Consumer taxation has been at the root of debates, riots and wars for centuries. The way specific products are taxed has varied greatly and changed many times over the years. The “gabelle,” a tax on salt by the French monarchy is said to have led to the French Revolution and the Boston Tea Party, an uprising by America’s colonists against Britain’s Tea Act of 1773, was a catalyst to the American Revolution.
It’s not without some irony that July 1st marks the date when many states put their newly increased sales tax rates into effect — the same month when both France and the United States celebrate their independence. Even though an increase of just a few percentage points probably won’t cause another war any time soon, it does continue to add complexity to your business processes, which could be mitigated by revolutionizing your sales tax compliance practices.
U.S. states still struggle to fill budget shortfalls (often hundreds of millions of dollars) and sales tax is often the easiest way to fill that gap. There were a number of states that made bold moves in 2015. For example, in Kansas lawmakers voted in the largest tax increase in the state’s history, pushing the sales tax rate from 6.15 percent to 6.5 percent, making it one of the highest in the country. In all, 19 states raised sales tax rates as of July 1, 2015.
It may not seem like much, but even a slight change to a state or local tax rate can be a big deal when it comes to compliance. For companies doing business in multiple states or serving a broad base of customers, trying to stay on top of rate changes, taxation rule changes and tax holidays can be pretty time-consuming.
As sales tax laws change and the complexities continue to increase, many companies have made the move towards automating their sales tax to ensure compliance without throwing more time and resources into the process. Cloud-hosted tax decisioning software like Avalara’s AvaTax gives you real-time access to the latest rates and rules and pinpoint precision in applying those rates to every transaction. Much like the minutemen of the American Revolution, AvaTax is ready in a minute’s notice (less, actually), so you can declare victory on sales tax compliance.
Understanding sales and use tax is no easy task, but we can help. Take it from the top with Avalara’s new e-book Sales and Use Tax Compliance for Dummies.