Sales tax doesn’t often make headlines, but soda taxes, marijuana sales, tampon exemptions, and online sales tax did in 2016. That trend is likely to continue in 2017. The New Year will bring new taxes, new exemptions, and renewed efforts by states to implement internet sales taxes. It will also bring plenty of the usual suspects, like sales and use tax rate changes.
Businesses need to be aware of sales tax changes so that they are charging the right rate. But there may be other effects of sales tax changes on businesses, such as when a sales tax rate increase may encourage customers to purchase in lower-tax locales, for instance.
This challenge of categorizing goods and services is compounded by advances in technology, which are responsible for such category-straining creations as digital goods and services. In a few short years, for example, technology has changed how we consume our news.
It’s an annual tradition for the President of the United States to pardon a turkey at Thanksgiving. Which president started the trend is up for debate, but White House history dates the first turkey clemency to 1865, when Abraham Lincoln’s son took a liking to a bird intended for Christmas dinner.
Drop shipping can be a big boon for online sellers, especially small businesses that don’t have the funds or space to stock up on and store inventory. With drop shipping, sellers can take orders from customers for an item and then turn around and order that item from a supplier, which then ships it to the customer. The seller doesn’t have to handle the physical item at all, the customer gets his or her order, and everyone’s happy.
Savvy shoppers know the value of everyday commodities, from the food they eat to the clothing they need and other essentials. They’ve comparison shopped enough to know the reasonable cost of products, and price point is always top of mind. Not everyone approaches shopping this way, but most people appreciate a bargain (does anyone not?). This is one of the main reasons sales exist.
There have been a number of red-letter changes to date in 2016, most notably with respect to state sales tax rates and remote sales tax laws. On July 1, local sales and use tax rate changes will sweep the nation.
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Turkey and taxes. The U.S. has a long history of both. And in 2010, the two converged in Virginia as part of an annual Thanksgiving tradition where tribal and state leaders pay homage to a more than 330-year-old treaty: then-governor Bob McDonnell was presented with a turkey (and two deer) by tribal chiefs in lieu of taxes. Unfortunately, paying taxes in trade doesn’t work for most of us. Depending on where and how you celebrate this year, your Thanksgiving feast could be served up with a side of sales tax.
Getting closer to the customer is no longer a retail-centric sales strategy. More manufacturers, suppliers and wholesalers are starting to sell direct to consumers (D2C). Motivations vary: brand awareness, customer loyalty, even product innovation. But for the most part, B2B sellers are simply looking to give consumers what they want — the ability to buy products directly from the source. Many are already doing it.
Bwaahahaha! Is that the ghostly laugh of a Halloween haunt — or the auditor reviewing your sales tax returns? Dealing with sales tax can be a ghoulish task. And for businesses with compliance obligations in multiple states, it can be frighteningly difficult to know which rules apply.
In most states, services are exempted from sales tax unless explicitly made taxable by law. So why are the governors of at least two states, as well as legislators in another, fighting to change that?
So it’s not without some irony that July 1 marks the date when many U.S. states put their newly increased sales tax rates into effect — the same month when both France and the U.S. celebrate their independence. While a few percentage points increase hardly merits waging an all-out war against sales tax, revolutionizing the way you manage tax compliance is a worthy cause.
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Manufacturers face sales tax risks at many points along the supply chain. Whether selling to retailers, directly to consumers, or supplying wholesalers and distributors, the unseen costs of errors in sales tax management can decimate the bottom line.
Companies tend to think about sales tax as secondary because it’s a pass-through activity for their business; the main focus is usually on all of the pieces that go into supporting a successful ecommerce site and driving revenue.
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