Ask, Share, Learn – Within the Largest Community of Corporate Finance Professionals
10 Sales Tax Rules that Impact a
Company’s Risk Level
• Identify the types of activities that can create nexus in
other states
• Identify the tax implications of how you ship your
products
• Recognize new Federal and State sales tax rules that
determine whether your business is compliant
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Ask, Share, Learn – Within the Largest Community of Corporate Finance Professionals
10 Sales Tax Rules that Impact a Company’s
Risk LevelScott Peterson, Director of Government Affairs,
Avalara
Where do States turn for tax revenue?
When general sales
tax and selective
sales tax are
combined, sales tax
makes up 47% of
total state revenue
Source: US Census Bureau, 2012 Census of Governments: Finance – Survey of State Government Tax Collections at www.census.gov/govs/statetax
Total State Government Tax Collections by Category
Other taxes 3.9%
Corporation net income taxes 5.3%
Total license taxes 6.8%
Total selective sales taxes 16.6%
General sales and gross receipts taxes 30.5%
Property taxes 1.6%
Individual income taxes 35.3%
Challenges of sales tax compliance
Sales Tax is a statutory requirement– Companies are always at risk of an audit (when, not if)
– Audits frequently result in back taxes and penalties
Manual sales tax management– It’s labor-intensive
– Human error leads to inaccurate results
– Expensive
– Rules are always in flux: 2014 had close to 14,000 rule
changes in U.S.
100% non-revenue generating activity– It makes sense to automate with a technology solution
Sales tax compliance is time-consuming,
risk prone, and expensive
Source: Wakefield Research, July 2013
Average total cost for businesses to manage a sales tax audit
44% can't remember the last time they updated their sales tax processes
Percentage of businesses that believe a sales tax auditor would find a mistake
Less than one month
23%
1 - 6 Months
20%
Over 6 Months
44%
Nexus Rules and Amazon Laws Apply to
Everyone
Remote sellers can no longer assume that Quill v. North Dakota
means they don’t have to collect sales tax
Nexus-creating activities (examples)
Independent agents
Remote sales force
Affiliate Nexus
Trade show participation
“Amazon Laws”
Cyber Monday, 2013: SCOTUS leaves NY click-through affiliate law
in place
14 States have already passed Amazon Laws
Thank you for your interest in this presentation. View the on-demand webinar or download the full presentation at:www.Proformative.com
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