We write to inform you that, consistent with its legal obligations, SuranceBay will commence collecting sales tax from its customers in July 2021. SuranceBay will pay the tax on your behalf and add it to your monthly bill beginning August 1, 2021.
Taxability of SureLC™ SaaS
Not all customers will be affected at the present time. In recent years, various states began imposing sales tax upon Software as a Service (“SaaS”) such as SureLC™, DataLink™ and similar software, basically treating it as a sale of tangible goods. Approximately 22
states presently require imposition of sales tax on SaaS such as SureLC™, and more and more states are joining this trend as we move forward. Please review the resources posted below to see if your state collects sales tax on SaaS.
Economic Nexus
SuranceBay may or may not yet be obligated to collect sales tax on sales in your state.
Out-of-state sellers such as SuranceBay are not obligated to pay sales tax until they reach a certain threshold of economic activity in the state. In 2018, the United States Supreme Court decided the case of South Dakota v. Wayfair, allowing states to require an out-of-state seller without physical presence in the state to collect and remit sales tax on sales to customers in the state, provided there is sufficient “economic nexus” between the seller and the state.
Nexus is uniquely defined by each state based on levels of revenues and number of retail transactions with customers located in the state. A typical threshold would be $100,000 in annual revenue and 200 individual sales transactions. Some states only use dollar figures, some set the bar at $500,000, while others use revenue or number of transactions.
Once “nexus” is met in your state, SuranceBay begins collecting the sales tax, provided the state imposes a sales tax on SaaS. Currently, SuranceBay has reached or is approaching economic nexus in the following states which impose a sales tax on SaaS: Arizona, Iowa, Connecticut, Ohio, Pennsylvania, Texas. SuranceBay continues to monitor nexus in all 50 states, and the list is expected to grow. Effective July 2021, SuranceBay will begin to
pass the direct tax cost to its customers, where applicable, by adding sales tax to the monthly bills.
Although you may not be impacted at present, once SuranceBay determines tax is due in your state, it will be collected and passed on to you. If you have outstanding tax obligations for any prior taxable periods, we will contact you directly. If you paid a use tax on any SuranceBay products, please advise our support team.
Useful Resources
The Wayfair decision:
https://www.supremecourt.gov/search.aspx?filename=/docket/docketfiles/html/public/17-494.html
States that collect tax on SaaS:
https://blog.taxjar.com/saas-sales-tax/ and
https://www.quaderno.io/blog/sales-taxes-for-saas-in-us
Please note, this is a growing list.
Economic nexus:
https://blog.taxjar.com/economic-nexus-laws/ and https://www.avalara.com/us/en/learn/guides/state-by-state-guide-economic-nexus-laws.html
Further Information
The applicable sales tax percentage depends on your state, your county, and/or your municipality. You should review publications by the Department of Revenue or
Comptroller’s office in your state and consult with your tax accountant if you have any questions about rates and taxation obligations.
For any other questions, please contact SuranceBay’s Support Team at support@surancebay.com.
