Sales and use tax for online transactions is one of the most rapidly evolving zones of the tax landscape and one that continues to pose challenges for tax authorities and taxpayers alike. For a quick overview of the terrain from the enterprise standpoint, check out this Visiture podcast featuring Nate Stohrer, solutions manager with Vertex Consulting’s retail practice.
In a wide-ranging discussion with Visiture’s Ronald Dod, Nate tackles the basics of tax compliance, the benefits of tax technology, and the impact of new tax rules. Here are five questions Nate addresses in the podcast:
How has Wayfair increased the complexity of tax compliance? Nate explains the background of the Supreme Court’s 2018 decision and its impact on businesses, especially the requirements around transaction level and/or dollar amount thresholds. He adds a quick discussion of the sales tax complexities associated with the “home rule” states.
What should businesses do to prepare for a tax audit? Nate emphasizes the importance of consulting with financial advisory firms and ensuring that all tax data is clean and readily available. (He also explains how a tax technology solution like Vertex can help.)
In what ways has the COVID-19 outbreak impacted sales taxes? One change that merchants may be able to use to their advantage is an increase in tax holidays as governments try to bring buyers back into markets. But tax authorities are still on the lookout for new sources of income; Nate sketches some of the latest moves toward taxes on marketplace facilitators.
What are the tax challenges for e-commerce businesses looking to expand sales beyond U.S. borders? The discussion here centers on VAT systems in the European Union and the complexity of the remittance requirements they impose (and, again, how Vertex can help).
How does the shift to the cloud affect e-commerce businesses? Nate sees a move among smaller businesses toward fully hosted solutions because they lack the in-house expertise required to manage e-commerce platforms. An increasing number of solutions are available for companies of all sizes and across many industries, from retail to financial services.
These are just some of the key tax compliance considerations as well as a shortlist of automated software features that can help reduce the burden on retailers.
Please remember that the Tax Matters provides information for educational purposes, not specific tax or legal advice. Always consult a qualified tax or legal advisor before taking any action based on this information. The views and opinions expressed in Tax Matters are those of the authors and do not necessarily reflect the official policy, position, or opinion of Vertex Inc.
Michelle Engro helps coordinate Vertex’s public relations and social media functions. Michelle has more than five years of corporate communications, public relations and social media experience. A graduate of Penn State University with a B.A. in public relations, Michelle also holds an M.A. in communications studies from West Chester University.