Supreme Court Peters v. Cohen: Major Unclaimed Property Case
By Freda Pepper, General Counsel, Unclaimed Property
Sovos regulatory team is tracking the latest Supreme Court Peters v. Cohen, a landmark case that raises fundamental questions about how state unclaimed property laws handle dormant assets and the constitutional protections owed to property owners. This Supreme Court Peters v. Cohen petition presents issues that could affect millions of Americans and establish new precedents for state escheat laws across the country, potentially reshaping unclaimed property law nationwide.
Supreme Court Peters v. Cohen centers on a German citizen whose Amazon stock was seized by California’s unclaimed property program under questionable circumstances. The case challenges the constitutionality of current state unclaimed property laws and could establish important precedents for unclaimed property compliance requirements. The petition was filed in June 2025 and is pending before the Supreme Court, which typically decides whether to grant review during its regular conference process.
Jan Peters, a German citizen, owned Amazon stock that was reported to California’s unclaimed property program. According to the Supreme Court Peters v. Cohen petition, Peters’ German address was changed from “D-80804 Munich, Germany” to “Munich, CA 00000” in the reporting process. Notice was then mailed to this address, which Peters never received. California subsequently took custody of the stock and sold it for approximately $1.6 million in 2020. Due to stock appreciation and splits, those shares would be worth over $4.2 million today.
Peters filed suit alleging violations of his constitutional rights under the Due Process and Takings Clauses, seeking declaratory and injunctive relief. Lower courts dismissed his claims, finding that the Eleventh Amendment’s grant of sovereign immunity barred relief against the state.
The case highlights critical issues with current state unclaimed property laws, particularly regarding notice procedures and address verification requirements that may fall short of constitutional standards.
The Supreme Court Peters v. Cohen petition argues that California’s notice procedures fail to meet constitutional standards established in cases like Mullane v. Central Hanover Bank (1950) and Jones v. Flowers (2006). The petitioner contends that current state escheat laws create several constitutional problems related to due process unclaimed property requirements.
Under current unclaimed property law, no individual notice is required for property under $50, meaning millions of small accounts receive only generic newspaper advertisements that may not effectively reach property owners. The petition raises concerns about address verification procedures and alleges that states don’t take adequate steps to verify or update addresses before declaring property abandoned.
Additionally, the petition argues that the state’s reliance on post-seizure remedies, such as requiring owners to search a website after their property has already been transferred to state custody, fails to provide the pre-deprivation notice required by the Constitution for due process unclaimed property protections.
The takings clause unclaimed property argument in Supreme Court Peters v. Cohen contends that California’s practice constitutes a physical taking under Horne v. Department of Agriculture (2015). The argument centers on the state’s practice of taking title to property and often selling it immediately, creating a permanent deprivation of the original asset.
Once property is sold under current unclaimed property law, the original items are not returned to owners; owners only recover the sale proceeds rather than the current value of their property. This takings clause unclaimed property issue is particularly significant in cases involving appreciating assets like stocks and digital assets, where the difference between historical sale prices and current values can be substantial.
This constitutional unclaimed property case arises against a backdrop of evolving jurisprudence around state escheat Supreme Court decisions. In 2016, Justices Alito and Thomas wrote in Taylor v. Yee that “the constitutionality of current state escheat laws is a question that may merit review in a future case,” noting concerns about shortened dormancy periods and minimal notification procedures.
Several federal circuits have addressed similar issues with varying results, creating potential conflicts that the Supreme Court could resolve through the Supreme Court Peters v. Cohen decision.
States typically defend their unclaimed property programs on several grounds that reflect legitimate policy concerns under current unclaimed property law. They argue these programs provide essential consumer protection by preventing businesses from indefinitely holding dormant accounts without oversight. States contend that centralized systems may be more effective at reuniting owners with property than leaving assets with individual businesses, which may lack resources or incentives to conduct extensive searches for missing owners.
California has specifically argued that its procedures comply with constitutional requirements and that the Eleventh Amendment provides immunity from certain types of lawsuits challenging state operations. The state maintains that its notice procedures are reasonably calculated to reach property owners and that adequate post-deprivation remedies exist for owners to reclaim their property under existing state unclaimed property laws.
The Supreme Court Peters v. Cohen petition is currently pending before the Supreme Court. The Court typically decides whether to grant review during its regular conference process, with decisions announced on scheduled opinion days. Whether the Court chooses to hear the case will depend on factors including the importance of the constitutional questions presented, the existence of circuit splits, and the potential for providing guidance to lower courts and state governments.
The petition argues that review is warranted given the scope of these programs and the constitutional principles at stake in constitutional unclaimed property law.
Supreme Court Peters v. Cohen presents the Supreme Court with an opportunity to clarify important constitutional principles governing state unclaimed property laws. The case involves the intersection of state fiscal policy, individual property rights, and federal constitutional protections—issues that affect millions of Americans and billions of dollars in assets.
The outcome could establish precedents that govern state escheat laws for years to come, potentially affecting how states balance their roles as protectors of unclaimed property with their fiscal interests in these increasingly significant revenue sources. For Sovos and other practitioners focused on unclaimed property compliance, this case represents a potential watershed moment in the evolution of unclaimed property law.
The National Association of Unclaimed Property Administrators (NAUPA) has approved a major update to their electronic reporting standards with the introduction of the NAUPA III file format. This significant advancement in unclaimed property reporting represents a modernization effort that aims to streamline the submission process while improving accuracy and efficiency for all stakeholders involved in reuniting owners with their assets.
The NAUPA III file format is the latest version of NAUPA electronic reporting standards, marking a transition from traditional fixed-width data structures to XML (Extensible Markup Language). This new unclaimed property file format update is designed to provide greater flexibility and user-friendliness while maintaining the highest standards of data accuracy and integrity. The NAUPA III XML format represents a significant step forward in modernizing unclaimed property compliance processes across all jurisdictions.
The NAUPA III file format introduces several critical improvements to unclaimed property reporting:
XML-Based Structure: The most significant change is the shift from the previous fixed-width format to the NAUPA III XML format. This transition makes the format more flexible and user-friendly, allowing for better data validation and easier integration with modern systems.
Enhanced Data Elements: The updated format includes refined data elements with clearer descriptions and improved codes. These enhancements are designed to help property holders submit more accurate reports while enabling states to better locate rightful owners of unclaimed assets.
Improved Validation: The NAUPA III XML schema provides better data validation capabilities, reducing errors and improving the overall quality of unclaimed property reporting submissions.
Understanding the implementation timeline is crucial for unclaimed property compliance planning:
Initial Rollout: Jurisdictions are expected to begin accepting NAUPA III file format submissions in Fall 2026 at the earliest. This timeline allows organizations adequate time to prepare for the transition and update their systems accordingly.
Transition Period: The NAUPA III format will run alongside the existing NAUPA II format during a transition period, ensuring continuity in unclaimed property reporting while organizations adapt to the new requirements.
Jurisdiction-Specific Information: Organizations can verify accepted formats for their specific jurisdiction at unclaimed.org/state-reporting, as implementation may vary by state.
To facilitate a smooth transition to the NAUPA III file format, NAUPA is providing comprehensive support:
XML Schema Definition (XSD) Files: NAUPA will provide NAUPA III XML schema files that offer detailed guidance for creating and validating XML submissions before filing. These resources ensure proper formatting and reduce submission errors.
