Sales Tax Changes – Is Your Business In Compliance?

By: Robert Hendrix, CPA, MBA, Audit Manager

The world is getting smaller; and for businesses, that means it’s getting more expensive.

In June, the Supreme Court ruled that states now have the authority to require businesses to collect sales tax on ALL purchases – even from purchases in states where they do not have a brick-and-mortar operation.

This is a radical change. Up until now, businesses were only required to collect sales tax in states where they had a physical presence.

For large corporations, the ruling will not have much of an effect, since most major retailers – like Walmart and Amazon – already have created systems to collect sales taxes nationwide. But for smaller companies – most of whom do not yet have such an infrastructure – this ruling is creating shockwaves.

As small businesses rush to get into compliance, they face several roadblocks.

First, there are many jurisdictions across the country, and different products may be taxed differently across state lines.

Some states don’t even have specific legislation in place yet: As of June 2018, there were only 16 states with online sales tax laws to govern these transactions. That number is sure to increase substantially in the coming months.

Ultimately, the Supreme Court ruling is a recognition of the growth of online business. E-commerce is no longer a fringe industry. According to some estimates, nearly 10 percent of total sales in the U.S. are of the online variety – and that amount is only going to increase. Traditional brick-and-mortar companies have had to charge sales tax on all of their items for years, and this ruling helps level that playing field.

If you do have an online presence for your business, it may be time to review your e-commerce infrastructure. How are you managing your sales tax obligations? Are you in compliance with the new ruling?

If you don’t want to research the requirements of each individual state and jurisdiction, contact your e-commerce software provider for guidance on handling these changes. Or, contact the qualified CPAs at Osborn Rincon to develop a comprehensive strategy for your business. Working with an experienced professional your business can successfully adapt to changing legislature and a changing economic landscape with ease.

For more information call Osborne Rincon CPAs at 760-777-9805.