Avalara, a leading provider of cloud-based tax compliance automation for businesses of all sizes, announced the availability of its Sales Tax Risk Assessment tool, a self-serve online resource that helps companies determine where they have likely triggered economic nexus by providing a detailed assessment of their state-by-state sales tax obligation risk over email. Avalara Sales Tax Risk Assessment enables companies to quickly discover states where their sales activity has likely triggered sales tax obligations and determine which states should be closely monitored.
“Avalara’s sales tax assessment tool provides businesses like ours a free starting point in the journey to sales tax compliance.”
“As a business that sells to customers across the United States, being able to easily see each state’s economic nexus thresholds is a game-changer for us,” said Charles Bunker, CFO at Capitol Scientific. “Avalara’s sales tax assessment tool provides businesses like ours a free starting point in the journey to sales tax compliance.”
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New Laws Mean New Sales Tax Obligations for Sellers
Avalara launches the Sales Tax Risk Assessment at a time when businesses, primarily online sellers, are facing added sales tax complexity. The South Dakota v. Wayfair, Inc. ruling in June 2018 stated that given the power and prevalence of the internet, states could now collect sales tax from remote sellers. To date, 44 states and the District of Columbia have adopted sales tax laws requiring businesses to use where their customers are located as part of determining compliance requirements.
Beginning in 2017, states began enforcing marketplace facilitator laws to begin collecting sales tax on third-party online marketplace sales. States can now collect sales tax attributable to third-party sales from marketplaces, rather than the individual sellers. However, in many cases, the revenue generated from marketplace sales also contributes to a remote seller crossing economic nexus thresholds. 41 states and the District of Columbia have adopted sales tax laws requiring the marketplace facilitator to collect and remit sales tax on behalf of marketplace sellers. The first step for merchants to stay tax compliant is to determine where they have economic nexus established by a certain level of economic activity in a given period, which can include analyzing sales revenue, transaction volume, or a combination of both.
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