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Expertek Blog

What every distributor needs to know NOW about sales taxes

Posted by Kenneth Mostello on Jul 25, 2018 4:26:09 PM
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The Supreme Court's decision on eCommerce and sales taxes can affect your distribution business.I’ve been writing this year about eCommerce and how it can help small-to-medium-sized distribution businesses stay competitive. In June, the US Supreme Court made eCommerce a little more complicated thanks to—but fortunately there are technology solutions that can simplify things.

Congratulations—You’re on the hook for out-of-state sales taxes.

This article goes into greater detail but briefly, the Supreme Court’s decision in South Dakota v. Wayfair, Inc. allows states to collect taxes from online retailers doing business in those states. While the decision concerns itself with South Dakota only, it sets a precedent with nationwide implications. The states that currently collect retail sales taxes in-state most certainly will seek to extend their jurisdiction to online commerce.  

And don’t count on these tax obligations to stop at the state level. It’s highly likely that county and municipal jurisdictions will cite South Dakota v. Wayfair, Inc. to support the collection of sales taxes from out-of-state online merchants.

So many jurisdictions, so many questions

 Watch the Expertek Webinar, "Transforming Your Distribution Business for the 21st Century."From a fundamental bookkeeping standpoint, sales taxes are a pass-through—the funds you collect go straight to the relevant jurisdiction. But with this Supreme Court decision, your tax accounting requirements are likely to get more complicated. According to the non-profit Tax Foundation, 45 states collect statewide sales taxes, as does the District of Columbia. And at the state level, determining sales tax liability can get more complex:

  • Products that are taxable in some states may be non-taxable in others.
  • The taxability of a product may be dependent on how the item is used by the purchasers. For example, a building materials distributor may sell a quantity of a product to a lumber yard, who will then sell it to builders. In some jurisdictions, there’s NO tax on the sale to the middleman (the lumber yard), but the sale to the end user (the builder) IS taxed.
  • Even the jurisdiction can be in question, depending on:
    • the physical location of the distributor’s headquarters
    • the physical location where the distributor’s data is house
    • the physical location of the purchaser

It doesn't matter HOW you sell—online, on the phone, or face-to-face. You need tools that can accurately determine how much collected tax is passing through and assure that the right amounts are passing to the correct states.

Challenge accepted: Introducing Expertek's Avalara + Infor integration.

The article I cited above notes that the Supreme Court in its decision expressed confidence that e-tailers would be able to leverage software to comply with state sales tax requirements. For distributors selling in multiple states, Expertek is ready NOW with our integration of Avalara tax software into Infor’s SX.e and CloudSuite Distribution software.

This full-featured integration simplifies nationwide sales tax compliance from the state level right down to the local level:

  • It allows you to set applicable sales tax rates for each customer, including state, county, municipal, and any others.
  • Avalara communicates all tax information to your Infor ERP, assuring frictionless, automatic tax computation at the point of sale, and communicating all sales tax receipts to your back office.
  • And with Expertek’s Avalara + Infor integration, you can also accurately account for, file, and pay your tax obligations in each jurisdiction where you do business—accurately and on time.

If your distribution business serves customers in multiple sales tax jurisdictions (whether or not you’re engaged in eCommerce), then Expertek’s Avalara + Infor integration can simplify and accelerate your tax accounting—AND reduce your taxation risk exposure. Interested in seeing more? Request a no-obligation demo today.

Topics: distribution, eCommerce, business velocity, software, sales tax

Distributors, start your 2019 business planning by downloading the Expertek ebook, Navigating a Changing Distribution Landscape.

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