Training and Education: The organization has committed to providing upcoming training sessions and additional resources to help property holders adapt to the new NAUPA electronic reporting requirements.
Technical Documentation: Comprehensive documentation will be available to support the implementation of the NAUPA III XML format, including best practices and troubleshooting guides.
Sovos is committed to ensuring a seamless transition to the NAUPA III file format for all our clients:
Comprehensive Format Review: Our team is actively reviewing the new NAUPA III format specifications and all supplementary resources provided by NAUPA to ensure seamless integration for our clients’ unclaimed property reporting needs.
Training Participation: We will participate in the upcoming NAUPA training sessions to gain comprehensive insights into the format requirements and best practices, ensuring our team is fully prepared to support client implementations.
Client Support and Resources: Sovos will provide a detailed summary of the key components and changes in the NAUPA III file format to help our clients prepare for this transition and maintain compliance with evolving unclaimed property reporting standards.
Ongoing Compliance Support: Our commitment extends beyond the initial transition, with ongoing support to ensure continued compliance with NAUPA electronic reporting requirements as they evolve.
The introduction of the NAUPA III file format represents a significant advancement in unclaimed property compliance technology. By staying informed about these changes and working with experienced partners like Sovos, organizations can ensure they remain compliant while benefiting from the improved efficiency and accuracy that the new XML-based format provides.
As wine lovers raise a glass to celebrate National White Wine Day on August 4, we’re taking a look at how white wines—particularly Chardonnay and Sauvignon Blanc—have performed in the direct-to-consumer (DtC) shipping channel over the past three years.
While the DtC market has faced economic pressure and shifting consumer behavior, these two white varietals have shown notable resilience and, in some cases, surprising growth. Drawing from the 2023, 2024 and 2025 Direct-to-Consumer Wine Shipping Reports (published by Sovos ShipCompliant in partnership with WineBusiness Analytics), here’s how these white wines have weathered the industry’s ups and downs—and what these trends signal for the wine industry in 2025.
Over the past three years, the DtC wine shipping channel has experienced steady year-over-year declines in both volume and value. After a 10.3% drop in volume in 2022, shipments fell another 6.5% in 2023 and 10% in 2024—the sharpest decline recorded in the 16-year history of the DtC wine shipping report. Value followed suit, slipping 5% in 2024 to $3.94 billion, despite average bottle prices climbing to a record $51.20.
Lower-priced wines (under $40) were hit hardest, but the slowdown impacted nearly every region, winery size and varietal. Despite these challenges, white wines—especially Chardonnay and Sauvignon Blanc—continued to resonate with consumers, demonstrating notable strength amid a declining DtC landscape.
White wines have held especially strong in California’s top producing regions, with Sonoma and the Central Coast standing out. These regions have adapted their pricing strategies to account for inflation, while also appealing to consumers looking for freshness, food-friendliness and relative value compared to premium red wines.
Sonoma County has leveraged Pinot Noir and Sauvignon Blanc to drive DtC performance. Despite a 12% overall volume drop in 2024, the county saw bright spots in its white wine program, particularly through increased average bottle prices and growing Sauvignon Blanc demand.
The Central Coast wine industry, long praised for their quality-to-price ratio, continued to ship significant volumes of both Chardonnay and Sauvignon Blanc. In 2024, Sauvignon Blanc’s surge helped offset broader volume declines in the region, even as total volume declined 9% year-over-year.
As one of the most widely produced and shipped white wines, Chardonnay has remained a core varietal in the DtC channel, consistently appearing among the top five wines shipped from regions like Napa, Sonoma and the Central Coast.
In 2022, Chardonnay shipments softened alongside the broader market, but its long-standing popularity kept it firmly entrenched in the DtC mix. The 2023 report (reflecting 2022 data) noted across-the-board shipment declines, yet Chardonnay maintained its volume leadership among white wines.
In 2023, Central Coast Chardonnay stood out. Even with economic pressure and a general decline in shipments, Central Coast wineries saw only an 8.6% drop in Chardonnay volume, while the value of those shipments rose 6.5%, driven by a 16.6% increase in average bottle price to $43.11. This suggests that even as consumers tightened their wallets, they continued to invest in premium, well-known white wines.
Chardonnay’s sales performance across top-producing regions like Napa, Sonoma and the Central Coast highlights its enduring appeal and steady role in DtC programs—even as the market evolves.
Sauvignon Blanc has quietly emerged as one of the most promising white varietals in the DtC channel, with recent reports showing meaningful gains in both volume and value.
In the 2024 report (covering 2023 data), Sauvignon Blanc was identified as one of the only varietals to show positive movement, with strong regional gains beginning to surface. The 2025 report (covering 2024 data) confirmed the upward trend.
In Sonoma County, Sauvignon Blanc shipment volume increased by 2%, while the value of those shipments rose 8%. This was driven by a 5% increase in average bottle price, showing that consumers were willing to pay more for the varietal even amid tightening budgets.
The Central Coast saw even more dramatic gains. Sauvignon Blanc shipments surged 18% in volume year-over-year, with a 26% increase in value, despite a 7% increase in price. This made it one of the best-performing white wines across any region and varietal category in 2024.
Its consistent momentum suggests even greater potential heading into the next DtC cycle.
While the broader DtC channel continues to face pressure—from inflation and shifting alcohol consumption habits to competition from cannabis and wellness trends—2025 wine industry trends show white wines experiencing encouraging signs of resilience.
Chardonnay sales performance remains a dependable anchor for many winery DtC programs, while Sauvignon Blanc is quickly becoming a varietal to watch. Consumers are demonstrating interest in white wines that deliver freshness, complexity and value, especially as summer buying behaviors and lighter drinking preferences remain top of mind.
As we toast National White Wine Day, it’s clear that white wines still have a strong place in the evolving DtC landscape.
For a deeper dive into varietal performance and regional shipping trends, explore the full 2025 Direct-to-Consumer Wine Shipping Report.
When executives first encounter e-invoicing mandates, a common reaction is to assume their ERP systems can handle the requirements with minor adjustments.
While this assumption is understandable, it often leads to painful discoveries as implementation
projects progress.
ERPs are financial systems that manage a variety of company data, but they were never built to support tax. They were never designed as network endpoints.
This fundamental architectural limitation creates cascading challenges when retrofitting existing ERP systems for e-invoicing compliance:
The hard truth many organizations discover is that achieving e-invoicing compliance often requires a fundamental reconsideration of their entire system architecture, data strategy, and process design. This post explains why many existing ERP systems can’t handle e-invoicing requirements, provides a six-step strategic roadmap for implementation, and reframes compliance challenges as opportunities for innovation.
When faced with the daunting task of global e-invoicing compliance, many organizations make the critical mistake of viewing it as merely an IT problem to solve. This perspective often leads to fragmented solutions that create more problems than they solve.
Instead, forward-thinking organizations develop a comprehensive strategy that acknowledges the interconnected nature of compliance, business processes, and technology infrastructure.
Here’s a roadmap:
Within this challenging landscape lie opportunities for forward-thinking organizations. Those who approach e-invoicing strategically—integrating compliance requirements into broader digital transformation initiatives—may discover
unexpected benefits.
The data standardization and process automation driven by compliance requirements can yield operational efficiencies, improve supplier-buyer relationships, and generate valuable business insights. Particularly in the adoption of frameworks like PEPPOL, electronic invoicing is driving innovation, advancing the digitalization of tax functions, and
enhancing process automation.
