|
Policy |
US Sales Tax and Exemption |
|---|
| Document ID |
POL-FIN-00004 |
|---|
| Effective Date |
01JAN2023 |
|---|
| Version |
1.0 |
|---|
| Country/Region |
US |
|---|
1.0 Executive Summary
This document describes the guidelines for calculating sales tax on customer orders and remitting payment to the taxing jurisdiction.
2.0 Scope
This policy is maintained and administered by JMP Finance and applies to all US customers.
3.0 References
- Sales tax statutes enacted by US State or Local legislatures
- Sales tax regulations written by US State or Local Governing Agencies
4.0 Definitions
4.1 Sales Tax: A tax levied on the sale of goods and services in the US that is usually calculated as a percentage of the purchase price and collected by the seller (JMP). The applicable tax rate varies and is set by each state and local jurisdiction.
4.2 Tax-Exemption: A statutory exception eliminating the need for the seller (JMP) to collect sales tax on a particular transaction or on all transactions with a customer. Tax-exemption status is granted by the state or local authority which has mandated sales tax be collected. Exemptions can be granted for a variety of reasons and can apply to a single sale, all sales for a specified period, or all sales in perpetuity.
4.3 UTOF: Universal Terms Order Form. The legal document JMP Statistical Discovery LLC will use to contract with customers for annual license agreements.
4.4 AvaTax: Sales tax calculation program, owned by Avalara, and integrated as a connector in NetSuite providing real-time sales tax calculation on the invoice in NetSuite. Tracks all JMP sales data within their website to be used for filing sales tax returns to state and local jurisdictions.
4.5 ECM Pro: Tax exemption compliance management software, owned by Avalara, and integrated with AvaTax providing real-time exemption on applicable sales.
5.0 Policy
5.1 JMP will charge sales tax on sales to US customers, based on the location of the Site Administrator which is considered the shipping location. JMP will use all reasonable efforts to obtain the correct location and utilize AvaTax to calculate applicable taxes.
5.2 The UTOF states “Customer is responsible for any applicable taxes, except for taxes based on JMP’s income. Unless otherwise stated in the Order Form, Fees do not include taxes. JMP will use reasonable efforts to include applicable taxes on JMP’s invoice. Customer will self-assess and pay any VAT, GST or sales tax applicable to Customer’s use of the Offering outside of the US and not included on JMP’s invoice.”
5.3 If an order is greater than $7,500 USD, aligning with the e-Commerce thresholds for purchase, JMP will accept a tax exemption certificate supplied by the customer. JMP will determine whether the state-issued certificate is valid based on the type of sale and shipping location. If valid, JMP will grant the customer tax-exemption on the order and will not charge any sales tax on the invoice. If not valid, JMP is required to charge sales tax on the order.
5.4 Valid tax exemption certificates provided by customers will be entered and stored in ECM Pro. Within 90 days of expiration date, if applicable, ECM Pro will send an email alert to customer requesting a new certificate be uploaded. The customer is responsible for providing the new certificate in a timely manner.
5.5 State and local tax jurisdictions have varying frequencies for filing sales tax returns. According to the frequency of each jurisdiction, AvaTax will create a Liability Worksheet based on applicable sales by the 5th of the following month. JMP will review this worksheet and provide approval for filing each return by the 10th of the following month. Avalara will file sales tax returns for each jurisdiction based on the deadlines for each but no later than the end of the following month.
5.6 Avalara will remit sales tax liability amounts to the appropriate state and local jurisdictions by the applicable deadline and draft the lump sum amount paid on our behalf from JMP’s bank account.
5.7 JMP is registered for sales tax in all state and local jurisdictions in which JMP products are taxable, economic nexus thresholds are met, or physical presence nexus thresholds are met. AvaTax will alert JMP when a taxable event occurs in a jurisdiction in which we are not registered. Annually, JMP will compare economic activity and employee locations against state and local jurisdiction thresholds to identify any additional jurisdictions where registration is needed. In all cases, JMP will seek to register in applicable jurisdictions in a timely manner.
