Top Four Sales Tax Risks Facing Retailers
Sales tax compliance filing rules and regulations are dynamic and complicated. Here are some complex areas of product taxability issues to understand:
- Taxing the non-taxable. Make you that you avoid taxing products that are non-taxable, such as unprepared grocery items, baking ingredients and manufactured goods intended for resale.
- Ignoring emerging technology. Streaming music and movie services are considered taxable by several states, including cloud-based computer software.
- Forgetting sales tax holidays. Sales-tax-free events held around themes, such as back- to-school or Black Friday, energize consumer spending and increase inventory turnover.
- Overlooking sourcing rules. The taxability of a sale, as well as determining which tax rates to apply, will depend on if the state is origin-based or destination-based as well if the sale is made intra-state, or is being sold across state lines.
It is vital that retailers either keep current with sales tax management or outsource it to providers with expertise in the industry.
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