The global e-invoicing revolution is here to stay. Those who adapt strategically (developing comprehensive approaches that balance compliance, business efficiency, and data control) will not only ensure compliance but also discover unexpected opportunities for business process innovation along the way.
This post is the third of a three-part series based on insights from “What’s Going on Over There? The Global Impact of E-Invoicing Mandates on U.S. Multinationals,” a joint perspective from KPMG LLP and Sovos.
To learn more and schedule your free 30-minute Readiness Assessment, click here.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity.
Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.
Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates or related entities.
© 2025 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms
affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
The swift growth of hemp-derived CBD and THC beverages has introduced a wave of innovation to the beverage industry, along with a fair amount of legal confusion. These products are showing up everywhere: on retail shelves, in tasting rooms and in the hands of curious consumers looking for functional alternatives to traditional alcohol or cannabis products. And yet, their legal status remains anything but straightforward.
In a recent Sovos ShipCompliant webinar, Emily Harris Gant, principal at Foster Garvey and chair of its alcohol beverage and cannabis practices, provided an in-depth overview of the legal and regulatory landscape shaping the hemp-derived beverage category. Here are a few key takeaways.
The 2018 Farm Bill removed hemp from the definition of marijuana under federal law, as long as it contains no more than 0.3% delta-9 THC on a dry weight basis. But that change didn’t resolve all the regulatory challenges concerning hemp. In fact, it opened up a new layer of complexity, especially when it comes to beverages.
Under the Federal Food, Drug, and Cosmetic Act, the FDA prohibits the interstate sale of beverages infused with hemp-derived ingredients, as it deems those products to be “adulterated.” This restriction does not apply to hemp-derived ingredients designed as Generally Recognized as Safe (GRAS), though. Hulled hemp seeds, hemp seed protein powder, and hemp seed oil are all on the GRAS list, meaning that hemp-infused beverages containing these ingredients may be sold in interstate commerce. Given that most hemp-infused beverages do not solely utilize products on the GRAS list, this leaves most of the CBD and delta-9 THC products on the market in questionable legal status, which could change if Congress and the FDA decide to act.
For alcoholic hemp-infused beverages, the TTB requires formula approval, which includes lab analysis. However, that approval is only granted for products containing GRAS-listed hemp ingredients. Labeling is tightly controlled—terms like “hemp” are only allowed in a TTB-approved statement of composition (e.g., “ale brewed with hemp seeds”) and may not include any reference, implication or graphic related to marijuana or psychoactive effects. Products containing a controlled substance under federal law—including cannabis—are not eligible for formula or label approval, regardless of whether they’re sold interstate or intrastate.
With limited federal oversight, states have stepped in to regulate hemp-derived beverages on their own terms, resulting in a legal patchwork that shifts dramatically from one jurisdiction to the next.
As of February 14, 2025:
Some states, like Minnesota, have embraced hemp-derived THC beverages, allowing products that contain up to 10 mg of THC in a single container, provided they meet labeling, age restriction, and other requirements. Others, like California and Massachusetts, have moved in the opposite direction, prohibiting the sale of hemp-infused beverages with detectable THC content outside of the regulated cannabis industry, or banning them outright in retail and alcohol-licensed environments.
Still more states fall somewhere in the middle, limiting THC content per serving or container, or requiring special registrations to sell or produce these products. The pace of change is rapid: already in 2025, Iowa, Kentucky and Maryland have enacted new legislation, each with its own set of rules around potency, labeling and age restrictions.
The key takeaway is that there’s no such thing as a “national” compliance strategy for these products, absent Congressional action. Each state requires its own careful review and often its own licensing pathway.
Licensing challenges are another major concern for operators entering the hemp beverage space. Those operating under TTB permits or state alcohol licenses may risk those licenses by producing hemp-derived beverages on the same premises. Producers need to consider:
In some jurisdictions, dual licensing is possible; in others, it’s expressly prohibited. These rules differ widely and are evolving quickly, making it essential to consult legal counsel before launching or expanding a hemp-infused beverage program.
The hemp beverage space continues to evolve rapidly, but the regulatory frameworks guiding it remain unsettled. At the federal level, the 2018 Farm Bill, which governs hemp production and sales, is set to expire in September 2025 after multiple extensions. Several legislative proposals are already on the table: some aim to restrict ingestible hemp-derived products, while others would establish more comprehensive and uniform oversight.
At the same time, state-level regulation is accelerating. More states are implementing rules around potency, packaging, age restrictions and labeling, creating a patchwork that can shift quickly and carry serious consequences for noncompliance.
As highlighted in the webinar, beverage producers in this category face a complex and often contradictory legal landscape. Missteps in licensing, product formulation or marketing can lead to significant legal and financial consequences.
For those looking to enter or expand in this space, caution and consultation are essential. Legal guidance, operational diligence and proactive regulatory awareness are critical to building a compliant and sustainable hemp beverage program.
Access the full webinar recording here.
Keep an eye out for fresh webinar announcements from the Sovos ShipCompliant LinkedIn feed. Learn more about Emily Harris Gant and Foster Garvey here.
VAT in the Digital Age (ViDA) is one of the most significant regulation changes to EU VAT in recent years. Changes to requirements became effective on 12 March 2025 with the official adoption of the package, with further rules coming into effect in 2030.
This blog discusses the changes impacting businesses, including Digital Reporting Requirements, and when they take effect.
Under the previous VAT Directive, EU approval was required for Member States to introduce domestic mandatory B2B e-invoicing. Countries such as Italy, Poland, Germany, France, Belgium and Romania applied for derogations to mandate e-invoicing. With ViDA, Member States may impose domestic e-invoicing without needing EU approval, provided it applies only to established taxpayers.
The previous EU VAT Directive stated the use of e-invoices was subject to buyer acceptance. Under ViDA, Member States that have introduced mandatory domestic e-invoicing will no longer require buyer consent.
ViDA redefines electronic invoices. Under the proposal, electronic invoices are those issued, transmitted and received in a structured electronic format that allows its automated processing. This means that non-structured formats, such as pure PDFs or JPEG images, will no longer qualify as an e-invoice. Hybrid formats, such as ZUGFeRD and Factur-X, can remain due to their structured portion.
In principle, electronic invoices must comply with the European standard and the list of its syntaxes pursuant to Directive 2014/55/EU (the “EN” format). However, ViDA allows Member States to use other standards for domestic transactions upon meeting certain conditions.
From 2030, B2B e-invoices compliant with the European standard will be the default and no longer requiring buyer acceptance. However, if a Member State opts for a different mandatory domestic standard, they may either waive or require buyer acceptance for e-invoices using the European standard.
One of the most impactful updates in ViDA is the requirement for near-real-time digital reporting of cross-border transaction data.
Starting in 2030, taxpayers engaging in cross-border transactions within the EU must report invoice data electronically following the EN format. Such DRR will be a condition for taxpayers to exempt VAT in a cross-border transaction or claim input VAT. Each Member State will provide electronic mechanisms for submitting this data.
With ViDA, cross-border e-invoices within the EU must be issued in up to 10 days after the chargeable event. In these cases, DRR must happen at the same time the e-invoice is issued or should have been issued.
