How to Simplify Online Sales Tax Shopatron Webinar Series

Shopatron Webinar Series
How to Simplify
Online Sales Tax
Introduction
Sean Collier
Chief Customer Advocate & Co-Founder
Shopatron
Responsible for client services and large
account success
HOW TO SIMPLIFY ONLINE SALES TAX
Agenda for Discussion
➤ 
Internet Sales Tax Basics
➤ 
Tax Rules in the U.S. are Very Complex
➤ 
Shopatron’s Simple Framework
➤ 
Fulfillers’ Judgment and Calculations
➤ 
Evolution of Tax and Online Purchasing
Internet Sales Tax Basics
HOW TO SIMPLIFY ONLINE SALES TAX
Internet Sales Tax Basics
All sales are taxable just like in store, catalog, or telephone orders
➤ 
Tax nexus is the key deciding factor of tax applicability
➤ 
Shoppers bear the responsibility of paying taxes, businesses are a
convenient tax collection vehicle
There is no universal sales tax rate/rule
➤ 
Nor any universal rules on how to calculate tax for individual items
Congress can approve tax on out of state orders
➤ 
But they haven’t and the supreme court will likely rule that it will create a
burden on interstate commerce
The streamlined sales tax agreement makes tax calculation more
complex, not easier.
Tax Rules in the U.S.
are Very Complex
HOW TO SIMPLIFY ONLINE SALES TAX
Tax Complexities for Online Purchasing
Tax is applicable to all online sales.
➤ 
That makes things easy
➤ 
It’s the calculation of that tax that is hard
Currently there are over 9K taxing
jurisdictions in the U.S.
➤ 
This does not include tax holidays
Complexities in tax calculation arise
because of:
➤ 
Laws imposed by state, city, county, or
school districts
➤ 
Destination tax versus origination tax
➤ 
Tax code product classification
➤ 
SSTA - Streamlines Sales Tax Agreement
Tax nexus is the key.
HOW TO SIMPLIFY ONLINE SALES TAX
How Tax Nexus is Determined
Nexus is a jurisdictional proposition. It does not constitute whether tax is due or
not, rather if a company has nexus with a state, the company can be forced to
collect state sales tax or pay state corporate income tax.
Simple
➤ 
If a company has a physical presence in the state, it is said to have a nexus.
Complex
➤ 
Different states have different rules and are constantly shifting to find access to tax revenue.
➤ 
37 states believe having an internet server in its state constituted nexus. About half (26
states) take the position that company also has nexus in if it shared space on a 3rd party’s
internet server, nexus is created in 24 states if it has data on a leased server, and only 13
states assert nexus if a company uses services of a web hosting provider.
➤ 
Thirty-eight states take the position that if an employee telecommutes from home, then nexus
is created. Of those 38 states, 33 of them believe that one employee doing back-office
administrative work is nexus creating and 34 states believe even development functions, such
as computer coding creating nexus.
Shopatron’s Simple Framework
HOW TO SIMPLIFY ONLINE SALES TAX
Shopatron Keeps it Simple
The fulfiller is ultimately responsible for calculating and remitting sales
tax to their state board of equalization.
➤ 
Each fulfiller in Shopatron already has a process for calculating and remitting
their sales tax
➤ 
This is something retailers do regularly
Location is the key to how Shopatron calculates.
A single tax rate to rule them all
➤ 
Store and location level tax rate, just like a walk in customer.
➤ 
Same as other large selling platforms like eBay.
Tax on shipping and handling
➤ 
Sometimes
What about tax holidays or specific product types?
Fulfillers’ Judgment
and Calculations
HOW TO SIMPLIFY ONLINE SALES TAX
Fulfillers’ Judgment and Calculations
Shopatron allows for fulfillers to provide the tax amount they
want to use as an override.
Reasons to override:
➤ 
Shopatron is too simplistic
➤ 
My accountant needs the tax amount to match against my system
HOW TO SIMPLIFY ONLINE SALES TAX
Methods of Override
HOW TO SIMPLIFY ONLINE SALES TAX
Manual Tax Override
➤ 
Simple interface for line level tax detail
➤ 
Includes override for shipping and handling tax
HOW TO SIMPLIFY ONLINE SALES TAX
Automating Tax Override
Shopatron can facilitate the fulfillers tax
calculation via API.
Available Order Download
➤ 
ItemID
➤ 
PartNumber
➤ 
ProdName
➤ 
option_text
➤ 
CustPrice
➤ 
ManufacturerDisc
Request Order
➤ 
developer.shopatron.com/RequestOrders
➤ 
The amount of tax that will be applied to the item if
you fulfill the order.
➤ 
Can be $0.00.
Evolution of Tax and
Online Purchasing
HOW TO SIMPLIFY ONLINE SALES TAX
Tax Evolution
Streamlined Sales Tax Agreement
➤ 
Not all states participate
➤ 
Does not reduce complexities in tax calculation, makes it harder in some cases
➤ 
Quill v. North Dakota. Quill prohibits a state from forcing a retailer to collect or
pay its taxes unless a company has nexus—a connection with the state.
Marketplace Fairness Act
➤ 
Far from settled, recent publication by House Judiciary Committee
➤ 
Does not reduce complexities in tax calculation
➤ 
Could be considered a hindrance to interstate commerce by Judiciary
Widespread Use Tax
➤ 
Moves burden from retailers to consumers
➤ 
Kentucky taxpayers to pay “Use Tax” on all out-of-state purchases
14/11/2013
HOW TO SIMPLIFY ONLINE SALES TAX
Amazon’s Tax Footprint
HOW TO SIMPLIFY ONLINE SALES TAX
Where are Purchases Taxable?
HOW TO SIMPLIFY ONLINE SALES TAX
Current Sales Tax Averages by State
Questions?
If you have any additional questions,
please contact your Account Manager or
Merchant Support Services.
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