In-House vs. Outsourced Sales Tax Compliance: Which Is Right for Your Business?

Sales tax compliance has become increasingly complex since the South Dakota v. Wayfair decision. With 46 states and Washington, D.C. administering sales tax and more than 10,000 jurisdictions in play, businesses must manage rules that vary by location and change often. As companies grow across states, sales channels, and product lines, many face a common question: Should we manage sales tax in-house, or is it time to outsource? 

What Managing Sales Tax In-House Really Involves 

Sales tax compliance is far more than filing returns. Managing it internally requires staff with expertise, reliable technology, documented processes, and the bandwidth to handle registrations, filings, exemption certificates, notices, and audits. 

Personnel is often the biggest challenge. When key employees leave, they take critical knowledge with them. And while software can help automate certain tasks, the liability is still on the business if something goes wrong. 

For very large organizations with dedicated tax departments, an in-house model may be sustainable. For many others, it quickly becomes risky and hard to manage. 

When Outsourcing Makes Sense 

As complexity increases, many businesses turn to outsourcing, but not all options are equal. Software-driven solutions typically focus on calculations and filings, leaving nexus, taxability, notice management, audit support, and more on you. 

Whereas full-service outsourcing provides end-to-end compliance management supported by experienced tax professionals. This approach covers registrations, filings, remittance, notices, audits, and ongoing guidance as rules and business activities change. 

The key difference is accountability. 

How to Decide What’s Right for You 

The right solution depends on your business size, growth plans, and risk tolerance. When evaluating your options, consider: 

• Who determines where you have nexus? 

• Who reviews taxability and monitors rule changes? 

• Will you have a dedicated point of contact? 

• How are notices and audits handled? 

• What responsibilities remain with your internal team? 

A strong provider should reduce your burden... not shift parts of it back to you. 

Sales tax is a specialized, high-risk function that becomes harder to manage as businesses grow. While in-house compliance may work in certain situations, many organizations find that outsourcing offers a more sustainable, lower-risk path forward allowing internal teams to focus on growth instead of compliance. 

For more information on this subject, download our latest eBook: Managing the Burden of Sales Tax: Evaluating Your Options