WEIGHING YOUR OPTIONS – HOW TO MANAGE SALES TAX COMPLIANCE

In light of recent legislation changes, you’ve determined you meet sales tax nexus thresholds outside of just your home state and now you have to collect, file, and remit sales tax in multiple states. What a headache. To make matters worse, this is a compliance issue, so you must act.

If you are a business with customers in one state, your scope and risk is limited to that one state. If you are a business with customers in multiple states, your scope and risk grows in accordance with the number of states and the sales tax complexities in those states. In order to comply with this tax responsibility, businesses must incur costs of staff, processes, technology and experts. The materiality of these costs depends on the scope of sales tax compliance (i.e., number of states and transactions) and the amount of risk you are willing to take (i.e., partial or full compliance).  What can you do to manage this burden?

Well, you have three options to address this compliance obligation.

• Try to manage everything in-house
• Outsource tax compliance to an experienced provider
• Do nothing and roll the dice…

If you don’t want to risk an audit or having to pay due tax as well as penalties and interest, you can’t afford to go with the ‘do nothing’ option. That leaves you with two options.

It boils down to you and your business having a choice: Tackle all that goes into compliance in-house, outsource the job, or figuring out some combination of the two. The right arrangement from the beginning can save you time, aggravation and money.

But how do businesses make this decision? There is no right or wrong answer, just understanding the pros and cons and doing what is best for your business.

With even more changes coming in 2020 from many of the 10,000 taxing jurisdictions, sales tax compliance is clearly a specialty and not getting any easier. If you’re looking to reduce costs, increase efficiencies and minimize the substantial risk of noncompliance, reach out to a sales tax expert. Consider working with TaxConnex^®.  Contact us to learn what it means when sales tax is all on us.

Learn more about the pros and cons of managing sales tax compliance in-house vs. outsourcing in our new eBook! Click below to download!