Taxes > Glossary > KNOWLEDGEBASE
Glossary
A
Affiliate Nexus refers to a tax connection established when a business has affiliates in a state that generate sales, triggering sales tax obligations.
An amended return is a tax form filed to correct errors or make changes to a previously submitted tax return.
An audit is an independent examination of financial statements to ensure accuracy and compliance with accounting standards and regulations.
B
B&O Tax, or Business and Occupation Tax, is a gross receipts tax levied on businesses in Washington State based on their revenue.
Bulk Sales Law requires sellers to notify creditors before selling a significant portion of their inventory to prevent fraud.
A buyer is an individual or entity that purchases goods or services in exchange for payment.
C
A Certificate of Authority is a legal document allowing a business to operate in a state other than its home state.
A Certificate of Exemption is a document that allows an entity to avoid paying certain taxes under specific conditions.
Click-through Nexus is a tax concept where a business establishes a tax obligation in a state through affiliate referrals or links.
Cloud Computing Tax refers to the taxation of services and products delivered via cloud technology, varying by state and service type.
The combined tax rate is the total percentage of income paid in federal, state, and local taxes.
Compliance is the adherence to laws, regulations, and guidelines set by governing bodies in business and financial practices.
A consolidated return is a single tax return filed by a parent company and its subsidiaries, reporting combined income and expenses.
Consumer Use Tax is a tax imposed on goods purchased for use in a state where sales tax was not paid at the time of purchase.
A customer is an individual or entity that purchases goods or services from a business.
D
The Department of Revenue is a state agency responsible for tax collection, enforcement, and administration of tax laws.
Destination-based tax is a tax system where the tax rate is determined by the location of the buyer, not the seller.
Digital Goods Tax is a tax imposed on the sale of digital products like software, music, and e-books, varying by state.
A Direct Pay Permit allows businesses to pay sales tax directly to the state rather than at the point of purchase, simplifying tax compliance.
Drop shipping is a retail fulfillment method where a store doesn't keep products in stock but instead transfers customer orders to a supplier.
E
E-filing is the electronic submission of tax returns to the IRS or state tax agencies via online platforms.
Economic nexus is a tax connection established when a business exceeds certain sales thresholds in a state, triggering tax obligations.
An Employer Identification Number (EIN) is a unique nine-digit number assigned by the IRS for tax identification purposes for businesses.
An Energy Tax is a levy imposed on the production, consumption, or sale of energy resources to promote efficiency and reduce environmental impact.
An excise tax is a federal or state tax imposed on specific goods, services, or activities, often included in the price.
Exempt sales are transactions that are not subject to sales tax due to specific legal exemptions, such as certain goods or services.
An Exemption Certificate is a document that allows a buyer to purchase goods or services without paying sales tax.
Exemptions are specific amounts that reduce taxable income, allowing taxpayers to lower their overall tax liability.
F
A filing deadline is the last date by which a taxpayer must submit their tax return or required documents to the IRS.
A filing extension is a request to the IRS for additional time to submit your tax return beyond the original deadline.
Filing frequency refers to how often a taxpayer must submit tax returns or reports, typically annually, quarterly, or monthly.
Filing method refers to the approach used to submit tax returns, such as electronically or via paper forms.
The filing period is the specific timeframe during which taxpayers must submit their tax returns to the IRS.
Filing threshold is the minimum income level at which an individual must file a federal tax return.
A fiscal year is a 12-month period used for financial reporting and budgeting, which may not align with the calendar year.
G
Gross Receipts Tax is a tax on the total revenue of a business, regardless of expenses or profits.
Gross sales refer to the total revenue from all sales transactions before any deductions like returns, allowances, or discounts.
I
Input tax is the VAT paid on purchases that businesses can reclaim against their output tax liability.
Interest is the cost of borrowing money or the return on investment earned from savings, typically expressed as a percentage.
L
Local sales tax is a tax imposed by local governments on the sale of goods and services within their jurisdiction.
Lodging tax is a tax imposed on guests for staying in hotels, motels, or other short-term accommodations, typically used to fund local services.
