Since the Wayfair decision two years ago (the 2 year anniversary was just this past weekend), sales tax compliance has become a major priority for many businesses. These businesses all have varying levels of knowledge on the sales tax rules and regulations, but they all have one thing in common: they want a solution to the problem, and they want it to be simple.
The first step for many businesses is to do a nexus review to determine where they should be collecting sales tax. From there businesses start to consider how they are going to charge sales tax – either on the invoice or in their shopping cart. Invariably, different software options bubble to the surface. These software options appear to automate the full sales tax process; however, what is not apparent is that the software options are similar to a do-it-yourself (DIY) project. The business is still responsible for the sales tax process and must tell the software company what to do and when to do it. This would include:
Implementation of the technology
Maintenance of the business assumptions and rules applied by the technology
Updates and management of the tax calendar and changing filing frequencies
Managing sales thresholds and an expanding nexus footprint
Taxability of new products and services
Management of the output from the technology – specifically tax data
Responding to jurisdictional notices and inquiries
But this is not to say that technology shouldn’t be used. There are several good software options on the market to be used in conjunction with a sales tax professional.
Sales tax compliance is complicated and multi-layered, requiring a person (ideally a person with extensive sales tax experience) to peel back the onion by jurisdiction (state, municipal, home rule, special district), activity, and type of tax before making key decisions.
Technology is a valuable tool, and in 2020, we’re leaning on it more than ever. But technology alone lacks the insight needed to manage sales tax from registration to remittance and audit to penalty resolution.
When you pair your tech solutions with an outsourced compliance partner, you’re able to make the most of valuable resources available to you and have a reliable compliance solution that actually takes the burden of sales tax off your plate. No more DIY here. Contact TaxConnex to learn more about our services in sales tax compliance – from nexus reviews and audit management to maintaining your tax calendar and filing your returns. With TaxConnex, it’s all on us.