We’ve recommended online, automated sales tax compliance solutions – like those from Avalara – before. As states become more desperate for revenue, the broadening of sales tax collections is increasingly in their sights. A timely update from our friends at Avalara, taken from a recent white paper entitled “The State of State Sales Tax in 2016” brings this into focus.
States are indeed broadening their tax collection efforts, Avalara notes, and rates in some states are increasing while exemptions are being temporarily suspended. The challenge of compliance has never been greater, especially among companies operating in multiple states.
State legislatures are debating the issue across the country. Options under review include taxing remote sales… increasing state rates… expanding taxes to services… eliminating exemptions to increase revenues — or expanding them to stimulate growth. Each state is unique, but if you sell in their states, it’s still your problem.
Meanwhile, federal lawmakers, Avalara notes, seem at an impasse. So states are launching frontal assaults on ‘Quill,’ the 1992 Supreme Court Decision that “affirmed that out-of-state sellers must have a physical presence in a state to be required to collect sales tax. Their goal: Create an opportunity for the Supreme Court to reverse Quill.”
About a dozen states are working on changes, while trade associations work to combat them, with major retailers sometimes refusing to comply. The bottom line is that across the country, sales tax laws and policies are in flux. The tax lawyers, of course, are having salad days.
Of course, Avalara sells a product called AvaTax to help. It’s a cloud-based, real-time sales tax calculation, compliance and filing system that guarantees its users that they will be in compliance at all times. Our experience with it has been that, while not exactly cheap, it is indeed safe and cost-effective, given the large fines and fees associated with even accidental non-compliance violations.
Let’s face it: sales tax compliance is a time-consuming burden for everyone. But it’s not going away. Avalara’s solution provides a way to manage the process and vastly reduce the stress, while eliminating potentially costly penalties. We recommend to all our multi-state sales clients that they investigate their options. We’re not being shills here, we just know the consequences, and as our 6th grade teacher used to say: A word to the wise is sufficient.