The new sales tax environment for online sellers raises the potential of noncompliance, audits, and fines. That’s got the attention of finance leaders.
States & Businesses Responding to Wayfair
The implications of the Supreme Court’s South Dakota v. Wayfair decision are still playing out, as states continue to adjust their tax rates and thresholds to improve their revenue streams. Businesses are still figuring out their response to Wayfair, too, and chief financial officers (CFOs) are turning to their tax executives for guidance. An excellent resource to support that conversation is this special report: How Finance Leaders Apply Automation to Navigate Nexus After Wayfair. It’s based on a joint webcast with Vertex and CFO.com featuring George Salis, principal economist and tax policy advisor at Vertex, and John Fontanella, a principal with technical advisory services firm The Bonadio Group.
Wayfair will “significantly change taxation for small and medium enterprises, as well as for large corporations, both domestic and foreign providers and sellers,” George points out. He sees the ruling as part of a broad movement to expand cross-border taxation in the global digital economy. The good news is that organizations seem prepared for change. In a poll taken during the webcast, 63% of participants said that their company has a clear understanding of how states and other taxing U.S. jurisdictions define nexus. An impressive 70% expressed confidence in their company’s ability to keep on top of expanding nexus standards.
Suggestions for Mitigating Risk
Still, the complexity of the post-Wayfair landscape leaves no room for complacency. The report identifies useful suggestions for mitigating risk, such as prioritizing states where you have the most economic presence and considering the need for voluntary disclosure in states with effective dates that have already passed.
Tax directors and finance chiefs alike will find the report’s discussion of tax technology solutions helpful; it covers must-haves such as tax holiday capabilities, GPS zip codes, and exemption management. George emphasizes the need for a solution that’s flexible enough to fit your specific business needs and keep you up-to-date with future rule changes: “It’s not just automating the process – it’s choosing the best automation for your own business model to have the best compliance experience possible.”
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.