Have increased holiday sales triggered new compliance obligations?

By Robert Dumas on Thu, Dec 19, 2019 @ 11:00 AM

Topics: sales tax compliance retail

Online retailers definitely have something to be smiling about this season. Cyber Monday saw Americans drop $9.4 billion. That figure is up 20% from last year’s $7.9 billion in online sales and it beat this year’s Black Friday’s sales.

But, state jurisdictions also have reason to smile at those numbers.  In the wake of Wayfair, states and localities are mandating that online retailers collect and remit sales tax for out of state purchases.
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This was the first Cyber Monday that big states like New York and California required online retailers comply with sales-tax collection laws. And while many headline retailers – Amazon et al. – did the sales tax thing even before the Wayfair ruling, smaller retailers who now meet states’ nexus thresholds are figuring out how to comply with far-flung and unfamiliar tax laws possibly for the first time.  

For some, online holiday shopping could even have pushed them over sales tax nexus thresholds in some states. It’s important in any season to be mindful of economic nexus thresholds in states in which you have the most sales, but as you experience higher volumes of sales make sure you have done your homework and stay a step ahead of your sales tax liabilities.  

Use this five step approach to ensure you stay compliant.  

  1. Determine where you have nexus. Understand the definitions of both physical and economic nexus and determine where you have met your thresholds.
  2. Know when your products/services are taxable.
  3. Find out if you need sales tax calculation software, or if it’s something you can manage on your own.
  4. Develop your go-forward strategy – including necessity of VDA’s, deciding how you will charge sales tax, and prospectively register in your required states.
  5. Establish a tax compliance filing process: Understand how you will manage the return filing process and if you will be best suited to manage it in house or outsource.

Sales tax compliance can seem overwhelming, but it doesn’t have to be so difficult – utilize the resources available and feel free to contact us for all your sales tax compliance needs.

Want to learn more on this topic? Download our eBook – The Guide to Getting Sales Tax Right.

 
Robert Dumas

Written by Robert Dumas

Accountant, consultant and entrepreneur, Robert Dumas began his public accounting career on the tax staff at Arthur Young & Co., followed by a brief stint at Grant Thornton. In 1998, Robert founded Tax Partners, which became the largest sales tax compliance service bureau in the country, and later sold it to Thomson Corporation. Robert founded TaxConnex in 2006 on the principle that the sales tax industry needed more than automation to truly help clients, thus building within TaxConnex a proprietary platform and network of sales tax experts to truly take sales tax off client’s plates.