Sales Tax Compliance Is More Than Filing Returns (Here’s What It Really Involves)

Sales tax compliance often gets reduced to one task: filing returns. In reality, it’s an ongoing, multi-step process that becomes more complex as businesses grow across states, sales channels, and product lines.

Since the South Dakota v. Wayfair decision, companies are managing sales tax obligations across 46 states and Washington, D.C., with more than 10,000 jurisdictions, each with its own rules, rates, and filing requirements. Even small errors can lead to penalties, interest, and audits.

The Hidden Complexity Behind Sales Tax Compliance 

Sales tax may seem straightforward at first, but it quickly becomes complicated as businesses expand. Rules vary by jurisdiction, taxability definitions differ by state, and changes occur frequently. When mistakes happen, the liability falls squarely on the business. 

Common challenges include: 

• Managing compliance across thousands of jurisdictions 

• Keeping up with constant rate and rule changes 

• Interpreting complex taxability rules for products and services 

• Bearing full responsibility for errors and audits 

Even companies with limited footprints can trigger new obligations through growth, remote hiring, acquisitions, or inventory placement.

What the Full Compliance Process Really Includes 

Sales tax compliance extends far beyond filing a return. A complete process requires: 

• Identifying nexus 

• Determining the taxability of products and services 

• Calculating accurate tax rates and mapping systems correctly 

• Managing exemption certificates, including validation and storage 

• Registering with jurisdictions 

• Preparing, filing, and remitting returns 

• Managing notices and responding to state inquiries 

• Maintaining audit readiness and documentation 

• Tracking credits, refunds, and filing calendars 

As your footprint expands, each of these steps becomes more demanding often exceeding what internal teams can realistically manage. 

Sales tax compliance isn’t a task you complete once a month or quarter. It’s a continuous operational process that grows in complexity alongside your business. Understanding the full scope is the first step toward building a sustainable, low-risk compliance strategy.

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