How to Keep Up with Sales and Use Tax Compliance in the Age of the Internet
The same technology that has forever altered the sales and use tax landscape has also given birth to innovative sales and use tax software.
From the Amazon tax, to the cloud tax, to the Internet Tax Freedom Act, no other area of taxation has seen so much change in the past decade as sales and use tax. Outdated sales tax codes are to blame. When the tax codes were first created the economy mostly focused on the manufacturing of tangible goods. As the economy shifted from manufacturing to services, in particular with the advent of digital commerce, state tax codes became outdated, and have ultimately led to an eroding tax basis.
For businesses tasked with collecting sales tax on behalf of the government, this erosion has resulted in a continual onslaught of tax code changes, as states struggle to keep up with an emerging economy. In a typical year, a business with presence throughout the United States will face up to a thousand sales and use tax code changes, which require significant operational resources to keep track of. At the same time, no consistency across states or even local municipalities means even more operational resources are required to remain in compliance.
For businesses, access to sales tax rates, down to the street address level, is now a critical must have. As many of Bloomberg Tax's customers can attest, two neighboring jurisdictions could have two very different sales tax rates. For large retailers, a single inaccurate calculation over millions of transactions could have a crippling impact on their bottom line, and even worse, put them at a higher risk for an audit.
For all the good the “Internet of Things” has done for businesses, it has also transformed an already cumbersome process of sales and use tax compliance into an administrative nightmare. The days of depending on manual efforts for managing and complying with sales tax requirements are no longer an option. However, there is a light at the end of the tunnel. Ironically, the same “game-changer” (aka technology innovation) that has forever changed the sales and use tax landscape has also given birth to innovative sales and use tax software, such as Sales Tax Rates™. With automated and up-to-the-minute sales tax rates, these software solutions improve the tax compliance process and reduce the burden and risk involved.
To learn more about the requirements and challenges surrounding ever-changing sales and use tax rates across multiple jurisdictions, access Bloomberg Tax’s Easing the Burden of Sales Tax Compliance white paper, which explores how third-party software can measurably improve the tax compliance process.Access White Paper