Q: If I accidentally collect sales tax when I don't have economic nexus, could I just refund the sales tax?
I started a crowdfunding project where you take preorders, and if it meets a certain minimum within a month, then they make as many of the product as orders they get. My minimum is 100, and I'm at 45 in the first week, so it's possible this will pass its goal.
The service I'm doing this from had a checkbox when I set up the project to collect sales tax, so I checked it and looked up the sales tax rate in my county, thinking that would suffice. I now realize I only need to pay sales tax in most states if I make at least 200 sales or several thousands of dollars in a given state. The best case scenario of my project is that I get around 150 preorders total, with only a handful in any given state. However, since I've been collecting sales tax from the orders I've gotten, am I now obligated to pay less than $3 in sales tax in all these different states? Or could I just refund the sales tax I've collected? No one is charged until the end, so could I just cancel the sales tax charge?
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A: If you have accidentally collected sales tax when you do not have economic nexus in a particular state, you should consult with a tax professional to determine the appropriate course of action. Generally, you may be able to refund the sales tax you have collected, but it is crucial to ensure compliance with state tax laws and regulations in each jurisdiction involved.
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