Invoices issued by the recipient on behalf of the seller (known as self-billing) and the invoices related to intra-community acquisitions must be reported no later than five days after the invoice is issued or should have been issued or received, respectively.
As expected, DRRs may be carried out by the taxpayers themselves or outsourced to a third party on their behalf.
ViDA grants Member States the option to mandate digital reporting for domestic B2B/B2C sales, purchase data, and self-supplies for VAT-registered taxpayers within their jurisdiction. Domestic reporting requirements must align with ViDA’s cross-border DRR standards, and Member States must permit submissions in the European standard format, although other interoperable formats may be allowed.
For Member States with domestic real-time reporting systems in place as of 1 January 2024, compliance with ViDA’s standards will be required by 2035. On the other hand, the package clarifies that other reporting obligations, such as SAF-T, can still exist. This alignment will ensure consistency across the EU in preparation for full ViDA implementation.
Member States have until 30 June 2030 to integrate ViDA’s e-invoicing and DRR provisions into their national legislation, making the Directive effective across the EU by 1 July 2030.
ViDA represents a significant shift for businesses operating within the EU, promising both opportunities and challenges. By introducing DRRs, ViDA aims to replace obsolete requirements, reduce administrative burdens, improve accuracy, and combat VAT fraud.
The move towards structured e-invoicing and near-real-time digital reporting will require businesses to update their invoicing and reporting systems, driving digital transformation across sectors. While the transition may entail initial adjustments, it is expected to increase efficiency, create a level playing field, and facilitate smoother interoperability between companies using different systems.
Find out more by reading our dedicated VAT in the Digital Age guide.
The global e-invoicing landscape resembles a patchwork quilt rather than a uniform blanket.
Each region and country has developed approaches reflecting their unique tax administration challenges, technological infrastructure, and regulatory philosophy. Understanding these regional variations is essential for multinational businesses seeking to develop effective compliance strategies.
This post, the second in a three-part series, compares approaches across Latin America, Europe, and Asia/ Middle East, highlights key characteristics of each region’s implementation, and introduces the PEPPOL framework as a potential path to standardization.
The story of modern e-invoicing begins in Latin America, a region where tax evasion had long undermined government revenues and fiscal stability. Countries like Brazil, Mexico, and Chile blazed the trail, creating what has become the template for government-controlled e-invoicing systems worldwide.
In Latin America, it’s not an option not to issue an electronic invoice; it’s mandatory. Tax authorities can be quick to deactivate digital stamps or certificates, which are required for e-invoicing. When this happens, businesses can’t complete transactions.
While Latin America led with strict control models, Europe has taken a more measured approach, balancing compliance requirements with business operational needs. The recently approved VAT in the Digital Age (ViDA) initiative represents Europe’s comprehensive adoption of continuous transaction controls, but with significant differences from the Latin American model.
Notable examples include Italy’s penalties of €250-2,000 per non-compliant invoice and France’s shift to partner dematerialization platforms (PDPs) for invoice distribution starting in 2026-2027.
The Asia-Pacific and Middle East regions present perhaps the most diverse range of approaches, blending elements from both Latin American and European models while introducing innovative variations.
Notable examples:
This regional diversity creates significant challenges for multinational businesses. Understanding these differences is crucial for developing compliance strategies that can adapt to local requirements while maintaining global consistency.
Beyond regional mandates, an emerging framework called PEPPOL (Pan-European Public Procurement Online) is gaining adoption across Europe and Asia as a standardized approach to business document exchange.
Unlike government-centric models, PEPPOL represents a fundamentally different philosophy using a “four-corner model” network architecture involving the seller, the buyer, and their respective access points. This creates what experts describe as “a network of networks through this interoperability scheme.”
The implications extend far beyond technical architecture, potentially transforming entire economies by democratizing access to digital business processes, particularly for small and medium-sized businesses.
While Latin America’s approach focuses primarily on tax compliance, “Electronic invoicing is really coming to promote innovation, to promote the digitalization of the tax function, to promote automation of processes” in other regions,
according to experts.
The PEPPOL revolution represents perhaps the most promising path toward eventual global standardization, offering a framework that balances government compliance needs with business process efficiency.
This post is the second of a three-part series based on insights from “What’s Going on Over There? The Global Impact of E-Invoicing Mandates on U.S. Multinationals,” a joint perspective from KPMG LLP and Sovos
Read the eBook here
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.
Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates or related entities.
© 2025 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
With the pilot phase of France’s e-invoicing reform fast approaching, we’re prepared to support businesses every step of the way. As a global provider of tax compliance solutions and a trusted technology partner, we’re ready to help companies navigate the upcoming transition with confidence.
The French B2B e-invoicing reform is set to begin its pilot phase in February 2026, and we’re fully prepared to support companies during this critical stage.
With less than a year to go before the phased implementation of the mandate, we’re anticipating the needs of both French and international businesses operating in France. Our solution is complete, interoperable, and aligned with the latest specifications published by the French tax authority (DGFiP) and the AFNOR Commission.
According to Article 91 of the 2024 Finance Law, the obligation to receive electronic invoices will apply to all VAT-registered businesses from 1 September 2026. The issuance of e-invoices and e-reporting data will be introduced progressively between 2026 and 2027.
To help companies prepare, the French tax authority has announced a pilot phase starting in February 2026. Participation will be voluntary and will involve testing all end-to-end flows, formats, and business scenarios set out in the reform. Companies and their Partner Dematerialisation Platforms (PDPs) will play a central role in ensuring everything is operational before the full mandate kicks in.
We’re committed and ready to support our clients and partners in this next crucial step. Our solution enables participation in the pilot while covering all 36 use cases identified by the DGFiP, including:
Our platform is fully compliant with the latest technical specifications issued by the DGFiP, and we plan to support our first voluntary clients from the very beginning of the pilot in early 2026.
As of August 2024, we’re officially registered as a Partner Dematerialisation Platform (PDP no. 0004). Thanks to our deep regulatory expertise, strong local presence, and robust global infrastructure, we’re uniquely positioned to support clients not only during the pilot, but all the way through full implementation.
This combination of technology, expertise, and trusted partnership makes Sovos a strategic ally in the transition to e-invoicing. We’re here to guide businesses of all sizes with confidence, ensuring full compliance with the evolving requirements in France, across Europe, and around the world.
In the whirlwind of tax policy changes sweeping through Congress, one provision of the recently passed “One Big Beautiful Bill” (OBBB) has quietly slipped through with minimal public scrutiny, despite its potentially massive fiscal impact. The bill increases the reporting threshold for Forms 1099-NEC and 1099-MISC from $600 to $2,000 for payments made after December 31, 2025, with future adjustments tied to inflation. While positioned as regulatory relief for small businesses, this change could cost the federal government billions in revenue annually impacting revenue that is already legally owed under current tax law.
The Numbers Tell the Story
The Internal Revenue Service’s comprehensive Tax Gap reports provide compelling evidence of what happens when income isn’t subject to third-party information reporting. According to the IRS’s Tax Year 2022 estimates:
These figures represent three decades of consistent findings across multiple IRS studies. The relationship is clear and stark: when taxpayers don’t receive information returns like Forms 1099, they dramatically underreport their income.
