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Tax Compliance for the Holiday Season

10/02/2017

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Holiday season; it’s the most wonderful – and busiest – time of the year. This can be true for shoppers and retailers alike. But, long before the twinkling of holiday lights and sound of seasonal music begins, store owners must begin to prepare by being sure to accommodate for and adhere to tax compliance. 

Using automated tax software tuned in to the special compliance issues sellers face because of holidays — not just during peak retail days like Black Friday and Cyber Monday, but also in the months before, when all the hard work of preparation gets done – can avoid a lot of holiday stress.

There are four compliance challenges that can become particularly complex during busy holiday weeks. 

1. Downtime and outages

No one wants to spend their holidays worried about downtime. Unfortunately, the holiday season can put extra stress on your e-commerce and shopping cart systems. More transactions mean more chances for things to go wrong. Sometimes, changing a single element of an ecommerce system manually can lead to significant downtime  — costing a small fortune in missed opportunities and lost customer goodwill.

Automated tax software gives your customers the right rate fast, and a cloud-based system is always up-to-date, with guaranteed accurate rates for every transaction.

2. New nexus rules

Are you sure you know of every state in which you’re required to collect sales and use tax? A few decades ago, sellers only had nexus - a connection close enough to the state to legally create tax obligations for the seller - in states where their business had a physical presence. However, in an effort to recoup tax dollars lost to online sales, states have expanded the definition of nexus in widely varying ways. It’s critical you know the ins and outs of these rules so you know whether you have nexus – and a resulting obligation to pay taxes.

3. Rate and taxability changes

When you’re already getting slammed with holiday orders and are scrambling to fulfill them, changes to tax rates and product taxability can throw a monkey wrench into your plans. In the first half of 2016, rate and taxability changes occurred at a rate of just over 200 per day.

Even if you’re not selling to all 50 states, it’s easy to miss changes that will matter both to your customers and the state tax auditor.

Automated tax software provides accurate, fast tax calculation that keeps up with changing rules and rates in every jurisdiction that charges sales tax.

4. Filing returns on time

In an age of online selling, many companies find themselves struggling to juggle sales tax returns for dozens of jurisdictions, each with their own complicated forms, prepayment requirements, and filing schedules. When payments are late, interest adds up. So do penalties and fees. But rushing through returns to get them filed on time can sacrifice accuracy — and that’s a recipe for disaster later on, when your records are audited.

If filing returns during peak sales months leaves you scrambling, it’s time to do things differently. Software that integrates with the applications you are already using automates the filing and returns process. Instead of e-filing on several different state websites each with separate direct deposit payments, or mailing in checks and paper returns, the right software gives you one consolidated total, then divides payment appropriately, files your returns, and remits payment to each taxing authority you owe.

Give yourself the gift of reduced stress 

Automated tax software can get you home for the holidays, instead of spending late nights trying to meet deadlines and verifying rate changes. A fully scalable solution can make it faster and easier to comply with sales tax regulations, whether you have two employees or 2,000.

Download our Holiday Readiness Checklist

Our checklist can help you prepare for common holiday problems. Make sure to check it twice to be sure you’re ready for tax compliance for the holiday season!