May 17, 2015
A Few Definitions
• Sales Tax & Use Tax• Nexus • Sourcing Rules
Sales Tax – Sourcing Map
A Few Definitions
• Sales Tax & Use Tax• Nexus • Sourcing Rules
• Custom Tax Rules
Sales Tax – The Past
A Brief History of (Internet) Sales Tax
• 1992: Quill v. North Dakota• Misconception that internet sales are really
tax free
A Brief History of (Internet) Sales Tax
• 1992: Quill v. North Dakota• Misconception that internet sales are really
tax free…• The perceived lack of online sales tax was a
driving force for e-commerce• The cost of not requiring retailers to collect
online sales tax has made this an economic issue for states
Sales Tax – The Present
Sales Tax – Today’s Landscape
• Thousands of taxing jurisdictions across the US• Limited centralized processes for managing sales
tax• Many states still have little capability to enforce
their own rules• Audits are more about getting the big fish, but
smaller retailers are being looked at more frequently now as well
• Compliance is a moving target
Questions You Need to Answer
• What do I sell? • Where do I sell it from? • How do I sell it?
Sales Tax Lifecycle
• Assessment of location• Determination of products• Calculation• Collection• Reporting• Remittance Sales Tax
How Hard is it to Calculate Sales Tax?
• In certain states and for some businesses, it’s simple.
• Destination v. origin sourcing• Nexus and collecting for multiple states• Product tax classing• Gotchas: Tax holidays, thresholds
As Your Tax Burden Grows…• Signing up in multiple states• Remitting across multiple systems• Calculating the correct amount to remit –
sales, partial shipments, cancellations, returns• Handling tax-exempt customers
Addressing My Store’s Needs• Nexus Determination • Assess your tax liability, review it as often as
changes occur • Trust your CPA, but verify• Find a software solution that supports YOUR
needs
• What is SSTP? – Conforming states, non-conforming states, and associate
members– Sourcing Rules, Taxability Matrix Charts,
Reporting/Remittance
What else is out there today? Streamlined Sales Tax Project
• How does this affect me as a retailer? – At this point it’s voluntary– Volunteer versus non-volunteer sellers – Free software – Relief from Liability
• Streamlined doesn’t necessarily mean simple
SSTP by the Map
Should You Consider SSTP Now?
• What you commit to• What you get in return• Is it worth it now? Or in the future?
Sales Tax – The Future
Marketplace Fairness Act
• Marketplace Fairness Act (MFA): What is it?• A history of past legislation• Where the bill currently stands• Small seller exemption
Marketplace Fairness Act
• What are the chances of this passing?• If it passes? – States joining SSTP vs. building their own solution– Compliance dates (90-180 days) – Solutions for Retailers• DIY vs. Third-Party Provider • Certified Service Providers
SSTP and MFA, Together
• SSTP is likely to become a bigger player• SSTP already has a model in place • Taxability Matrix Definition and Reporting Processes• Boundary/Rate File management process • Certification Process for States and Vendors • Group of existing Certified Service Providers (CSPs)
Preparing for What Comes Next
• Seek advice from your CPA or tax consultant sooner rather than later
• Stay informed about the status of Marketplace Fairness
• Monitor state legislation, including those that affect your nexus
• Small Seller Exception removes a great deal of concern (if it stays)
• Determine options for calculating online sales tax (both software and data)
Choosing a Sales Tax Solution
• Integrates with your shopping cart or provides a programming interface (API)
• Fits your budget – monthly, setup fees, long-term commitment
• Provides the tools you need: Calculation reports, remittances, exemption certificate management
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