Sales tax is meant to be a pass-through tax and thus one that should have minimal impact on a company’s bottom line. The sales tax is collected by businesses and “passed-through” to the taxing jurisdictions. Of course, there is cost associated with managing this compliance obligation; however, the costs of not managing the compliance process are significantly greater. If you fail to collect and remit the applicable sales tax when you have an obligation, under audit a jurisdiction will assess the tax due + a penalty + interest. This then becomes a bottom line hit unless you can recoup from your customers.
Many businesses have argued that with the introduction of economic nexus in 2018, sales tax has become a much bigger burden on businesses than originally intended. But as states continue to report gains in revenue from collected sales tax, it’s not likely we will see it going away any time soon. That leaves businesses to figure out the best way to manage their obligations to remain compliant.
To help you get started, we’ve compiled information on 3 important components of your sales tax compliance process, or as we refer to them, the 3 C’s of Sales Tax. Once you have an understanding of how to implement these components into a compliance process, you’ll be set for success.
Source: taxconnex.com
