Transactional tax compliance — sales and use tax calculation and filing — is complicated. It also changes frequently. That’s a recipe for headaches in your business.
Why is sales tax so complicated?
One good reason for the frequent changes we see in transactional changes is the Wayfair Supreme Court decision in 2018 that allows states to require businesses to collect and remit sales tax even if they don’t have physical nexus in a state. 43 states have changed their laws to include remote sellers since that decision, and each state has made different rules and regulations. Some are going to court, but even when the transition has been simple…it’s complicated.
Another reason is the pandemic. Many states have suffered financially as a result, and creative changes in sales tax have been a common source of solutions. There have been controversies over these new laws in many states, and changes in consumer behavior during the pandemic have had unpredictable effects on businesses, too.
In fact, anything that leads to changes in sales tax law is likely to create complications. Most states already have surprising or even downright wacky rules when it comes to taxability, and industry lobbying often adds to the idiosyncrasies, so changes in tax laws can end up with very specific amendments. For example, web design is not taxable in Arizona unless the designer puts the design on paper or a disk, at which point it is taxable. In Texas, web design is taxable, but only the part of the product that is used in Texas, and only if the web design is 5% or more of the total bill. These examples are more recent than the famous bagel example, but they show that the rules aren’t getting simpler.
Add the enormous variation in sales tax rates from one state to another — and one county or city to another within states — and it’s no wonder sales tax is one of the top sources of anxiety for small and medium businesses.
Automate or outsource?
When the Supreme Court made their decision in Wayfair, they said airily that they assumed there was — or soon would be — simple, affordable software that would completely automate the experience. SalesTaxDataLINK is easy to use, automated to the level of individual invoices, and affordable. We believe that you will see an enormous difference between our product and the much less affordable products that compete with us.
On the other hand, more and more of our clients are choosing to outsource all of their transactional tax compliance to us. As sales tax experts, we are able to take the burden off your shoulders completely. Call 479-715-4275 to discuss your needs.
The Wayfair decision Four years ago, the Supreme Court's decision in South Dakota vs. Wayfair changed everything about sales tax compliance for businesses with revenue from multiple states. Instead of being responsible only for transactions in states...
The new nexus Before the Supreme Court's decision in South Dakota vs. Wayfair, remote sellers only had to collect sales tax when they had a physical presence in a jurisdiction. A store, a warehouse full of your products, affiliate sellers -- these...
a The Barter Life It used to be that businesses only had to collect and file sales taxes if they had a physical presence in a state: an office, a store, a warehouse, or a factory, for example. A small business using e-commerce to sell in other states or...