What’s a Tax Engine?

Your sales tax reporting software calculates your report and helps you file, keeping you compliant in every jurisdiction where you have nexus — and that can be a complicated question to begin with. But there’s another point of complication: changing sales tax laws and regulations. 

Sales tax laws are complicated. They vary from state to state and even from town to town. And right now they’re changing fast. A recent Supreme Court decision allows each state to make laws requiring out of state sellers to collect sales tax. Not only are states still deciding what to do about the end of Quill, they are also figuring out how their new laws work and even going to court over the details.

So an ordinary tax table just isn’t enough to keep you on track. You need a tax engine.

What’s a sales tax engine?

If you have e-commerce at your website, you probably have a simple sales tax engine. When your customers put in their addresses, the tax engine checks the tax rate in their town and calculates the sales tax on their purchases.

That’s great — but it doesn’t have the level of accuracy you need. For one thing, it probably relies entirely on zip code, which may not be enough information to get the exact rate for each jurisdiction. It probably also doesn’t take into account special tax rates for specific items or detailed regulations for your industry. Chances are, it doesn’t even update often enough to catch all the changes in rates and regulations.

This doesn’t always matter at a typical small online retail shop. Your average basket size might be $35 or $86, and you may have limited numbers of sales in each state. You can miss a few cents here or there and end up close enough.

Does your sales tax engine meet your needs?

Larger scale retailers need greater accuracy.

For manufacturers, construction, and large items like industrial machinery, it’s a whole different ball game.

That’s why you need a tax engine like the one Sales Tax DataLINK uses in our solutions. We can get you invoice-level accuracy that makes sure you’re compliant in every required jurisdiction and supports you in an audit. 

Give us a call. We’ll be happy to prepare a demo that will show you exactly what Sales Tax DataLINK sales tax reporting software can do. 

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