Sales Tax Compliance | TaxConnections

02 Feb 2024

How To Make Sure You Are Using Sales Tax Compliance Best Practices

There are a few different ways you can “do” sales tax compliance. Here are the four main ways we recommend, as well as which option is generally best depending on your company’s size and nexus:

Someone in-house does returns manually, which usually means filing each tax return individually via each state’s online portal. This is often a good option for small companies that file in five or fewer states. But companies usually need a better solution.
An outside bookkeeper or firm files returns manually. This also requires them filing returns through each state’s online portal, so it may be a good option for small businesses that file in 10 or fewer states, but much beyond that and it gets cumbersome very quickly to try to keep up with manual filing.
Rely on a completely automated software solution, with very little human interaction. There are multiple software solutions out there that calculate how much sales tax to collect and remit, and automatically file the returns for you. This maybe a good option for middle market companies that file in 10 or more states with relatively simple transactions (e.g. they sell online, high volume, tangible property where most items are subject to sales tax). However, we always courage our clients to consider all the ramifications of automation and then also consider the human element. Sometimes the biggest hurdle is the software implementation!
Work with a compliance provider, which uses the software but also offers more interaction with a real person on the team. This is usually a good option for or larger companies filing in 10 or more states with more complicated transactions (e.g. they sell more technology products, software or SaaS that are subject to interpretation about taxability), higher end products with a larger cost per product and lower volume. Again- a well thought out combination of software and human intelligence is often the best strategy. In addition to picking the option that will lead to most effective sales tax compliance, you’ll want to weigh the cost involved with each of the above options.

Miles Consulting Group can help you evaluate the best compliance solution as there are more factors than the ones included above—there can be a wide variety of factors to consider.

Written by Monika Miles | Posted in Monika Miles Consulting • Sales Tax Compliance

05 Jan 2024

The Role Of Technology In Streamlining Ecommerce Sales Tax Compliance

It has been over 5 years since the pivotal ruling essentially creating the concept of “economic nexus” thresholds in South Dakota v. Wayfair (US Sup Ct – 2018). And yet, we still field questions from e-commerce companies daily about how to navigate compliance. Ecommerce businesses operate in a complex landscape where sales tax compliance is of paramount importance. Compliance is not merely a legal obligation; it is a critical component of financial stewardship. Failing to comply with sales tax regulations can lead to financial penalties, audits, and a negative impact on the business’s reputation.

As ecommerce transactions cross state and international boundaries, understanding and adhering to the various tax laws and rates remains a formidable challenge.

This article explores the significance of sales tax compliance for ecommerce businesses and how both technology and the human element of a consultant play a pivotal role in simplifying this intricate process.

Here’s what we’ll be covering:

Challenges Faced by Ecommerce Businesses in Sales Tax Compliance
- Specific challenges in sales tax compliance:
  - Varied Tax Jurisdictions: Navigating different tax rules in various locations.
  - Tax Rate Determination: The complexity of calculating accurate tax rates.
  - Handling Exemptions: Managing exemptions for certain products or transactions.
  - Evolving Regulations: Adapting to changing tax laws.
  - Borderless Commerce: Coping with the complexity of cross-border transactions.
  - Accurate Calculation, Filing, and Record-Keeping: Ensuring precision in tax-related tasks.
  - Non-Compliance Consequences: Consequences of failing to comply with tax regulations.
The Evolution of Sales Tax Software for Ecommerce
- The evolution of sales tax compliance methods:
  - Traditional Sales Tax Compliance Methods: Manual and spreadsheet-based approaches.
  - Introduction of Sales Tax Software Solutions: Automation of the compliance process.
  - Advantages of Using Sales Tax Software for Ecommerce: Benefits of using software solutions.
Key Features of Sales Tax Software for Ecommerce
- Essential features of sales tax software:
  - Tax Calculation Software: Automates precise tax calculations for each transaction.
  - Tax Filing Software: Streamlines the submission of tax returns.
  - Tax Management Platforms: Centralized hubs for monitoring compliance.
Beyond the Software: The Role of Consulting in Sales Tax Compliance
- The importance of consulting in sales tax compliance:
  - Importance of Expertise in Tax-related Challenges: Expertise in complex tax laws.
  - How Consulting Can Complement Sales Tax Software: Combining expertise with automation.
The Human Touch Before Technology
- Emphasizes the role of a knowledgeable consultant before implementing automation solutions in tax compliance.

Written by Monika Miles | Posted in Sales Tax Compliance

16 Mar 2022

Florida Sales Tax Compliance And Rates

Florida’s tax rates are mostly consistent across the board, but there are a couple of exceptions that are useful for one to keep in mind while filing taxes. Florida has a state-level tax rate of 6%, but when it comes to commercial rentals, the tax rate is .5% less. This makes the state-level tax rate on commercial rentals 5.5%. Florida sales tax compliance also imposes a 4% tax on amusement machines and a 6.95% tax on electricity.

Florida Sales Tax

There are four different types of filing frequencies for tax returns in Florida: monthly, quarterly, semi-annually, and annually. Make sure to mark your calendar for the 19^th of each month because that is the last day you can file your tax returns in Florida. If the 19th falls on a weekend or on a business holiday, then the deadline is changed to the first applicable business day before the 19^th. This is different than how most states deal with their return due dates. Usually, states will push the due date back to after the weekend or holiday. Keep that in mind, so you do not end up missing the due date because you thought you had a little bit of extra time. Please note that all payments must be made before 5pm EST of the due date to be considered on time.

Written by Aaron Giles | Posted in Sales Tax Compliance • Sales Tax Compliance Rates

28 Jan 2022

Sales Tax Recovery Can Help Cash Flow

Sales tax recovery reviews, sometimes known as sales tax reverse audits are a great way to generate cash flow at any time, but the disruption Covid-19 has caused worldwide has forced many businesses to reevaluate. Will reopening generate the volume of sales businesses had pre-Covid-19? Will our economy tip into a recession? Will businesses be forced to trim costs or even payroll to remain profitable? Businesses are facing these and many other pressing questions over the coming months. One thing is certain, businesses have found ways to adapt and do more with less over the past 10+ weeks. Maybe it is time to reconsider recovering overpaid sales taxes.

Many of you are familiar with sales tax recovery reviews. Quite a few of you have enjoyed success in prior sales tax recovery reviews. We view sales tax recovery reviews as something akin to a doctor’s checkup. Maybe they don’t need to occur on an annual basis (who are we kidding, we all know we’ve missed one from time-to-time), but every few years it is imperative to go in for that checkup to make sure everything is still functioning properly and to address any concerns we have. That’s the same opportunity sales tax recovery reviews offer your business as it relates to sales tax.

Written by Aaron Giles | Posted in Sales Tax Compliance