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How Sales Tax Affects Your Business

How Sales Tax Affects Your Business

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Published by avalara
Ever wonder how sales tax really affects your business? is it more than mere collection? Learn different areas where sales tax impacts your business--there is more than one!
Ever wonder how sales tax really affects your business? is it more than mere collection? Learn different areas where sales tax impacts your business--there is more than one!

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Published by: avalara on Feb 07, 2012
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10/01/2013

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Sponsored by Avalara, Inc.
Copyright © 2013
 
Page 2 of 8.
How Sales Tax Affects Your Business © Avalara 2013
Sales tax is in the news more than ever today with national legislationbeing debated in Congress, and many states struggling to gain a holdon internet sales and the related tax liabilities. The current controversiesbetween a certain internet seller and a number o state revenue ocialscertainly made the ront page in 2011. Sales tax policy is a ascinatingsubject and the internet revolution is pushing discussion o sales taxesto the public center. These developments indicate the high level o concernheld by business leaders, politicians and bureaucrats in the sales tax eld. The current ocus on sales tax policy will hopeully produce a more rationalsales tax compliance environment. Some day.For now, we need to acknowledge that the sales and use taxcompliance arena is raught with challenges or businesses o all sizesand types. Sales and use taxes impact your business on a daily basis withlegal liability requirements and they aect your business on a broaderscale by their infuence on strategic decision-making. The eects o salesand use tax management and compliance are not limited to traditionalretailers either. All types o businesses must be aware o the instances o sales and use tax, and the challenges presented by calculation, collectionand remittance o sales and use taxes and documenting tax-exempt sales.
Sales and use taxaffects all businessesin some universal ways
 
Page 3 of 8.
How Sales Tax Affects Your Business © Avalara 2013
Shifting rates& shifting boundaries
Sales and use tax rates are stable in some states, but tend to be volatile inothers. In places where sales and use tax rates are more prone to changebased on political whim, rates can change on a monthly basis. Even in morestable jurisdictions, rates vary rom township to township, city to city, orcounty to county. Rates can vary based on the type o product or serviceyou sell, who your customer is, even the manner by which your customeruses or consumes what you are selling.Counties, cities, townships, re districts, school districts, and even economicincentive zones are continually expanded, established and otherwise giveneect in the United States. In some states, local sales and use tax jurisdictionsare oten little more than gerrymandered ink spots, bounded and strungtogether by individual lots or alleys. Traditional location methods such asthe US Post Oce’s Zip Code Service are simply not designed to support ordelineate sales and use tax boundaries, yet many companies believe them tobe adequate.
How Changing Rates and Shiting Boundaries Aect Your Business:
Identication o current rates and boundaries requires an on-going eortor any business. Even businesses that do not regularly sell outside theirown physical location are subject to changes in the locations they do serve.For expanding businesses, new locations and new products or servicespresent additional challenges as existing approaches and solutions mustbe modied or re-developed to meet the need o an expanded productor service line. Finally, don’t orget that rates and boundaries are the coreelements o your sales tax compliance solution.Put another way: Inaccurate rates and boundary inormation makes yourcompany’s otherwise sound management and compliance eorts result
 
in materially inaccurate calculation, collection and remittance. This meansyour business may be paying less or possibly more than required and haveincreased audit risk.
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