How U.S. Merchants Should Automate the Sales Tax
You would rather spend your time managing WooCommerce and coordinating day-to-day operations than dealing with taxes. Compliance does not have to be difficult. It is as easy as connecting WooCommerce to a software solution, and automating sales tax collection. Understanding the basics […]
You would rather spend your time managing WooCommerce and coordinating day-to-day operations than dealing with taxes. Compliance does not have to be difficult. It is as easy as connecting WooCommerce to a software solution, and automating sales tax collection.
Understanding the basics is key to understanding automation. Internet sales tax is a pass-through tax that is exchanged between the seller and the state. You are not responsible for any costs incurred. However, you are responsible for collecting the correct amount in the right place and timely remitting it.
The Evolution of Economic Nexus
Online sellers were exempted from sales tax in states other than their home state, where they had significant presence through inventory, employees or a home office. States in the U.S. realized the potential revenue loss and challenged the law in South Dakota v. Wayfair.
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In a June 2018 Supreme Court ruling, states were granted the power to define nexus and significant activity within their state. Economic nexus was thus born. must pay sales tax on remote sellers who have sales between $100,000 and $500,000, depending on their state.
Complexities of Sales Tax
It is possible for sales tax to become complicated because it is determined at state level and not as a federal law. Online sellers must comply with:
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- Keep an eye out for any changes in legislation and remember the various economic nexus thresholds.
- You can track multiple filing dates and file frequencies.
- Tax codes can vary from one product to the next.
- Use the street address to determine the appropriate tax rate. The accuracy of ZIP codes is not sufficient to calculate sales tax at the checkout.
What is the solution? Automatization is the solution.
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How automation simplifies sales tax
A sales tax software that is right for you can give you peace of mind. Once TaxJar is integrated with WooCommerce will automatically.
- Calculate the right sales tax rates at checkout to generate an accurate sales tax report for each state.
- AutoFile allows you to file on-time in all states.
- Send nexus updates.
Multi-channel users must calculate sales taxes across multiple platforms in different states. TaxJar quickly tracks where you sell, which platforms you use and generates state-specific reports that can be filed.
Automation saves time and helps you focus on your business growth.