A luxury tax is a tax imposed on goods and services deemed non-essential or high-end, aimed at reducing consumption of such items.
M
A marketplace facilitator is a business that enables sales between third-party sellers and customers, often handling tax collection and remittance.
A marketplace seller is a business or individual that sells goods or services through an online platform connecting buyers and sellers.
Meal tax is a sales tax applied to prepared food and beverages sold for consumption, typically imposed by state or local governments.
N
Nexus is the connection or link a business has to a state, determining tax obligations there.
A non-collecting seller is a vendor who does not collect sales tax from customers, often due to their location or sales threshold.
Non-taxable items are goods or services exempt from sales tax under specific laws or regulations, varying by state.
Nonprofit exemption is a tax status allowing organizations to avoid federal income tax due to their charitable, educational, or social purposes.
O
Origin-based tax is a tax system where the tax rate is determined by the location where goods or services are produced or sold.
Output tax is the tax a business collects from customers on sales of goods or services, typically passed on to the government.
P
A penalty is a financial charge imposed by the IRS for failing to comply with tax laws, such as late filing or underpayment.
Physical nexus refers to a business's substantial presence in a state, requiring it to collect and remit sales tax there.
A Point of Sale (POS) is the location where a retail transaction is completed, typically involving hardware and software for processing sales.
Prepaid Wireless Tax is a tax imposed on prepaid mobile phone services, typically collected at the point of sale.
Prepayment is the payment made in advance for goods or services to be received in the future, affecting cash flow and accounting periods.
R
Registration is the formal process of recording information with a government authority to establish legal recognition or compliance.
A remote seller is a business that sells goods or services to customers in a state where it has no physical presence.
A resale certificate is a document allowing businesses to purchase goods tax-free for resale rather than personal use.
A Reseller's Permit allows businesses to purchase goods tax-free for resale, ensuring sales tax is collected from end consumers.
A retailer is a business that sells goods directly to consumers for personal use.
S
SAAS Tax refers to sales tax applied to Software as a Service products, varying by state and jurisdiction in the U.S.
Sales tax automation is the use of software to calculate, collect, and report sales tax efficiently and accurately for businesses.
A sales tax chart is a table that outlines applicable sales tax rates by state, locality, and type of goods or services sold.
A Sales Tax Holiday is a temporary period during which certain goods are exempt from sales tax to encourage consumer spending.
A Sales Tax Permit is a state-issued authorization allowing businesses to collect sales tax on taxable goods and services sold.
A Sales Tax Return is a document filed by businesses to report and pay sales tax collected from customers to the state.
Sales tax sourcing refers to determining the location where a sale occurs to apply the correct sales tax rate.
A seller is an individual or entity that offers goods or services for sale to buyers in exchange for payment.
A Seller's Permit is a state-issued license allowing businesses to collect sales tax on taxable goods and services sold.
Services taxation refers to the tax imposed on the sale of services rather than goods, often varying by state and type of service.
A sin tax is a levy imposed on goods deemed harmful, such as tobacco and alcohol, to discourage consumption and generate revenue.
Sourcing rules determine the location of income for tax purposes, affecting how and where it is taxed.
A Special Taxing District is a designated area that levies taxes to fund specific public services or projects within its boundaries.
The SSUTA, or Streamlined Sales and Use Tax Agreement, simplifies sales tax collection and administration across participating states.
A State Comptroller is a government official responsible for overseeing financial management and accounting for state funds.
State sales tax is a consumption tax imposed by state governments on the sale of goods and services, typically calculated as a percentage of the sale price.
T
A tax authority is a government agency responsible for administering and enforcing tax laws and collecting taxes.
Tax avoidance is the legal practice of minimizing tax liabilities through strategic planning and use of deductions, credits, and exemptions.
Tax base is the total amount of assets, income, or transactions subject to taxation by a government.
Tax brackets are ranges of income taxed at specific rates, determining how much tax individuals owe based on their earnings.
