download and fill out. For editing and signing your forms, you can use a tool like Digisigner. Here are the steps:


    Step 1. Register in your own state if not already. 

    You should have already done this as you have always been required to pay sales tax in your home state as a business.
    Here is a link to a resource with a list of states and the corresponding place that you should register.  Find your state in the list and register for a Seller’s permit.


    Step 2. Fill out the Multi-state certificate. 

    The multi-state certificate is one document that actually covers you in 36 states. Simply fill this out, and you won’t be charged tax.

    Place your home state issued Sales Tax ID on your home state line. For all other states (EXCEPT CA, DC, HI, IL, and MD) you can place “No Nexus – HS XXXXXXXXXXX” (HS being your home state postal code and X’s are your home state sales tax ID) on the state line.

    To make this super easy for you we have pre-populated the information for the Seller, Art Storefronts. Download Multi-State certificate template here >>

    See example of a filled out Multi-State certificate here >>


    Step 3. Fill out the Streamlined certificate. 

    Here you will ONLY need to fill out the lines for IN, WV and WY, because these states are not already on the Multi-state certificate you filled out in Step 2. Make sure you complete and sign page 1.

    On lines for IN, WV and WY you will need to enter “No Nexus” on page two under “Reason for Exemption” and your Home State sales tax ID under “Identification Number”.

    To make this super easy for you we have pre-populated the information for the Seller, Art Storefronts. Download Streamlined certificate here >>

    See example of a filled out Streamlined certificate here >>

     

    Note: in count 6 of the Streamlined certificate there is a field for you to put in your title as the business owner. For some reason, this field is limited to only 2 characters, so we’ve recorded a short video to show you how you can add your own Text field here using Digisigner tool.


    Step 4.
    Everyone should fill out the New York ST-120 certificate form (provided below).  But unless your business is located in New York, you do NOT need to register in this State. 

     
    New York requires the use of their own state issued resale certificate, but does allow the use of the “home state” tax id for exemption purposes. So, if you are not registered within NY for sales tax exemption, you will need to complete Part 2 of the attached resale certificate. You will list your home state as your state/jurisdiction and place your home state tax id as the registration number.

    To make this super easy for you we have pre-populated the information for the Seller, Art Storefronts. Download New York ST-120 certificate here >>

    See example of a filled out New York ST-120 certificate here >>


    Step 5. Fill out the Virginia ST-10 certificate. 

     
    Virginia requires the use of their own state issued resale certificate, but does allow the use of the “home state” tax id for exemption purposes. So, if you are not registered within VA for sales tax exemption, you will place “No Nexus – HS XXXXXXXXXXX” on the line next to “Virginia Account No.”

    To make this super easy for you we have pre-populated the information for the Seller, Art Storefronts. Download Virginia ST-10 certificate here >>

    See example of a filled out Virginia ST-10 certificate here >>

     

    Step 6. Determine if you should register in CA, DC, HI, IL, LA, MA, and MD

     

    Unfortunately, CA, DC, HI, IL, LA, MA, and MD require registration within their states for sales tax exemption, so unless you are registered within these states we cannot exempt the sales tax.  If you are registered in these states, you will need to place the tax id on the respective line on the Blank Uniform-Sales-and-Use form. 


    Please note that if you are not located in one of these states, we do NOT suggest registering. Once you register, you will have to file tax returns in each of these states. It is our opinion that is not worth the time, effort, and cost to do this and you are better off just paying the sales tax for orders being shipped into these states. Remember, since the sales tax will be charged by us and is based on the cost of the vendor order, and not what YOU charge your own customer, the cost is not that much. 


    If you decide to register in Louisiana and/or Massachusetts, a side from filling out the respective line in the Blank Uniform-Sales-and-Use form, you will also need to fill out the forms issued by these two states.

    Download Louisiana R-1042 certificate here >>

    See example of a filled out Louisiana R-1042 certificate here >>

    Download Massachusetts ST-4 certificate here >>

    See example of a filled out Massachusetts ST-4 certificate here >>

     

    Step 7. Upload and Submit Your Resale Certificates in your Site Manager

     

    Use the Jump To Menu, click on Tax Methods, then click on the Tax Exemptions tab:

    Tax_methods_1.png

    To upload the Multi-State Tax certificate, click on the Choose File button, and find the certificate you filled out and signed in step 2:

    Tax_methods_2.png


    Next, click on the Upload button:

     

    Tax_methods_3.png


    Repeat the same process for all the other forms you have filled out and signed in steps 1- 6.

    Once you submit these forms, we will be notified. We will review them within approximately 1 week, whereby we will either approve or decline them. You will receive a notification by email once this happens. By “approving”, this means we will make a permanent update to your website so that you will not be charged sales tax by Art Storefronts for your print fulfillment orders (i.e. “vendor purchases”) that ship into any of the States where we have approved the resale certificates.


    Step 8. Increase your markups by 2% - Optional

    Our advice is to increase your markups by 2% to cover you for any states where you will be charged tax but where you are not registered and you don’t plan to register.  This will have arguably no impact on your sales, but will add a few extra dollars in your pocket to make up the difference. If you need help with this, see How To: Set Markups in an Art Print Store

  6. Questions?

    If you have any questions on how to fill out your forms to get exempt, please reach out to our support team at cs@artstorefronts.com and we will be happy to assist.
  7. Additional resources

    For those who have questions regarding sales tax registration information and thresholds, please feel free to reference the helpful resources we have listed below from the Avalara knowledge base.

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