Sales Tax Nexus – Next Steps Post-Wayfair

You get it – the SCOTUS decision in Wayfair changes everything. But what should I do now? Take a look at the table below to answer the most pressing questions for you, your team and your business.

Question Why Important Yes, we have this covered No, not covered – learn how to address it
Nexus: Do you understand where your business has a sales & use tax obligation today?

•Digital footprint – Where are you conducting online sales and/or returns? How many transactions and at what total dollar amount?

•Distribution – Where are shipping to/from? To whom are you shipping to/from – customers, distributors, or both?

 

 

Understanding your business process, customer buying locations, sales and distribution methods are all part of determining where you have a sales tax obligation – where you have nexus.

This was complicated before the Wayfair decision but even more so now as states will aggressively pursue the South Dakota or similar models to capture sales tax revenues.

Congratulations! You are one of the few businesses who truly understand their nexus footprint.
It’s important to stay current with your nexus profile as your business goes through normal lifecycle changes:•M&A•New Product Introduction•Sales & Distribution changes
You are not alone. Addressing this fundamental question will help you understand whether you have a currently unrecognized liability and thus risk. It will also inform what are the appropriate next steps to becoming and remaining compliant.

The Wolters Kluwer Nexus Study is an effective tool for making this important determination. Work with Sales Tax experts who understand business practices.

NEXUS STUDY

Customer Data: When was the last time your customer address information was reviewed for accuracy and completeness? It may seem obvious but customer address information can become stale, even if it used for shipping. Multiple taxing jurisdictions may fall within a single 5 digit ZIP code which means your deliveries may be fulfilled but your sales tax obligations may not.

State and local auditors understand and look for precision of sales tax remittance across the street, county and ZIP (+4) code. What may seem like a short distance could be significant when it comes to the sales taxes you are collecting and remitting. Don’t leave your business exposed.

If your customer data was reviewed and scrubbed for tax purposes within the last twelve months, you are practicing good sales tax hygiene.

Keep it up!

This is quite common – after all, your deliveries may be getting through just fine. But auditors don’t care about happy customers, they’re looking for gaps in your remittance.

Wolters Kluwer offers a cost-effective Address Validation service to review and correct your address data. This service typically finds that corrections/updates are required in 80% of the customer data reviewed.

ADDRESS VALIDATION

Business Registrations: Does your business have all the business license and/or sales tax registration forms, including documents requested by the states, cities or counties where you have a tax obligation? Most states require that companies be registered for tax purposes if they are located and/or conducting business within the state. Sales tax is no exception. Each state has their own forms and processes which must be followed. Excellent, this is an important step. Keep in mind with the economic nexus standard and other creative approaches from various states, you may have nexus in new locations. It’s time to look into this. Having current and proper forms filed with the states is critical to avoid administrative entanglements or possibly fines. Our Business Registration service can help manage this task for your company.

BUSINESS REGISTRATIONS

Compliance Workflow: How does your team stay aware of and manage monthly compliance dates in all the States where you have nexus? If you conduct business in multiple states and have limited resources, it’s not difficult to imagine that missing a (or several) filing deadlines can occur. Don’t let that happen to you. Utilizing a sales tax-specific calendar and workflow tool is the best practice for maintaining a good compliance track record.

Nice job!

The team that handles your sales tax remittance process will thank you for (so will state regulators) for understanding there are many and frequent filing deadlines. CCH SureComply synchs with most desktop calendar tools and uses simple but robust task management and tracking to keep your team efficient.

CCH SURECOMPLY

Sales & Use Tax Automation: Are you running software specifically designed for sales and use tax in your industry vertical? South Dakota pursued the Wayfair case all the way to SCOTUS because there are millions of tax revenue dollars at stake. Other states are adopting similar (and in some case, more creative) approaches to getting their share of the pie.

The Wayfair decision will only embolden States to increase sales tax audits as a way to fill draining revenue buckets. Utilizing fully functional software fed by accurate and timely sales tax rates and taxability rules, means you’ll be able to respond to audit inquiries easily and will be less likely to face penalties which can be up to 2% of annual revenues.

Sales tax automation software is the pinnacle of best practices. Good work!

Check in with your team annually to be sure your software is meeting your compliance needs – efficiently and effectively.

This may be the single most important aspect of getting and staying compliant in a post-Wayfair world. CCH SureTax has the capabilities, features and sales tax rates & rules (chosen by the IRS 14 years running) to handle your current and future sales and use tax obligations.
Integrations with leading ERPs (Microsoft Dynamics, NetSuite and SAP) means your IT will be comfortable with this tool in your environment. We also work with custom built or home-grown environments.CCH SURETAX
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Sales & Use Tax Experts

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