Sales Tax on Services & Products: Taxability Services

Understanding the taxability of your products and services is pivotal in maintaining compliance, unfortunately just like nexus, it differs from state to state.

Expansion into new states, changing tax laws, new product launches, and acquisitions make taxability decisions challenging. There are over 12,000 taxing jurisdictions and many have their own unique set of rules and interpretations. Lack of sales tax on a product or service appropriately could lead to significant exposure over time.

Take the following example:

Product / Service A is not taxed, but in reality should have been taxed.
Year 1 sales total $100,000 and grows 20% per-year over a three year period.
That’s $364,000 of sales over a three year period.
With an average tax rate of 8%, that’s over $29,000 of uncollected tax.

An additional penalty and interest assessment would take the total exposure to close to $40,000. That’s a tough number for almost any business to cough up.

When you rely on the experts at TaxConnex®, you can ensure you understand your sales and use tax obligations in all states and jurisdictions, from establishing nexus to understanding your taxability. Having a trusted resource to ensure you remain compliant gives you ultimate peace of mind.

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