For online businesses, it’s time to get ready for the new normal in sales tax.
As time goes on, the various impacts of the U.S. Supreme Court’s 2018 decision in South Dakota v. Wayfair continue to unfold. States are adjusting their sales and use tax rules with a bewildering variety of new thresholds, rates and regulations. A new e-Book by Vertex, How to Prepare for the Post-Wayfair Impact on Your Online Business, looks at the challenges and suggests ways to tackle them.
Here are some of the highlights directly from the report that can help businesses adjust to the new realities of the post-Wayfair world:
Understand the risks of non-compliance: Legal and economic exposures include audits and fines, as well as litigation risk. Tax and business leaders should also consider the potential for reputational damage in the eyes of trading partners, customers and the media.
Identify state thresholds and reporting requirements: It is fair to expect ongoing changes in rules and rates. In some states, even if a company hasn’t made any sales, it must still file a report of zero taxes due. It’s important to keep track of which states you’re selling in and where you’re registered. As Pete Olanday, Vertex consulting retail practice leader, notes in the e-book: “In the past, businesses didn’t need to record [that information] because they didn’t need that data for filing purposes. Now they’re going to start to need to capture all sales, regardless of whether they’ve registered in that state, and without knowing if they’ll need to report it.”
Prepare for surprises: If your sales have been mostly limited to a particular state or area, don’t overlook the possibility of a sudden increase in demand for your product in other locations that could result in compliance headaches.
Get granular with a tax automation solution: Having the right platform in place to handle all the rules, rates, exemptions and compliance demands is a huge confidence booster. Armed with this confidence, execs don’t have to operate as tax experts. Instead, as I point out in the e-book, they can let their technology handle the complexities. If and when things change, decision-makers can rely on the proficiency of a tax automation solution like Vertex to stay on top of what’s going on and push those necessary updates through.
That last point is just one of the reasons why we trust partnering with Vertex to help Magento Commerce merchants confidently grow.
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.