‘Tis the Season for Complex Tax Transactions
The effects of COVID-19 have drastically accelerated the growth of online retail across the world. From the explosion of remote work to mandatory stay-at-home orders, consumers embraced online shopping, whether it be for groceries or gadgets or gifts.
The United Nations Conference on Trade and Development reported in May that as a result of COVID-19, online retail sales as a percentage of total retail sales grew globally from a share of 16% to 19% in 2020. In the United States alone, online retail sales jumped from $598 billion in 2019 to $791.7 billion in 2020.
Online shopping over the 2020 holidays in the United States grew 32.2% from 2019, totaling $188.2 billion, according to CNBC. And while retailers welcome the upcoming holiday surge, they need to maintain compliance with complex and evolving rules and regulations.
This year, online shoppers will probably start early, buy more and ship to multiple addresses. Retailers need to monitor and manage revenue dollars to determine if and when they need to register in a new jurisdiction and what sales tax to charge and file.
Businesses can’t do this alone. Even the best tax departments can’t track every little change in the more than 11,000 tax districts in the United States. That’s what tax technology is for.
Vertex offers sales tax automation to streamline, automate, and standardize tax calculations on every transaction. Vertex runs on the most advanced calculation and returns software platform in the industry to reduce time and effort to perform sales and use tax calculations.
But tax technology is more than just making sure your company stays compliant, it’s also the foundation of a healthy, thriving business. The scenario below shows just how complex transactions can become during the holidays and how Vertex automated tax solutions could make a big difference.
Grow your business, not your sales tax risks
Breah owns a toy shop specializing in handmade wooden toys in Brooklyn, NY. During the past year her online shop has grown exponentially. She’s thrilled to now have customers all across the country, but she needs to figure out a better way to calculate sales taxes before the holiday rush. It’s clear this is going to be a holiday shopping season like no other.
Automatically calculate accurate sales tax
Joyce has six grandchildren in three different states. She hasn’t been able to see them much over the past year, so she plans to shop early and splurge on their holiday gifts. She’ll make a big purchase at Breah’s shop and ship the gifts directly to several addresses. Vertex integrates with Commerce Cloud to help Breah calculate sales tax on whatever items she sells, wherever she sells them and ships them.
Deal with change orders
After Joyce places her order, she learns that one of her grandsons doesn’t like the color blue anymore. He prefers red. She gets back onto Breah’s website and changes her order. Vertex uses order management integration to update the tax at each stage of the buyer’s journey.
Generate monthly tax returns fast
Finally, the big day has arrived. All six grandkids love their gifts. But one of Joyce’s granddaughters has already received the same toy from a friend as a birthday gift a few weeks earlier. Breah receives the return months after the original purchase. During that time, the tax rate has changed. Luckily, her tax software will handle it.
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.
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