Is one of your business resolutions for 2017 to understand your sales tax requirements? We are thrilled to be able to provide expanded sales tax services by an accounting professional that understands e-commerce. Phyllis Manning, our sales tax specialist, can make sure your business is compliant and up to date as the changing tax landscape becomes more complex.
Sales tax changes are common at the start of a new year, so make sure you are aware of the most recent changes. Amazon has announced that it will apply sales tax to Nebraska transactions as of January 1, 2017. It will also begin collecting tax in Iowa, Louisiana, and Utah at the first of the year.
Forty-five US states and DC will now levy a sales tax to buyers. This rapid expansion of Amazon’s tax collection is likely to have an impact on other state’s sales and use tax policies.
We checked in with Phyllis to look at common issues relating to sales Tax. Our interview is below.
bookskeep: What do you foresee in the future of e-commerce and sales tax?
PM: The US is losing over $23 billion dollars a year in revenue due to e-commerce. In Colorado, the individual taxpayer is asked to report their online purchases on their individual income tax return and remit the missed sales tax. Most of my tax clients were not even aware of the requirement, thus they had no records to show when they had or hadn't paid sales tax for online purchases.
I believe the burden for collecting sales tax is going to continue to fall on the shoulders of the sellers. I expect that we're going to see a great deal of change in all tax laws in the next few years. The physical presence rules for state sales tax are likely to be a part of that change.
bookskeep: What is a common mistake you see with e-commerce sellers and their sales tax methods?
PM: I think the biggest challenge for e-commerce sellers is recognizing when they should be registering for a license with a given state. Sellers can get into a situation where they have nexus and sales in a state, creating a tax liability that could have been collected from customers but ends up coming out of the seller's own pocket, along with penalties and interest for not having had that license sooner.
bookskeep: What services do you provide for bookskeep customers?
PM: I'm excited to be partnering with Cyndi and the team at bookskeep. I'm hoping to fill the need of clients for assistance with sales tax compliance issues; determining nexus, completing licensing applications, filing monthly, quarterly, and/or annual returns. I can also provide Federal and state income tax planning and preparation services.
bookskeep: Do you recommend any online software for sales tax?
PM: I really like TaxJar. I find it to be very user friendly and fairly priced.
bookskeep: What is one piece of sales tax advice you would give to online sellers?
PM: When a seller is collecting sales tax, they are working as an agent for the state. The state expects those funds to be turned over in a timely manner, imposing penalties and interest when reporting and payment happens late. I think that it is a good practice for sellers to set the collected sales tax funds aside in a separate checking account. This keeps the funds from getting co-mingled with working capital and helps folks have the necessary balances available to make payments on returns in a timely manner.
bookskeep note: We love this advice as it works well with our Profit First cash flow planning methods! An account for Sales Tax is different than the Tax Account set up with Profit First.
Welcome to the team Phyllis! We are excited that you are already helping out clients in the short time we have been working together! Let us help you with your Sales Tax New Year’s resolution and take away the worry and burden for 2017.
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