tax

---
name: tax
description: Structures the tax questions a growing business faces — corporate income, sales and use, payroll, nexus, and the obligations created by hiring or selling somewhere new. Use this to work out what a new state or country obligates you to, prepare for a tax filing or audit, understand sales tax on your product, or check what a remote hire or new market triggers.
---

# Tax

Tax obligations are created by facts — where you sell, where people work, what you sell — not by
decisions anyone consciously makes. The characteristic failure is discovering an obligation years
after it began, with penalties and interest attached.

**This structures the question and tells you what to ask. Tax is technical, jurisdiction-specific,
and changes frequently. Positions on anything material belong with a qualified tax adviser or CPA,
not a checklist.**

## Nexus: the thing that creates obligations quietly

Nexus is the connection that gives a jurisdiction the right to tax you. It is established by
activities most companies do not think of as tax events:

- **An employee working somewhere.** One remote hire in a new state commonly creates payroll
  registration, income tax withholding, and often corporate income tax nexus.
- **Economic activity without physical presence.** Since *Wayfair*, US states set sales-tax nexus on
  revenue or transaction thresholds — a few hundred thousand dollars, or a couple of hundred
  transactions, with the numbers differing by state.
- **Inventory held somewhere**, including in a third-party fulfillment warehouse you never visit.
- **Contractors, or attending trade shows**, in some jurisdictions.

Review nexus whenever you hire in a new location, cross a revenue threshold, or change how you
distribute. Registering late costs more than registering early, and voluntary disclosure programs
exist precisely because this is so common.

## Sales tax is about what you sell, not what you charge

Taxability of software and services varies enormously by state: SaaS is taxable in some, exempt in
others, and treated differently again if delivered with implementation services. The classification
of your own product is a determination worth getting in writing and revisiting when packaging
changes — see `revenue:pricing-and-packaging`, because bundling can change the answer.

Exemption certificates for tax-exempt customers must be collected and kept current. In an audit,
missing certificates mean you owe the tax you did not collect.

## The calendar is most of the discipline

Tax failures are usually administrative, not technical: a missed registration, a late filing, an
estimated payment nobody scheduled. Maintain a calendar of every obligation by jurisdiction with an
owner, and treat it as part of `finance:financial-reporting-and-close`.

## Where it meets the rest of finance

- `finance:financial-reporting-and-close` — tax provision and the deferred position
- `finance:capital-allocation` — after-tax returns are the only ones that matter for a decision
- `people:workforce-planning` — every hire in a new jurisdiction is a tax question before it is a
  cost question
- `finance:revenue-recognition` — book and tax treatment diverge, and the difference is itself
  something to track

## Sources

`references/sources.md` in this skill lists the outside authorities that settle the questions
here — what each one is authoritative for, and what you may do with it. Check them before
answering on anything they cover, and cite what you used. Most are free to read and not free
to reproduce; the use note on each is binding.

## Never

- Assume no obligation because there is no office in a jurisdiction.
- Treat your product's taxability as settled across states without a determination.
- Sell into exempt customers without current exemption certificates.
- Take a position on a material matter without a qualified adviser.

• SKILL.md 4 KB
• references/sources.md 2 KB