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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 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
After attending this event you will be able to:
Learning Objectives
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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%
Sales tax compliance is time-consuming,
risk prone, and expensive
Polling Question
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
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