Can sales tax be collected voluntarily when it is not required?

Can sales tax be collected voluntarily when it is not required?

States require economic nexus before they can require a corporation to collect sales tax, but the IRS will not prohibit a corporation that does not have economic nexus in the state from registering to collect tax. Therefore, you can voluntarily register to collect sales tax even if it is not required.

There are times when a client may require the seller to collect tax in order to minimize its use tax requirements. Some times it is because the buyer is a government department that requires the seller to provide a registered tax number. There are times when it is because the seller originally had employees or premises in the state but has now closed. These may be the reasons for voluntary tax collection. But only if you register before the tax is levied.

It is especially important to note that once a company is registered for the purpose of collecting sales tax, it must comply with all relevant laws as if it had economic ties. The company must collect tax on all taxable sales and must obtain a certificate of exemption before it can make tax-free sales. A corporation may not voluntarily register at the request of one client, but collect sales tax only from that client. It must collect tax on all sales in the state and is obligated to be audited.

Under the Streamlined Sales Tax Program (SSTP), a voluntarily registered seller company has certain protections that reduce risk exposure.