Tracking, monitoring, and recording sales tax by jurisdiction can be challenging. Taxes vary among states, counties, towns, and even items. They can change by year, with some items taxed temporarily to raise funds for a special local project and other items non-taxable for a day or two, like clothing taxes waived for back to school shopping. What’s a business owner to do to keep it all straight?
Fortunately, software such as Avalara AvaTax can help you track sales taxes without losing sleep. With the many changes in sales tax each year, having an automated system integrated with Acumatica Cloud ERP or Sage 100 ERP can be a game changer. Such systems can help you with tax compliance across multiple jurisdictions, products, and more.
How Tax is Charged: Sales Tax Jurisdictions
Sales tax is usually charged and collected based on whether the customer who orders the goods lives in the area in which your company has a presence. A “presence” to the IRS means an office, a warehouse, or another location that regularly conducts business. It can also include workers who perform full-time duties from home offices in different states. Keep this in mind when you talk to your accountant about the areas in which you are legally bound to collect, report, and pay sales tax.
Sales Tax Changes You Need to Know
There are dozens of changes to the sales tax rules nationwide. Avalara provides a good report on them for 2017 on their website, but the highlights include:
- Changes to local sales tax rates in many states. These include:
- Alabama
- Arizona
- Arkansas
- California
- Colorado
- Florida
- Illinois
- Kansas
- Minnesota
- Mississippi
- Nebraska (also boundary changes, which can impact rates)
- Oklahoma
- South Dakota
- Texas
- Utah
- Washington (and Washington lodging tax rate changes)
- Wisconsin
- Repealed sales tax exemptions in numerous states including:
- Repeal of exemptions for tangible or personal property used for renovating aquariums in Georgia.
- Retail sales of tangible personal property, digital property, and taxable services by nonprofits will no longer be exempt from sales and use taxes in North Carolina.
- North Carolina will no longer exempt purchases by a manufacturer of fuel or piped natural gas used solely for comfort heating, either.
- Wyoming is considering eliminating sales tax exemptions triggered by economic development incentives. This hasn’t passed yet but is under examination by Wyoming’s Joint Revenue Committee.
Amazon Changes
If you sell using Amazon’s services, take note: they will start collecting taxes in Utah, Iowa, and Louisiana, even though they do not have warehouses or offices in those states. Amazon has voluntarily agreed to track and charge tax to placate local governments in those areas. If you sell via Amazon in those states, you may need to take note of these changes.
Exemptions and Repeals: An Annual Event
The tax code is always changing. In any given year, the list of exemptions and repeal of exemptions changes. Exemptions can be based on state needs, helping special interest groups such as military veterans, or a number of other things.
The best way to track exemptions and related exemption repeals is to focus on the states and counties in which you do business. Most companies have a finite number of locations in which they conduct business and that makes it easier to work out sales tax rules and deadlines.
Using Software to Track Tax Changes
Tracking taxes across multiple states and counties can be a nightmare. To make it easier, you can integrate your Sage 100 ERP or Acumatica Cloud ERP program with Avalara AvaTax. Avalara AvaTax offers an end-to-end sales tax tracking system that can automate sales tax tracking and import the data directly into your ERP system. Real-time access to current rates and information on more than 12,000 tax jurisdictions can be a lifesaver for businesses with many locations.
Emerald TC
Emerald TC understands how businesses today operate and what they need to stay competitive. We focus on helping you solve your biggest challenges such as sales tax automation and other business needs. Avalara AvaTax, Sage 100 ERP, and Acumatica ERP are just some of the problem-solving software we offer. Contact us today and we will help you choose great solutions for your business.