If you are a US customer, or are ordering books for delivery to a US customer, you may notice GST being applied to your invoice. As some customers may not be familiar with GST, we have created a brief Q&A that we hope may address most questions. If you are still not clear, do get in touch: https://help.bookvault.app/kb-tickets/new
What is GST?
US Goods and Services Tax is a consumption tax applied to products and services sold into a state. What products and services attract the tax can vary between states, but books are included within GST for most US states.
Critically, the rate of GST applied to a sale is the one that is relevant in the state that is the destination for the product, not the location of the customer. So, a book ordered by an author for delivery to a customer in a different state would attract GST based on the tax rate in the customer’s state, not the author’s state.
Why is there GST on my invoice now when I wasn’t charged GST on similar transactions on previous occasions?
Businesses supplying goods and services to customers in the US, regardless of where they are based, need to levy GST once they reach “economic nexus” in particular states.
The level of economic nexus is different in each state, but as Bookvault’s US business has grown, it has triggered economic nexus in an increasing number of states, so now needs to levy GST on sales destined to be supplied into those states.
Why did you levy GST on an invoice for books going to one destination, but not another one?
Some US states do not levy GST at all. Some do, but have levels of economic nexus that are very high (e.g. California) meaning Bookvault have not crossed that threshold (and may never cross it)
What is the rate of GST?
This varies not just between states, but also at different locations within states as state and local taxes often combine.
The average tends to be around 6 – 7%, but as noted, in some cases there is none (e.g. Oregon and New Hampshire) and in rare cases taxes can exceed 10%. It should also be noted that GST may or may not apply to different services charged (e.g. Bookvault subscriptions) depending on individual state policies
How is Bookvault establishing the correct rate of GST?
Bookvault are working with industry-leading tax partner Avalara (https://www.avalara.com/us/en/index.html) whose integrations with the Bookvault and Great British Bookshop platforms will allow the correct tax to be charged, based on product type, location and nature of the customer.
I don’t believe I should be charged GST. What should I do?
States generally have clear reasons why you may not have to pay GST. The most common is when you may be acting as a reseller, and so are buying books to then sell to others. If GST will then be applied on the sale to your customer, or you are asking Bookvault to dropship to a customer in a state where your sales are too low to trigger economic nexus (and therefore require tax to be levied), then tax doesn’t need to be applied on the books you purchased from Bookvault. Other reasons for exemption may include being a contractor for a state government institution, a charitable organisation or another form of non-profit body.
In all these situations, the way to avoid having GST charged is by providing Bookvault with an exemption certificate obtained from your state tax authority. This can all get quite complex, particularly when dropshipping to your customer, so this handy guide can be helpful in this respect: https://www.avalara.com/content/dam/avalara/public/documents/pdf/drop-shipping-infographic-and-reference-guide.pdf
If you believe you should be exempt and have an exemption certificate, please do reach out to Bookvault as soon as possible https://help.bookvault.app/kb-tickets/new and Avalara will get in touch so you can upload your certificate for validation. As soon as Bookvault and Avalara have the validated certificate on file, tax will not be applied to your purchases.
If you are still unclear about your tax liability, or believe that the charging is incorrect, we would urge you to talk to your tax advisor to get any further clarification required. Bookvault and Avalara are not able to provide specific tax advice to customers.