– Written by Liz Anderson of Avalara (DCSC Guest Blogger)
AvaTax Helps DCWarehouse Customers Calculate Sales Tax During Order Entry through Shipping. Eliminate Your Sales Tax Audit Risk Today!
Businesses are learning the hard way that their manual sales tax management processes for calculating sales tax and managing exemption certificates puts them at a greater risk for negative audits. Additionally, many businesses are not even aware of how to determine if they are required to collect and remit sales tax in a particular state because they do not understand the constantly changing nexus laws. Thus, one of the first things a business needs to understand when it comes to audit risk is how nexus affects their business.
The definition of nexus in regards to state sales tax is “physical presence” and determines whether a business is subject to collecting and remitting sales taxes within a particular state. If a company is doing business in multiple states, it can be a complicated process to stay on top of what each state defines as the presence required for nexus. In the past, most states defined nexus as an office, warehouse or employee living in that state. However, understanding nexus today can get pretty confusing because states are trying to generate more revenue and many are broadening their definition of nexus, so they can collect more sales tax revenue. Below are examples of how some states have expanded their definition of nexus beyond the typical “physical presence” scenarios listed above:
- Trade show attendance
- If a company has an associated business in another state that shares a trademark or a substantially similar name
- If an affiliate runs “click-through” sites on behalf of Internet retailers and receives compensation for sales made as a result of that activity
- If repair, installation or maintenance service is performed by your employees or a third party in another state
- If a company ships returnable containers into a state
- If a company has representatives regularly visit customers in a state
- If a company-owned vehicle crosses state lines to deliver products
As you can see, it is now more important than ever to review the laws in each state where you conducted business to ensure you are remaining in compliance. California just passed a new online sales tax law and plans to hire 100 more auditors to enforce the new law that broadens the requirement for out-of-state sellers to collect California sales tax. If a business is not keeping up with the latest sales tax changes in states they are selling products, they often times do not realize they are out of compliance until it is too late. Therefore, the best defense against having a negative audit result is automation. AvaTax from Avalara can easily and affordably automate the entire sales tax process businesses.
Avalara is the leading provider of cloud-based sales tax automation and can help businesses from all industries address the complex challenges of calculating sales tax rates, managing exemption certificates, filing returns and remitting payments. DCWarehouse now has an optional AvaTax plug-in that allows customers to use the AvaTax Service to calculate sales tax during order entry and the information flows through to fulfillment.
Close is no longer good enough when it comes to sales tax compliance, so call us today at 314-664-2200 or email firstname.lastname@example.org to learn about the new AvaTax Certified connector for DCWarehouse.