The Math Behind the Revenue Loss
To understand the potential fiscal impact, consider that the current $600 threshold captures millions of transactions that would escape reporting under the new $2,000 threshold. Based on IRS data:
When we extrapolate the 55% underreporting rate for income with little to no information reporting, even a conservative estimate suggests that raising the threshold from $600 to $2,000 could result in billions of dollars in lost tax revenue annually.
The Real-World Impact
The consequences extend beyond abstract fiscal projections. Consider these scenarios:
Scenario 1: The Freelance Consultant A marketing consultant performs $1,800 worth of work for a client. Under current law, no 1099 is required. Under the previous $600 threshold (if it had been implemented), this income would have been reported to the IRS. Statistical evidence suggests there’s a 55% chance this income won’t be properly reported on the consultant’s tax return.
Scenario 2: The Small Business A small business pays various contractors between $600-$1,999 throughout the year. Under the OBBB, these payments escape information reporting entirely, significantly increasing the likelihood of underreporting across multiple income streams.
Why Information Reporting Matters
The effectiveness of information reporting isn’t theoretical—it’s one of the most successful compliance tools in the modern tax system. The IRS has documented that:
This dramatic difference occurs because information reporting creates a “matching” system where the IRS can automatically detect discrepancies between what’s reported to them and what appears on individual tax returns.
The Inflation Indexing Problem
The OBBB compounds the potential revenue loss by indexing the $2,000 threshold to inflation. This means that over time, an increasing share of business payments will fall below the reporting threshold. Given that inflation averages 2-3% annually, the $2,000 threshold could exceed $2,700 within a decade, further eroding the information reporting system’s effectiveness.
A Balanced Perspective
It’s important to acknowledge the legitimate concerns driving this change. Small businesses do face administrative burdens from issuing numerous 1099 forms, and there are real compliance costs associated with the current system. However, these costs must be weighed against the substantial revenue loss and the erosion of tax system integrity.
The question isn’t whether businesses should receive regulatory relief—it’s whether the chosen approach optimizes the balance between compliance burden and revenue protection. Alternative approaches might include:
The Bottom Line
The One Big Beautiful Bill’s changes to tax reporting thresholds represent a significant policy shift likely to reduce federal tax revenue by billions of dollars annually. This isn’t new revenue or higher taxes; it’s revenue that is already legally owed under current tax law. With the federal government facing ongoing fiscal challenges and the national debt exceeding $33 trillion, policies that make it easier to avoid paying legally owed taxes deserve careful scrutiny. The IRS Tax Gap, the difference between taxes owed and taxes collected, currently stands at approximately $700 billion annually.
The data from thirty years of IRS compliance studies provides a clear warning: reducing information reporting requirements will likely result in significantly higher levels of tax underreporting. Policymakers should carefully consider whether the administrative relief provided to businesses justifies the substantial cost to federal revenues. The choice is clear; we can maintain robust information reporting requirements and collect the revenue legally owed, or we can provide regulatory relief while accepting billions in lost revenue.
For 20 years, the Sovos ShipCompliant Wine Summit has been about gathering winery professionals with the authorities and leaders who make the industry move. At this year’s Wine Summit, attendees heard directly from the regulators, attorneys and brand leaders shaping the future of the wine industry. As economic pressures, shifting consumer preferences and more tasting rooms than ever compete for attention, the questions facing wineries today aren’t hypothetical—they’re operational.
This year’s sessions offered a window into how leading wineries are adapting, where legal experts say the gray areas are and why the industry’s most resilient players are rethinking not just how they sell, but who they’re selling to.
As a highly regulated industry, wineries are no strangers to significant business hurdles. Yet the challenges facing beverage alcohol today are at least as numerous and significant, if not more so, than ever. Aging Baby Boomers and younger consumers are focused on moderation and non-alcoholic adult beverages, cannabis, inflation, along with global attention on the health impacts of alcohol. Add to this changing palates and occasions, technology and the pressure of how to connect with digital natives.
Keynote speaker Evan Shirley, an associate partner at Clarkston Consulting’s management and operations practice, spoke about how these factors are shaping the wine market and influencing purchasing decisions, and how savvy wineries can keep pace.
For wineries to keep up, they need to evaluate and adjust in several arenas, including:
As Evan noted: “Amid disruption, wine has enduring cultural, emotional, and sensual value. But it needs to be rearticulated for the new consumer. Think of wine as a story and experience, not just a product, with hospitality as a frontline differentiator.”
Wineries today are navigating a landscape filled with uncertainty around supply chain, shifting regulations and more. From fluctuating tariffs to evolving state-by-state shipping laws and cuts to the TTB, the regulatory environment is complex and constantly changing.
It was a privilege to have esteemed experts join us at the Sovos Wine Summit to share their invaluable insights on federal and state beverage alcohol regulations. Janelle Christian and Aniko Kasprian from the TTB provided crucial guidance on navigating complex federal compliance requirements, while Robert de Ruyter from the California ABC offered expert perspective on state-level enforcement and regulatory trends. Their participation added incredible depth to the conversation and gave attendees direct access to the knowledge and clarity needed to stay ahead in an evolving industry.
Rounding out the conference was Steve Gross, vice president of state relations at the Wine Institute, with his signature update on regulatory and legislative activities impacting the wine industry, with a focus on direct-to-consumer shipping regulation and what’s on the horizon in the coming months and years.
Much has changed since the Wine Summit started two decades ago. Back then, complexity and confusion were the watchwords of DtC shipping, with states applying a hodgepodge of haphazard laws across the country. For most of the country, DtC shipping was prohibited in any form, while other states adopted patchwork fixes that only the most diligent or wonkish of wineries could manage.
With time, patience and tremendous amounts of support from wine makers and wine lovers, along with industry organizations that fought the good fight, like Free the Grapes! and Wine Institute, the laws across the country changed, so that today we are able to enjoy a much different map, where consumers in nearly every state have the ability to purchase and receive shipments directly from their favorite wineries around the country.
That is not to say that the future of the wine industry looks free and breezy. There are real fears and concerns for the future of our industry, such as how to keep up your sales and where growth will come from. To me and our Wine Summit guest speakers, the headwinds we see are not reason to panic, but a call for renewal and reinvigoration.
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If you’re a financial executive at a U.S. multinational company, you’ve likely encountered early warning signs about the wave of e-invoicing mandates sweeping across the globe. What may have seemed like isolated regulatory experiments has rapidly transformed into a fundamental shift in how governments worldwide monitor, collect, and enforce tax compliance.
This transformation isn’t merely about digitizing paper invoices or upgrading accounting software. It represents a profound paradigm shift in the relationship between businesses and tax authorities, moving from periodic returns and occasional audits to real-time monitoring and continuous transaction controls.
For decades, businesses operated under a familiar tax compliance model: interpret tax laws, apply them to transactions, file periodic returns, and prepare for the occasional audit. This declarative model placed significant control in the hands of businesses, with tax authorities exercising oversight primarily through retrospective reviews.
That familiar world is rapidly disappearing. The revolution is founded on a simple yet transformative principle: eliminating the interpretive space between transaction and taxation through real-time data access.
As business processes happen, the information exchanged between trading partners is shared in real-time in a structured, standardized, authenticated form with tax administrations. This approach removes the human factor from tax enforcement on both sides of the equation.
The immediate and visible consequences of non-compliance are severe and include:
However, perhaps more concerning than these direct penalties is the collateral damage to business relationships. If you’re not supplying your customers with valid invoices, they won’t be able to recover Value-Added Tax (VAT), creating major issues with your customers.
