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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 giveneect in the United States. In some states, local sales and use tax jurisdictionsare oten little more than gerrymandered ink spots, bounded and strungtogether by individual lots or alleys. Traditional location methods such asthe US Post Oce’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 Shiting Boundaries Aect Your Business:
Identication o current rates and boundaries requires an on-going eortor 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 modied 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 inormation makes yourcompany’s otherwise sound management and compliance eorts result
in materially inaccurate calculation, collection and remittance. This meansyour business may be paying less or possibly more than required and haveincreased audit risk.