During our recent webinar with tax solution Avalara, the following question was asked: "What are the benefits that Avalara can provide for brands with eCommerce that currently do not have nexus in multiple states?" Bob Holt at Avalara provided further information for brands, both those with current eCommerce capabilities or those looking to enter the eCommerce space.
"At Avalara we work with the small client doing hundreds of transactions a month to those clients doing hundreds of thousands of transactions a month. The tax challenges are the same; how to accurately file, report and remit sales tax to the appropriate sales tax jurisdiction. This challenge is shared by all businesses, perhaps more so with the small and midsize business because these organizations will not have the extra staff to support such a complicated and tedious undertaking as sales tax calculation, reporting and remitting. As companies grow, their likelihood of audit increases; an independent study found that 95% of mid-sized companies underreported sales tax liability. Additionally, once companies achieved mid-market status nearly 90% reported that they had been subject to an audit and 50% reported having been audited more than 5 times. Each month there over 500 changes in sales tax rate, rules and boundaries. States are increasingly looking for revenue to compensate for greater expenses and diminishing revenue. In California alone, the state hired 60 additional auditors to investigate underreported sales tax. Manual sales tax calculations are expensive from a time, talent and opportunity cost perspective. As anyone who has done sales tax can attest; sales tax in no way, shape or form adds to an organization’s revenue, sales or market positioning. Since its inception in 2004, none of Avalara’s over 10,000 customers have reported a negative audit result and allowing you to do what your business does best-grow."