The shift to real-time, data-rich tax monitoring fundamentally alters the relationship between businesses and tax authorities. In some countries, the tax administration knows more about your business in real-time than you do.
Organizations that fail to develop comprehensive data strategies matching tax authority visibility may increasingly find themselves at a disadvantage in tax disputes, unable to effectively challenge assessments because they lack the data parity necessary to present alternative interpretations.
Yet within this challenging landscape lie opportunities for forward-thinking organizations. Those who approach e-invoicing strategically—integrating compliance requirements into broader digital transformation initiatives—may discover unexpected benefits in operational efficiencies, improved supplier-buyer relationships, and valuable business insights.
The window for reactive approaches is rapidly closing. Organizations that thrive will recognize e-invoicing not merely as a compliance challenge but as a fundamental transformation in how businesses interact with tax authorities and each other in our increasingly digital economy.
This post is the first of a three-part series based on insights from “What’s Going on Over There? The Global Impact of E-Invoicing Mandates on U.S. Multinationals,” a joint perspective from KPMG LLP and Sovos.
Watch the webinar here
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Iceland holds a unique and critical position regarding natural catastrophes due to its extraordinary geography and climate.
Situated on the Mid-Atlantic Ridge, the country is one of the most volcanically and seismically active regions in the world, with frequent eruptions, earthquakes, and geothermal activity. Its mountainous terrain and harsh North Atlantic weather also make it highly susceptible to avalanches, landslides and severe storms. Combined with a relatively small and dispersed population, these natural risks pose significant challenges to infrastructure, housing and public safety.
As a result, Iceland has developed a comprehensive and layered system of contributions and levies to collect funds for ensuring rapid response, risk mitigation and long-term resilience against these ever-present threats.
This blog summarises the charges that are payable by insurance companies towards various governmental bodies in relation to natural catastrophes. It’s part of a series that also covers:
Property owners and insurance companies in Iceland are subject to various fees and assessments related to natural catastrophes.
These include:
Insurance companies are obliged to calculate and – if the fee can be charged to the policyholder – collect the amount of these charges and then pay them to various governmental bodies.
In Iceland, by law, property owners are obliged to insure their properties against fire. The value of a property is based on the fire damage assessment (Brunabótamat). Fire damage assessment is performed by the Housing and Public Works Agency. The value of the properties then is managed by the State Land Registry (Fasteignamati) and kept in the property register.
Property owners pay a fee to update and maintain the Land Register. This fee is called the House Valuation Fee (HVF) and is collected and remitted by the insurance companies.
This additional premium’s objective is to create a solidarity fund that covers the costs of damages caused by natural disasters, such as volcanic eruptions, earthquakes, landslides, avalanches and floods.
Insurance companies writing businesses in Iceland shall pay an annual fee for the Civil Engineering and Construction Administration (Mannvirkjastofnun). This fee is called Building Safety Fee. Its purpose is to support fire prevention and ensure that structures in Iceland are safe and do not threaten human life, health or the environment.
Various works must be done to protect properties against damage and accidents caused by avalanches and landslides. To cover the costs of such works, an annual fee is imposed on all fire-insured properties.
A new fee, the Prevention Fee or Lava Levy, was introduced in 2024 to protect critical infrastructure on the Reykjanes Peninsula.
Sovos has built good relationships with various offices and governmental bodies, including the Financial Management Authority, which administers the recently introduced prevention fee. Our IPT experts will promptly answer any questions you may have.
The IRS has officially confirmed a plan to sunset the FIRE system, marking one of the most significant transformations in information return filing in decades. After serving as the backbone of electronic tax reporting since the 1980s, the Filing Information Returns Electronically (FIRE) system will be decommissioned in January 2027.
That means 2025 is the final tax year that can be filed through FIRE, with all 2026 returns (filed in early 2027) required to use the IRS’s new Information Returns Intake System (IRIS). With just one remaining filing season to complete the transition, the window for preparation is closing fast.
The IRS FIRE system relied on the legacy 1220 flat file format—a relatively compact and simple way to transmit data. IRIS, in contrast, is built with modern technology in mind and requires data to be transmitted using XML files, which are:
| Aspect | FIRE System (Legacy) | IRIS System (New) |
| File Format | 1220 flat file | XML |
| Data Complexity | Simple, compact | Complex, larger XML schemas |
| System Interface | Legacy infrastructure | API-based or portal submission |
| TCC Requirements | One TCC | Separate TCCs for portal vs A2A |
As you prepare for the FIRE sunset and transition to IRIS, here are four essential considerations:
Unlike the 1220 format, IRIS requires separate fields for first and last names. You’ll need logic in place to split names without creating unnecessary Name/TIN mismatches, which can lead to costly penalties.
This web-based filing system lets you e-file up to 100 returns at a time, enter data manually or by .csv upload. Filers are required to submit via Application to Application (A2A) when submitting 100 or more returns.
When submitting 100 or more returns , IRIS A2A enables automated XML submissions via API. To participate, you must:
If your current filings are handled through homegrown systems or core platforms, it’s critical to begin assessing and planning how these systems will support the new IRIS XML structure and IRS A2A connection point. Waiting too long could put you at risk of non-compliance.
While the IRS moves forward with IRIS, most states still rely on the FIRE format to process information returns. As of early 2025, only a handful of states have adopted the IRIS schema. This means that businesses may need to maintain dual filing capabilities—submitting returns in IRIS XML to the IRS and FIRE format to individual states.
Sovos has been deeply involved in the development and rollout of IRIS from the beginning:
With over two years of IRIS filing experience, Sovos is fully equipped to support the new IRS filing requirements. We will continue to support IRIS filings across all of our go-forward solutions, providing customers with the confidence and compliance coverage they need—both now and in the future.
The transition from FIRE to IRIS may feel like a distant deadline, but with the technical and operational shifts involved, the time to start planning is immediately.
Here’s where to begin:
Sovos is here to help you make that transition smoothly and stay ahead of the compliance curve. Contact us today to learn how we can support your transition to IRIS and ensure seamless, secure, and compliant filings—federally and at the state level.
Effective July 1, 2025, all direct-to-consumer (DtC) shipments of wine into Maine must comply with the state’s beverage container redemption program, better known as a “bottle bill.”
While wine bottles sold in Maine retail stores have long been subject to these provisions, the state is extending the program to include DtC shipments from out-of-state wineries. This makes Maine the second state, after California, to apply its bottle bill to DtC shipments of wine.
Compliance with the bottle bill rule will require DtC shipping wineries to:
1) Register with the state
2) Ensure all labels they will ship into the state are registered with the Maine Department of Environmental Protection (DEP)
3) Collect the deposit amount on shipments to the state and
4) File an annual report to the state
Maine requires that beverages sold in the state that are subject to its bottle bill be handled by a registered Initiator of Deposit (IOD).
For wines that are sold in retail liquor stores, the IOD can be the wholesaler. However, for DtC-shipped wine, the IOD must be the licensed DtC shipping winery.
Further, Maine permits only one IOD for each registered label sold in the state. This means that while a winery can continue to work with a third-party IOD for wines they will only sell at wholesale in Maine, such as their distributor, all labels that the winery will sell both DtC and three-tier must be registered under the winery’s name. Wineries that are currently selling at three-tier in the state must therefore transfer IOD registration to them before they can ship those labels DtC.
