Why Are Businesses Dissatisfied With the Way They Manage Sales Tax?

At the end of last year, TaxConnex commissioned Porter Research Group to conduct a survey of 100 finance leaders to understand the growing concerns they face related to sales tax heading into 2021.

One question respondents were asked was if they were satisfied with how they were currently managing sales tax, and almost three out of four respondents (71%) answered that they were in fact not completely satisfied with how sales tax was being managed within their business.

Which types of business are most dissatisfied with how they are currently managing sales tax? Three-quarters of responding companies with $25 million or less in revenue are the least satisfied with their current approach of complying with sales tax obligations. Almost as many companies (72%) doing business in fewer than 30 states aren’t satisfied, including mostly retail/e-commerce companies (85%).

What is the cause of their dissatisfaction? The biggest concerns facing these leaders were ranked as the following:

1. understanding nexus and whether products/services are taxable
2. being audited
3. getting sales tax returns filed correctly and on time

Another factor producing dissatisfaction with compliance functions is that sales tax is not only an ongoing obligation but a constantly changing one.

An increasing number of online companies, as well as other remote sellers, find they are meeting or exceeding the economic nexus thresholds in various states. And these requirements are frequently changing in terms of new nexus thresholds, and new rules for marketplace facilitators. Important regulations evolve constantly and need to be monitored

Most businesses, especially smaller ones, don’t have or can’t afford a full sales tax department in these days of tight resources. Sales tax is typically managed by someone who has a lot of other things on their plate. In fact our survey proved some of this. We found that almost half (46%) of respondents are still managing sales tax nexus in-house, 47% are preparing and filing returns in-house and 54% are preparing remittance payments in-house. And they consider not having enough resources, time or expertise available to them as some of their top dissatisfactions potentially hindering their company’s growth.

When you think of all the steps that go into an effective compliance process, it’s not surprise that most companies are unhappy.

If sales tax has become too much for your business to handle or something you’d rather hand off to an expert – get in touch. TaxConnex acts as an outsourced sales tax provider to businesses across the country. Learn more about our services.

Find out more about the difficulties of managing sales tax in our latest eBook.