FAQ - Cyrious Subscription/Services and Sales Tax

This article covers some of the frequently asked questions regarding Sales Tax for Cyrious's Subscriptions and Services.

What is the sales and use tax you are collecting?

• Just as you are required to charge and collect sales tax for the goods you sell to your customers, we too are now required to charge and collect a sales and use tax on the products and services we provide to you. This mandate applies to most jurisdictions across the United States.

Why are you just now starting to collect sales tax?

• On June 21, 2018, the United States Supreme Court ruled in South Dakota v. Wayfair that “States” can mandate that businesses without a physical presence in a state collect and remit sales taxes on transactions in that state. Over the last few years, most states have enacted their own laws requiring this action. Consequently, starting January 1st, 2022, Cyrious will be collecting, reporting, and remitting sales and use tax from all jurisdictions across the U.S in which it is required. As more jurisdictions begin requiring it, we will immediately begin collecting in those areas as well.

Can you explain more about the South Dakota v. Wayfair case?

• South Dakota v. Wayfair, Inc. was a United States Supreme Court case that resulted in the Supreme Court overruling a longstanding physical presence rule, allowing states to now require remote sellers to collect and remit sales tax.
  
  Since Wayfair, most (but not all) states have adopted new rules defining what establishes sales and use tax obligation, known as Nexus. You can read more about the decision/case directly on the Supreme Court website.
  
  Prior to this legislation, most businesses were only required to collect/remit sales tax on their products/services in areas where they had a physical presence such as staff, offices, manufacturing facilities, remote salespeople, etc. Additionally, businesses outside of your own state did not collect sales tax on your remote/online purchases. Instead, you were responsible for self-reporting and remitting any sales tax of remote purchases to your local jurisdictions when you filed your business and/or personal taxes each year.
  
  Since Wayfair, most (but not all) states have adopted new rules defining what establishes sales and use tax obligation, known as Nexus. Many of us remember the early days of ordering online from Amazon, Wayfair, Overstock, etc. and other large online-only retailers and not being charged sales tax on the majority of our purchases. With this new Supreme Court ruling and the associated Nexus rules, taxes are now collected/remitted on any purchases you make from these online-only retailers.

Is this a new tax?

• In short, no.
  
  Previously, if your jurisdiction did not require Cyrious to collect a sales tax on the products and services provided to you, you were still obligated, in most cases, to self-report and remit the sales tax yourself. Because of the South Dakota v. Wayfair case, Cyrious is now required to collect sales tax and remit it directly to the state.

What determines whether Cyrious will collect Sales Tax on my subscription and/or services?

• The Nexus rules/regulations for the state in which your business is located will determine whether Cyrious is required to collect/remit sales tax. Please be aware, Cyrious is only responsible for collecting/remitting sales tax on the goods, services, software, licensing, etc. that Cyrious sells you.
  
  We are not responsible for collecting/remitting any sales tax that is applicable to estimates/orders that you create for your customers. That would be your business's responsibility as it has been historically.

What Cyrious goods/services could be subject to sales and use tax?

• Software Licensing Fees
• Software Training Fees
• Data Import Fees
• Software-as-a-Service Subscription Fees (whether pre-paying annually or monthly).
  Note: It is important to note that Software-as-a-Service is treated differently, from a sales tax perspective, than custom/canned software in many states.
• Any other goods, services, etc. that you purchase from Cyrious.

Can I opt out of this tax?

• In almost every case the answer is no. If your jurisdiction taxes the products and services we provide, there are some edge cases where states do allow for tax exemption; however, less than 1% of our customers qualify for these exemptions. If we believed your business met one of these exemptions, we would have already reached out to you and asked you to provide us with a tax-exempt certificate. We register with each state, tell them what products and services we provide, and they tell us if the products and services are taxable or not and what rate to charge. This is not something we control.

Does anything change with sales tax if I'm paying for my Cyrious subscription annually instead of monthly?

• The only difference is that when paying for Cyrious annually your order subtotal price is higher since you are prepaying for 12 months of service, thus your total sales tax for that one order will be higher.

Does this affect the way I collect sales tax from my customers?

• No. This has absolutely no effect on your responsibility to collect sales tax from your customers. You still will be required to collect, report, and remit sales tax as you always have. This is only a tax on the products and services Cyrious sells to you.

My state doesn't charge sales tax on software services. Why are you sending this to me?

• Even if your state does not currently charge sales tax on software services, we anticipate that most states will likely do so in the near future. This communication serves as your notice that when/if the law changes as a result of new legislation, we will immediately begin charging sales tax.

My state doesn't have any economic nexus laws. Why are you sending this to me?

• Even if your state does not currently charge sales tax on software services, we anticipate that most states will likely do so in the near future. This communication serves as your notice that when/if the law changes as a result of new legislation, we will immediately begin charging sales tax.