Access Analytics to Understand the Tax Implications of Business Decisions

Insights gained from sales and use tax engine analytics can inform the kinds of expansion an SMB retailer pursues.

For example, nexus in a particular state can be created if a retailer:

• Has a physical presence in the state (i.e., a brick-and-mortar store, warehouse, or inventory located in the state)
• Makes regular deliveries with its own vehicles into the state
• Has sales representatives located there

Many states are attempting to tax retailers that sell over the internet by enacted sales laws known as Amazon Laws or Click-Through Nexus Laws. The passage of these laws is an attempt to increase a states’ ability to collect taxes on internet sales. These laws are intended to expand substantial nexus to require a remote/online seller to collect sales and use tax in nonresident states.

Having easy access to information such as taxability and transaction reports can help SMBs:

• Perform a reverse audit to ensure their products are taxed correctly
• Properly manage their exemption certificates
• Ensure all returns are correct and filed on time

Sales tax collections are slowing and the country is becoming more of a service-based economy. As consumers purchase more services, many states are expanding the sales tax base to include them. For some states, expanding the sales tax base is a way to increase revenue, and for others, it’s a way to replace lost revenues due to reduced personal income and corporate business taxes.  Expanding services into the sales tax base will help to increase state tax revenues in both the near term and the long term.

In some states, lawmakers are considering bills that would impose the sales tax on services like pet grooming, haircuts, country club memberships, health clubs, funeral services, telephone land line services, cellphone services, movie tickets, cable service and digital downloads. Many states already broadly impose sales tax on many services, such as professional services, and have done so for years. However, many states are simply relying on rate increase to help with decreasing tax revenues.

For retailers considering international sales, having such data about the countries under consideration is even more vital given the stakes involved, which include higher shipping costs, language issues, dealing with foreign currencies, and importing and exporting regulations.

For more information read 5 Steps to Simplify Sales and Use Tax for Retailers.