The Top Ways Retailers Trump Sales Tax

Retailers need to face the facts: calculating sales tax on transactions can be an expensive, confusing obligation. Many therefore rely on payment service providers to get the process done correctly. In a recent whitepaper, Avalara unveils the ways in which merchants can use their provider’s essential services to support order-to-cash flows, keeping sales tax from becoming a risky afterthought.

Payment service providers are invaluable to merchants because they lower risk profiles for fraud and data security. Many merchants even rely on their payment service provider to calculate sales tax on transactions. All of these functions are necessary for supporting order-to-cash flows, so if payment providers can offer all of these critical services under one umbrella, what merchant wouldn’t want to use them?

Unfortunately, although these companies aim to reduce customer risk, their goal is rendered counterproductive by treating sales tax as an afterthought

In a new white paper, Avalara reveals the ways in which merchants can better understand how and why sales tax mistakes involve risk, time, and cost. According to “Don’t Make Sales Tax an Afterthought,” merchants who rely on their payment service provider for sales tax may encounter common issues.

 

Tax Content

Is sales tax content licensed from a third party? Who is ultimately responsible for its accuracy?

 

Location Rate Assignment Accuracy

Are rates determined with a system based on zip codes and tax tables? This approach yields inaccurate rates in many states.

 

Product and Service Taxability

Does the system support rules for varying product taxability? Many solutions leave merchants vulnerable to inaccuracy based on sales tax holidays, product threshold rules, and other rule variations.

 

Reporting

Research by Aberdeen finds businesses are audited every 1.5 to 5 years. Whether a merchant is preparing for the filing crunch or for a sales tax audit, detailed and reliable reporting is a must.

 

Calculation Speed

With Ecommerce shopping cart abandonment rates at 30%, sub-second calculation speeds are critical to supporting customer experience.

 

The Sales Tax Afterthought Club

The report groups merchants and their sales tax compliance approaches into four types, explaining how every merchant can approach becoming more compliant.

 

Sales tax is still something many retailers fail to get right, exposing their business to risk. And the landscape is only becoming more complex as states enact more tax rules and regulations. For more on how to keep sales tax from being an afterthought, click the button below to download the whitepaper “Don’t Make Sales Tax an Afterthought“.

 

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