DisclaimerI will be speaking on topics that may impactyour organization’s sales tax liabilities andobligations.This should not however be consideredprofessional Tax advice specific to yourorganization.It’s recommended to speak with a ‘certified’sales tax professional (such as anaccountant, advocate, or attorney) forspecific questions and advice.
Federal LegislationIncreased State EnforcementConstantly ChangingRates, Rules, & BoundariesNexus(Physical Presence)Product TaxabilityUse TaxFiling & ReturnsInternationalRequirementsSales Tax Compliance: The ProblemYOUAREHERE
Sales Tax LegislationEver changing Sales Tax regulations• Thousands of changes annually across the U.S.Amazon Laws• Expanded and new definitions of NEXUSUS Federal Legislative Pending Action• Marketplace Fairness• Main street Fairness• Marketplace Equity
Do you have Nexus in a given state?States define Nexus as a ‘tangible physical presence’ whichcreates the legal requirement to collect & remit Sales Tax.Nexus triggering events are not consistent state-to-state butcan include:Traveling and/or Remote SalespeopleAgents or DistributorsRemote Employees on PayrollOnsite Customer TrainingTrade Show AttendanceInventory / Warehousing / Drop-ShippingInstalling / Servicing Tangible PropertyInternet (and other) Affiliates
Marketplace Fairness ActIn February as part of the Budget Vote 74 Senatorsapproved Marketplace Fairness Act in a non-bindingvote.Its currently supported by National Retail Federation,Amazon, Wal-Mart, National Governors association.In Effect overturns Supreme Court Decision QuillCorp vs. North Dakota, and ignores current NexusOnly exempts Companies doing under $1 million inremote sales (out of state sales) from collectingStudies have shown an anticipated impact on 3million businesses if the Bill passes
The Ongoing Challenge and ‘time loss’ of Sales TaxNexus – What is the full scope of States where Ishould collect sales tax?Accuracy – Am I doing the calculations right?Filing – The monthly, quarterly, never-endingcrunch!Audits – Go pick on someone else!
The Sales Tax Challenge for Ecommerce RetailersCalculation – For each transaction where Sales tax need becalculated, the following must be taken into account:– Should sales tax be applied based on Ship-To or the Ship-From address ?– Jurisdiction Layers (State, County, City and Special Taxing Jurisdictions)– Product specific taxability requirements ?– Amount of the unit price and total invoice effecting tax calculation ?– Sales tax exempt status for specific customer accounts ?– Reporting to support the compliance processTax Returns – The tax accrued or collected needs to be remitted toeach state or jurisdiction:– AP departments typically have to make a payment to each state monthly orquarterly.
A State by State Look at Sourcing Rules‘Sourcing Rules’ determine on which location / jurisdictionsSales Tax should assessed for shipped itemsOrigin-Based States for Products (Services Destination)• Arizona, Illinois, Missouri, New Mexico, Ohio, Pennsylvania, Tennessee,Utah and VirginiaMixed Source States• California• Counties are Origin-based; Cities & STJs are Destination-based• Services are always Destination-Based• Texas• Cities and Counties are Origin-Based based; STJS are Destination-based• Some Services are Destination-BasedDestination-Based States• All the rest
What does it take to be Jurisdiction Accurate?
Accuracy isn’t just about the address aloneStates tax products differently depending on theproduct and where that product is shipped.Some examples of industries with varying taxabilityrules:Software / HardwareDigital GoodsServicesMedical device / equipmentFood / BeverageClothing / ApparelDietary SupplementsAnd many other industries / products!
Some odd ‘product taxability’ examples:Which is non-taxable?Original Milky Way or Milky Way Midnight candybars?
Some odd ‘product taxability’ examples:Is this bagel taxable or non-taxable in New York?
Download Adobe Acrobat 9 Pro Extendedhttps://www.adobe.com/downloads/Taxable or Non-Taxable in California?
Taxable or Non-Taxable in California?Download Adobe Acrobat 9 Pro Extendedhttps://www.adobe.com/downloads/
The Multi-Channel Business & Sales Tax Compliance18Consistency of rates andautomation across ALLtransactional Softwareplatforms…
The Market Options for Managing Sales TaxManual• OK for simple collection requirements,low volumesZip-Code Tax Tables• Adequate, though inaccurateOnsite Solution• IT infrastructure, maintenance‘Cloud-based’ Solution• Automated via SaaS deployment
Avalara is the leading global transactional tax solutionAvalara is the leader in SaaS based transactional tax• Chosen by over 11,000+ businesses• Calculating more than 3 million tax computations daily• Auto Filing more than 30,000 returns per month• Remitting more than $14 billion in tax filings annually• Currently tracking over 1.5 million sales tax exemption forms• All AvaTax Calculations legally Certified as accurate by 24 statesand growing
David WestOEM-ISV Channel ManagerDavid.west@Avalara.com+1 206.826.4900 x1119http://www.facebook.com/AvalaraSalesTaxhttp://blog.avalara.com/http://twitter.com/avalara