The Tax Code is a comprehensive set of federal laws governing taxation in the United States, detailing rules for income, deductions, and credits.
Tax credits are direct reductions in the amount of tax owed, often based on specific expenses or circumstances.
Tax due date is the deadline by which taxpayers must file their tax returns and pay any owed taxes to avoid penalties.
Tax evasion is the illegal act of not reporting or underreporting income to avoid paying taxes owed to the government.
A tax-exempt organization is a nonprofit entity that is exempt from federal income tax under IRS regulations, typically for charitable purposes.
A tax holiday is a temporary period during which specific taxes are reduced or eliminated to stimulate economic activity.
A Tax Identification Number (TIN) is a unique identifier assigned by the IRS for tax purposes, used to track taxpayer obligations.
A tax invoice is a document issued by a seller to a buyer, detailing the sale and the applicable sales tax for record-keeping and compliance.
Tax jurisdiction refers to the legal authority of a government to impose taxes on individuals and entities within its geographic area.
A Tax Jurisdiction Code identifies the specific tax authority responsible for collecting taxes in a designated area.
Tax liability is the total amount of tax owed to the government based on income, deductions, and applicable tax rates.
A tax preparer is a professional who assists individuals and businesses in preparing and filing their tax returns.
A tax rate is the percentage at which income or profits are taxed by the government.
Tax rate changes refer to adjustments in the percentage of income or profits that individuals or businesses must pay to the government as tax.
Tax Rate Lookup is a tool or resource used to find applicable tax rates for various income levels and types of transactions.
A Tax Rate Lookup Tool is an online resource that helps individuals and businesses find applicable tax rates for various jurisdictions.
A tax refund is the amount returned to a taxpayer when their total tax payments exceed their actual tax liability for the year.
A Tax Registration Number is a unique identifier assigned to businesses and individuals for tax purposes by the IRS or state tax authorities.
Tax remittance is the process of sending tax payments to the government by individuals or businesses as required by law.
A Tax Remittance Schedule outlines the due dates and amounts for tax payments owed to federal, state, or local authorities.
A tax reseller is a business that purchases tax credits or incentives to sell them to other entities for financial benefits.
Tax software is a digital tool that helps individuals and businesses prepare, file, and manage their tax returns efficiently.
A taxable event is any occurrence that triggers a tax liability, such as earning income, selling an asset, or receiving a gift.
Taxable items are goods and services subject to sales tax or income tax under federal, state, or local tax laws.
Taxable sales refer to transactions involving goods or services subject to sales tax under state and local tax laws.
The taxable threshold is the minimum income level at which an individual or entity must start paying taxes.
Taxable transactions are exchanges or activities that generate income subject to taxation under federal, state, or local tax laws.
Taxable value is the assessed worth of property or income subject to taxation, determining the amount owed to tax authorities.
Taxation is the process by which governments impose financial charges on individuals and businesses to fund public services and infrastructure.
A taxpayer is an individual or entity obligated to pay taxes to a governmental authority based on income, property, or transactions.
Telecommunications Tax is a tax imposed on services related to communication, such as phone and internet services, by federal, state, or local governments.
Transportation Tax is a levy imposed on the use of transportation services or infrastructure, often funding public transit and road maintenance.
U
Use tax is a tax on the use, storage, or consumption of goods purchased without paying sales tax.
Use Tax Reporting is the process of declaring and paying tax on goods purchased without sales tax, typically for business use.
V
A vendor is an individual or business that sells goods or services to another entity, often in a commercial context.
Vendor's compensation refers to the payment or remuneration received by a vendor for goods or services provided to a business.
A Voluntary Disclosure Program allows taxpayers to report unfiled taxes or unpaid liabilities without facing penalties for past noncompliance.
W
The Wayfair Decision allows states to impose sales tax on online retailers based on economic presence, not just physical location.
A wholesaler is a business that purchases goods in bulk from manufacturers and sells them to retailers or other businesses.
Z
Zero-rated sales are transactions that are taxable at a 0% rate, allowing sellers to claim input tax credits on related purchases.
