Are you maintaining compliance with the new sales tax laws for eCommerce sales? Online sellers in the US now have to deal with a complicated array of tax rules, dependent on the location of the buyer rather than that of the seller.
In its June 2018 decision in South Dakota v. Wayfair Inc., the Supreme Court ruled that states could impose sales taxes on companies without a physical footprint in that state.
In the past, eCommerce companies avoided dealing with the details of particular jurisdictions, at least to a large extent (there were still complications). This was because a state’s ability to tax a company was dependent on whether the company had a “significant physical presence” in that state. However, with the new ruling, state and local tax rules have come to the forefront, and the complications are staggering:
1) There are over 12,000 tax jurisdictions
One reason this new ruling complicates tax compliance for businesses is that there are over 12,000 jurisdictions. Not only do tax rules differ by state, but in some states, they differ by city and county. In other words, an eCommerce company will have to know the specific tax laws of thousands of different locations in order to comply.
2) States and localities will change tax rules over time.
Adding to the confusion, states and localities will change tax rules over time. So not only are you dealing with 12,000 jurisdictions, but you need to keep track of changes in those 12,000 jurisdictions to ensure you’re in proper compliance.
This has already begun, with many states changing their tax codes after the recent court decision. Colorado, Connecticut, Nebraska, Louisiana, Iowa, West Virginia, and Utah have recently passed new rules. Meanwhile, in North Carolina, counties have started to institute changes as well. This will certainly increase over time, as different state and localities try to take advantage of the ruling to garner more revenue.
Fortunately, in most states, companies have to meet a certain amount of revenue from sales before they are taxed. But even this criterion can and will change as time passes.
3) Due dates and filing procedures can differ by state.
Lastly, companies trying to stay in compliance will also have to deal with differing due dates, filing procedures, etc. by state or municipality.
These three issues can make it extremely complicated and labor-intensive for most eCommerce businesses to track on their own. Large entities like Amazon may be able to handle it by hiring staff with expertise on taxes. But for smaller to mid-sized enterprises (and even many large ones), this doesn’t make much sense.
Instead, businesses are increasingly turning to solutions like Avalara to automate their tax compliance.
Avalara Sales Tax Software
Avalara AvaTax is a sales tax software that allows you to automate tax compliance for your eCommerce sales.
Avalara helps you in two different ways. First off, it keeps track of all 12,000 jurisdictions across the US. In this vein, it serves as a sort of knowledge consultant or tax expert, constantly updating information about the different tax rules across the country.
Secondly, using this information, Avalara computes sales taxes in real-time so you can charge the right amount at the point of sale. It connects to your shopping cart on your eCommerce platform (via the right connector) and determines for every sale 1) whether a tax needs to be collected, and 2) if so, how much. It then charges that tax for the sale, automating taxes for you.
With these two benefits, you no longer have to pay attention to pieces of legislation or tax rules at all times. You also take out all of the guesswork and associated risk with trying to compute these taxes on your own, potentially getting it wrong and receiving late penalties. Finally, by integrating Avalara AvaTax with your system, you automate the tax collection and remittance process and thereby reduce labor.
Odoo and NetSuite Avalara Connectors from Bista
As an approved partner with Avalara, Bista Solutions provides direct integrations with ERP systems such as NetSuite and Odoo. We’ve integrated Avalara for many companies in the past, and we can help you do the same.
Even if you’re using external eCommerce platforms such as Magento and Shopify attached to your ERP, Bista can configure the connector properly for your use.
If you’d like to integrate Avalara, give us a call! You can reach us at (404) 631-6219 or by using our contact form.