The annual fee for an IOD registration is $500 for wineries producing more than 50,000 gallons per year and $50 for smaller wineries.
IODs must contract with a comingling agent, which will be the in-state party that handles collection of containers and will remit the bottle bill collections to the state agencies. The state is still developing specific parameters for how DtC shippers will work with comingling agents. In the meantime, a list of available comingling agents can be found here.
Once the winery has registered as an IOD, they will need to register the labels they will DtC ship into the state through their DEP account.
Label registration can be done manually or through a CSV upload, and must list the product name, beverage and container type, glass color, UPC (if available) and comingling group information. Until July 15, 2025, brand label registrations will cost $1 per label.
Note that the bottle bill registration requirement for DtC-shipped wines is in no way associated with any brand/label registrations instituted by the Maine Bureau of Beverage and Lottery Operations. It remains the case that only wines sold through Maine wholesalers are subject to any BABLO label registrations.
Wines subject to the Maine bottle bill must be properly labeled with a sticker that clearly identifies the IOD and the deposit value. Prior to sale in Maine, the IOD must provide a sample sticker to the DEP for approval, which will be subject to readability, suitability and durability.
The Maine deposit value is 15 cents per wine beverage container that is greater than 50 mL and 5 cents per container smaller than 50 mL (however, DtC shipments of wine in containers smaller than 250 mL is prohibited in Maine).
DtC shippers will need to collect the deposit value per bottle at the time of sale, listing the charge as a separate line item on their invoices. Notably, the deposit value is not subject to Maine’s sales tax.
Unlike in California, the DtC wine shipper will not pay the deposit collections directly to the state. Instead, their comingling group is responsible for such remittances. As such, the comingling group will charge the winery for the deposit amount that must be remitted to the state along with additional handling and administrative charges, as set forth in their contract.
DtC wine shippers, as registered IODs, will still need to file an annual report (due in March) to the DEP reporting the number and type of containers sold in the state. There are different procedures depending on whether they are reporting actual or estimated sales data.
Managing container waste—and encouraging recycling—is a major concern for all states, with many latching onto bottle bills like Maine’s as one possible solution. While DtC wine shippers have long managed to escape the regulatory burden associated with bottle bills, the recent changes in California and Maine seem to signal that this will be a more common compliance requirement going forward.
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The digital business landscape is forever changing, yet one thing is certain: electronic archiving is more than a convenience – it’s a matter of compliance.
As governments worldwide invest in digital tax transformation initiatives like e-invoicing and e-reporting, a complex web of e-archiving requirements that vary across borders is also developing.
Understanding your e-archiving requirements is essential for maintaining proper tax evidence, surviving audits, and preventing potential business disruptions.
E-invoicing refers to the issuance and exchange of digital invoice documents, often in structured formats, replacing traditional paper processes. As countries implement mandatory e-invoicing and other types of Continuous Transaction Controls (CTCs) to close tax gaps and reduce fraud, these electronic documents must adhere to increasingly complex country-specific requirements.
While e-invoicing addresses the transaction process, e-archiving focuses on the long-term storage and preservation of these electronic documents in their original format to allow subsequent audits. This means proving that an archived invoice is precisely the same as when it was originally issued or received, with no unauthorised alterations.
According to research conducted between 2024 and 2025 by the Digital Innovation Observatories, “document archiving and management is the most commonly adopted service as a consequence of the introduction of e-invoicing mandates.”
This trend reflects a broader shift: regulatory compliance is no longer just about issuing invoices correctly, but also about how those documents are managed and retained throughout their lifecycle. As such, understanding the fundamentals of both e-invoicing and e-archiving is critical for organisations aiming to remain compliant, efficient and prepared in an increasingly digital and regulated environment.
E-archiving requirements are frequently underestimated but are critical to tax compliance globally.
While CTC systems provide real time granular data to the authorities, the possibility to conduct audits persists after the e-invoicing process, i.e. during the storage period, when the authorities will access e-archives to verify compliance. This makes a robust e-archiving system essential for businesses operating across multiple jurisdictions, each with unique regulatory requirements.
Importantly, businesses must maintain their own e-archiving strategy even when tax authorities offer centralised archiving services as part of CTC frameworks. In the event of an audit or legal dispute, it is ultimately the taxpayer’s responsibility to disprove or challenge the data held by the authorities. Relying solely on tax authority systems – or worse, on a counterparty’s archive – could leave businesses vulnerable, with limited control over the integrity or availability of critical documentation.
Moreover, businesses should view e-archiving not merely as a compliance obligation but as an opportunity to improve document management, streamline operations and strengthen audit defence. Without proper archiving, companies risk substantial penalties during audits and may face difficulties demonstrating compliance with local tax laws.
While there are several varying requirements from country to country, the following represent some of the essential general elements businesses must keep in mind when implementing a compliant e-archiving system:
As mentioned before, businesses often overlook the fact that e-archiving regulations can be as diverse and specific as e-invoicing mandates themselves, with each jurisdiction imposing its own distinct set of requirements.
While general requirements are present in almost every country, there are also unique complexities. As requirements differ from country to country, companies will find that certain jurisdictions have more complex and stringent e-archiving rules
Some country-specific e-archiving complexities examples are listed below:
Developing and implementing an effective e-archiving strategy presents significant challenges for businesses operating across multiple jurisdictions. With varying retention periods, technical requirements and constantly evolving regulations, organisations often struggle to establish compliant archiving processes that scale efficiently while minimising risk. A well-designed e-archiving approach ensures compliance, optimises operational efficiency and supports business continuity.
To develop an effective e-archiving approach, businesses should:
Tax audits can occur unexpectedly, requiring immediate access to archived invoices. Businesses should regularly test the retrieval and readability of archived documents and ensure staff understand how to access and present them during audits.
Beyond meeting regulatory requirements, a well-designed e-archiving system delivers significant business advantages:
Implementing a globally compliant e-archiving solution requires careful planning across technical, legal and operational dimensions. Rather than treating e-archiving as an afterthought to e-invoicing, it should be part of the foundation of your compliance strategy.
Sovos eArchiving offers compliant storage across over 60 countries from a single platform, ensuring country-specific compliance and continuous regulatory updates. This approach allows businesses to maintain compliance with constantly evolving requirements via one universal compliant e-invoice archive, regardless of the number of service providers and e-invoicing software solutions a company uses.
As tax authorities worldwide continue embedding compliance into business transactions, a robust e-archiving system isn’t just good practice—it’s essential for business continuity and audit readiness in our increasingly digital tax environment.
In a country where sales tax is the norm, a handful of states stand out for going against the grain—they don’t impose any statewide sales tax at all. That’s right—no last-minute filings, no scrambling to collect and remit every month. At least, not for sales tax. But before you pack your headquarters and head for the border, there’s more to the story.
So which states said “no thanks” to taxing retail sales? And what does that really mean for your businesses, especially in a world where economic nexus laws still apply and local jurisdictions may have rules of their own? Explore the five U.S. states with no sales tax and what smart businesses should consider before calling them tax havens.
As of 2025, Alaska, Delaware, Montana, New Hampshire, and Oregon do not collect state-level sales tax. These five states have opted out of traditional sales tax structures, though some—like Alaska—may still allow local jurisdictions to impose their own sales taxes.
