Online Sales Tax in 2014Susan Petracco, AccurateTax.com

Online Sales Tax in 2014

How to Prepare Your Business for Sales Tax

Agenda

• A Brief History of Sales Tax• Where Sales Tax is now, and where it’s going?• Retailers and sales tax laws – what’s applicable

for my store?• Q&A

What do things look like today?

Sales Tax – The Basics

• Definitions – Sales versus Use Tax – who’s responsible – Nexus – Sourcing Rules… – Custom Tax Rules

Sales Tax – Sourcing Map

Sales Tax – The Basics

• Definitions – Sales versus Use Tax – who’s responsible – Nexus – Sourcing Rules…– Custom Tax Rules

Sales Tax – The Basics

• Questions you need to answer: – What do I sell? – Where do I sell it from? – How do I sell it?

A Brief History of (Internet) Sales Tax

• Quill v. North Dakota• Misconception that internet sales are really tax

free…• The perceived lack of online sales tax was a driving

force for e-commerce• The cost of not requiring retailers to collect online

sales tax has made this an economic issue for states

A Brief History of (Internet) Sales Tax

• Quill v. North Dakota• Misconception that internet sales are really tax

free…• The perceived lack of online sales tax was a driving

force for e-commerce• The cost of not requiring retailers to collect online

sales tax has made this an economic issue for states

Sales Tax – Today’s Landscape

• Thousands of taxing jurisdictions across the US• Limited centralized processes for managing sales tax• Many states still have little capability to enforce their

own rules• Audits are more about getting the big fish, but smaller

retailers are being looked at more frequently now as well• Compliance is a moving target

Sales Tax Lifecycle

• Assessment of location• Determination of products• Calculation• Collection• Reporting• Remittance

What else is out there today? Streamlined Sales Tax Project

• What is SSTP? – Conforming states, non-conforming states, and associate members– Sourcing Rules, Taxability Matrix Charts, Reporting/Remittance

• How does this affect me as a retailer? – At this point it’s voluntary– Volunteer versus non-volunteer sellers – Free software – Relief from Liability

• Streamlined doesn’t necessarily mean simple

Streamlined Sales Tax Project (by the Map)

Should You Consider SSTP Now?

• What you commit to• What you get in return• Is it worth it now? Or in the future?

How Does this Affect My Company’s Sales Tax?

How Hard is it to Calculate Sales Tax?

• In certain states and for some businesses, it’s simple.

• Destination v. origin sourcing• Nexus and collecting for multiple states• Product tax classing• Gotchas: Tax holidays, thresholds

Addressing My Store’s Needs• Nexus Determination • Assess your tax liability, review it as often as

changes occur • Trust your CPA, but verify• Find a software solution that supports YOUR

needs

Sales Tax and Miva Merchant

• Built-in Miva modules• Third party modules or DIY, and managing the data• SaaS solutions– Third Party Providers vs. Certified Service Providers

• Find the right solution for the problem you have

As Your Tax Burden Grows…• Signing up in multiple states• Remitting across multiple systems• Calculating the correct amount to remit –

sales, partial shipments, cancellations, returns• Handling tax-exempt customers

Where are We Headed with Sales Tax Beyond 2014?

Marketplace Fairness Act

– Marketplace Fairness Act (MFA): What is it?– A history of past legislation– Separating fact from fiction• Where the bill currently stands• Small seller exemption

Marketplace Fairness Act

– What are the chances of this passing?– If it passes? • States joining SSTP vs. building their own solution• Compliance dates (90-180 days) • Solutions for Retailers

– DIY vs. Third-Party Provider – Certified Service Providers

SSTP and MFA, Together

• SSTP is likely to become a bigger player• SSTP already has a model in place • Taxability Matrix Definition and Reporting Processes• Boundary/Rate File management process • Certification Process for States and Vendors • Group of existing Certified Service Providers (CSPs)

Preparing for What Comes Next

• Seek advice from your CPA or tax consultant sooner rather than later

• Stay informed about the status of Marketplace Fairness• Monitor state legislation, including those that affect

your nexus• Determine options for calculating online sales tax (both

software and data)

SMB Pain in an MFA World

• Small Seller Exception removes a great deal of concern (if it stays)

• Choosing a Vendor– Integrates with your shopping cart– Fits your budget– Provides the tools you need (reports, remittances,

exemption, etc)

Q&A

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