We all know sales tax compliance for retailers is complex, even more so when omni-channel sales and e-commerce are factored in.
From omni-channel tax challenges to shipping taxes, there are ample compliance landmines. Be sure your retail clients are prepared by keeping abreast of these seven important sales tax compliance considerations.
1. Omni-channel Taxation
Your retail clients need to ensure each of their sales channels is collecting the right amount in each state where they’re required to collect sales taxes. The more channels a retailer deals with, the more opportunity for error.
A customer’s increasing omni-channel expectations can create sales tax compliance challenges. Customers now expect multiple fulfillment options when shopping online, including the ability to order online and pick up in the store or on site. For online orders, sales tax will be applied based on where the customer lives.
If an online store includes the fulfillment option “pay in store,” the sales tax obligation would be based on the store’s location. States with hyper-local taxes, such as cities or counties, can add additional complexity and confusion for customers.
As more sales channels are added, special attention should be paid to the nexus that these channels may create. Nexus can be triggered through affiliate programs, click-through referrals from other websites, sales representative activities and other sales capture methods.
2. Taxing Sales, Discounts and Promotions
With limited exceptions, sales tax applies to the gross selling price received from the sale, but the specific definition of gross selling price may vary between states.