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Ignoring the Hype
© Avalara 2013
Over 30 million people visitTimes Square annually.
Sales tax is no big deal.
It is true that sales tax rates are generally lower than income taxrates. Amounts charged on individual sales transactions are notby themselves signifcant; however, across all sales, the dollars canquickly add up. When you consider the additional cost o penalties,interest and audit adjustments, there is an even greater cost orbusinesses that ail to properly collect, report, or remit sales tax.At a time when states are seeking to increase their revenues tocover budget shortalls and businesses are seeking to hold onto their profts, wise business leaders can no longer aord toignore sales tax management. States are beefng up their salesand use tax enorcement eorts when businesses can least aordan unexpected, and potentially negative, audit adjustment.
Sales taxes are complicated.
In order to properly assess, collect, and remit sales taxes, businessesneed help answering the ollowing questions or each state in whichthey sell:1. Nexus – What activities are you perorming in a given stateand are they sufcient to establish a taxable connection?2. Rules – Are the items or services you sell taxable in a givenstate? Is the buyer subject to sales tax? Are goods being pur-chased or resale?3. Rate – What rate o tax applies to a taxable sale? Have youconsidered all local taxing jurisdictions and recent updates?4. Jurisdiction – Which jurisdiction has the right to tax aparticular sale?5. Taxability – Which items are taxable in a given jurisdictionand at what rate?6. Sourcing – Does a given state use a destination ororigination basis or determining taxability in-state?Or does it use a combination o the two? Are you trackingwell enough to ensure sales taxes are remitted to the right jurisdiction?