This past year sales tax has been on every business owner’s radar. The recent Supreme Court case South Dakota v. Wayfair has gotten a lot of buzz and caused the topic of sales tax to bask in front-page glory.
With all this sales tax talk, maybe you have heard someone mention that there are some states that do not have a sales tax. Really? Have you ever heard someone refer to the “NOMAD” states and wondered what they were talking about? Read on, this information could save your small business from thousands of dollars in sales tax liability.
The acronym NOMAD can stand for several things, like “Navy Oceanographic Meteorological Automatic Device.” But in the world of taxes, NOMAD stands for the states that do not have a state-administered sales tax.
These states include New Hampshire, Oregon, Montana, Alaska and Delaware. You read that correctly, there are no state-level sales taxes in New Hampshire, Oregon, Montana, Alaska and Delaware. But that doesn’t mean there are no indirect consumption taxes in these states.
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1. New Hampshire
Let’s start off with New Hampshire. It is true that there is no sales tax in New Hampshire, where the official state motto is “Live free or die.” But you will see meals and room tax on your bill if you are dining out, staying in accommodations or renting a motor vehicle in the state. The New Hampshire meals and rooms tax rate is 9%.
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2. Oregon
Oregon does not have a sales tax, but some cities have a food and beverage tax that applies to the sale of prepared food and beverages. The state also has a bottle deposit fee and an E911 fee. These fees are charged to end consumers on certain canned or bottled beverages and prepaid calling cards. The fees help support recycling initiatives and the E911 state-wide call system.
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3. Montana
Montana, known for its mountains and often called “Big Sky Country” is another state that does not have a sales tax. Certain Montana communities and areas that meet specific population and economic conditions, however, can implement a resort tax of up to 3%. There is also a state lodging and facilities sales and use tax. Because this tax only applies to lodging, it is not considered a general sales tax, which means Montana is still considered to be a no sales tax state.
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4. Alaska
Alaska is a state that does not have any state-levied sales tax, but there are many local municipalities and boroughs that impose a sales tax. Some of these local jurisdictions only administer the sales tax for part of the year, while others have higher rates during popular tourist seasons. For example, in Nome, Alaska a 7% seasonal sales tax is levied on all sales and rental of goods and services made in the city during the months of May, June, July and August and a 5% sales tax is levied all other months of the year. At the end of the day, while there is no state-level sales tax in Alaska, there are plenty of local sales taxes.
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5. Delaware
Delaware, our last NOMAD state, does not have a sales tax but…as you have probably guessed by this point, has some other taxes. You will find an 8% lodging tax in Delaware as well as an E911 fee that applies to any prepaid wireless service in the state.
Now you know which states do not have a state-level sales tax and you can easily remember them by using the acronym NOMAD. Keep in mind that your small business may still have the obligation to collect local sales taxes or other similar types of taxes in these states
Check out the free Quickbooks Sales Tax Calculator to see how QuickBooks tracks thousands of tax laws, even in NOMAD states, so you don’t have to.
This article originally appeared on the Quickbooks Resource Center and was syndicated by MediaFeed.org.
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