Alaska doesn’t impose a statewide sales tax, but that doesn’t mean businesses are entirely off the hook. Many boroughs and municipalities charge their own local sales taxes, with rates climbing as high as 7.5%. These rates vary significantly by location, meaning compliance isn’t as straightforward as it may seem.
For businesses selling in or shipping to Alaska, this patchwork system requires careful attention. What’s tax-free in Anchorage may be fully taxable in Kodiak, so using a local sales tax lookup tool is essential to stay compliant and avoid costly mistakes.
Delaware is one of the only states with zero sales tax—state or local. It’s also a corporate favorite, known for its pro-business laws and minimal red tape. For online sellers, holding companies, and incorporation seekers, Delaware is a magnet.
However, while there’s no traditional sales tax, Delaware does impose a Gross Receipts Tax on the total receipts of a business. Unlike sales tax, this is paid by the business and cannot be passed directly to consumers, potentially impacting margins.
Oregon is a true no-sales-tax state meaning no local, and no hidden retail sales taxes. This makes it especially appealing for businesses with high transaction volumes, as the total price to consumers can be lower without the added burden of sales tax at checkout.
But while businesses benefit from simplified sales tax compliance, the state recoups revenue through higher income and excise taxes, which can affect overall operating costs. For business leaders, it’s important to weigh the savings on sales tax against potential increases in other tax obligations when building long-term cost projections.
Montana has no statewide or local sales tax, making it one of the most tax-friendly states in the country when it comes to retail transactions. The only exceptions are a handful of resort areas that impose a local “resort tax” on specific goods and services like lodging, food, and alcohol.
For most B2B transactions, Montana offers a low-friction environment—particularly appealing for eCommerce sellers and manufacturers looking to establish a footprint with minimal compliance complexity. For businesses, this translates to fewer tax collection obligations and simpler checkout processes, though it’s still essential to stay informed about local tax nuances in tourism-heavy regions.
New Hampshire is known for its pro-business tax climate and does not levy any state or local sales tax. This makes it an attractive option for companies selling goods both in-state and across state lines, as it eliminates the burden of tracking and collecting sales tax on retail transactions.
However, the state does generate revenue through other channels, including Business Profits Tax (BPT) and Business Enterprise Tax (BET). For larger businesses with significant revenue or payroll, these taxes can add up. While the lack of sales tax reduces front-end compliance, companies still need to factor in these corporate-level taxes when evaluating long-term operating costs in New Hampshire.
Just because certain states do not tax sales does not mean they’re “tax-free.” They’ve instead crafted tax structures that rely on other mechanisms to fund public services, infrastructure, and education without taxing retail sales of goods and services. The five states that do not charge a statewide sales tax often capitalize on alternative revenue streams, including:
The trade-off between sales tax and income tax affects everything from gross sales strategy to corporate tax planning. Businesses need to evaluate the full picture—not just whether they’ll need to collect and remit sales tax, but how other tax structures could impact their margins, growth plans, and long-term profitability.
To learn more about state specific rates and sales tax by visiting our blog.
With nearly 13,000 state and local tax jurisdictions across the U.S., sales tax is one of the most deceptively complex parts of doing business, especially for companies operating in multiple states or selling online. While the basic idea is simple—collect the correct rate and remit it to the right authority—the rules, rates, and requirements vary dramatically depending on where your customers are located.
What is sales tax exactly? How does it differ from use tax? And how can businesses ensure they’re calculating, collecting, and remitting it accurately? Read on to explore fundamentals of sales tax, how it’s applied across different jurisdictions and what businesses need to know to stay compliant.
Sales tax is a transactional tax imposed by state and local governments on the sale of goods and certain services. It’s considered a consumption tax or an indirect tax because it’s ultimately paid by the end consumer, however, it’s the business’s responsibility to calculate, collect and remit it to the appropriate tax authority.
Sales tax nexus refers to the level of connection a business has with a state that triggers a legal obligation to collect and remit sales tax. If your business has nexus in a particular state, you’re required to register with that state’s tax authority, collect the correct sales tax from customers, and file regular returns.
There are two main types:
Note: Every state sets its own nexus rules, so it’s critical for businesses, especially those selling online or across multiple states, to monitor where they’ve established nexus and ensure compliance in each jurisdiction.
Not all transactions are subject to sales tax or subject to tax at the standard rate. Depending on the state, certain goods, services, or buyers may qualify for exemptions — and it’s up to the seller to apply those rules correctly. Common sales tax exemptions include:
Exemptions vary significantly by state. Each jurisdiction has its own definition of what qualifies. Even states with similar definitions may interpret them differently and sellers must maintain valid exemption certificates to support any non-taxed transactions that are based on the nature of the purchaser or the use to which they will put the item.
Sales tax is typically a percentage of the sale price. The seller calculates the tax based on the applicable rate and adds it to the total at checkout. The collected tax is then filed and paid to the state or local government. To calculate sales tax:
Example:
If an item costs $100 and the sales tax rate is 7%, the tax is $7. The total price paid by the buyer would be $107.
Sales tax and value-added tax (VAT) are both indirect (or consumption) taxes, but they operate differently:
| Factor | Sales Tax | VAT |
| When it’s charged | At the point of final consumption | At every stage of the supply chain — from production to final sale |
| Visibility | Typically shown on the customer invoice | Generally shown on the invoice for B2B sales, often included in the advertised price for B2C transactions. |
| Who pays it? | The end consumer | Business buyers within the supply chain have the ability to reclaim VAT paid from the VAT they collect. The end consumer has no such ability and bears the full VAT burden. |
| Where is it used? | Primarily in the United States | Common across the rest of the world. |
In short, sales tax is a single-stage tax, while VAT is a multi-stage tax that requires businesses to charge VAT on sales and recover VAT paid on purchases. For U.S.-based companies entering international markets, this shift can introduce entirely new compliance obligations including VAT registration, collection, and compliance, continuous transaction controls, mandatory electronic invoicing and cross-border reporting.
For businesses, sales tax compliance isn’t as simple as charging customers an extra percentage at checkout. It’s a multilayered process that requires vigilance, organization, and up-to-date knowledge of state and local regulations.
Almost every state in the country, including Washington DC and the Commonwealth of Puerto Rico, imposes a sales tax. The exceptions are New Hampshire, Oregon, Montana, Alaska, and Delaware. Complexities kick in immediately though because while there is no state-level sales tax in Alaska (at least not yet), they do have tax at the county (Borough) and city level. State level rates are relatively stable. In the last 12 months, only Louisiana has adjusted their standard state rate.
Local rates are a different story. Thirty-seven states have local sales tax at the county, city and/or district level. Those rates can and do change all the time. In fact, during 2024, there were 643 local rate changes
Rates differ not just by state, but often by county, city, or even ZIP code. And thanks to destination-based sourcing rules in many jurisdictions, the correct rate depends on where the buyer is located— not the seller. Below is a state-by-state breakdown of sales tax rates as of April 2025.
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Want more state-specific info? Browse the State-by-State Sales Tax Guide
Sellers collect a percentage of each sale and remit it to the government. The rate depends on where the buyer is located.
Simple: Revenue. Sales tax helps fund schools, roads, emergency services, and all the other infrastructure we rely on.
It’s a consumption tax, which means the more you buy, the more you pay — and unlike income tax, it doesn’t care how much you earn.
No. Rates and rules vary by state and even city or county.
Sales tax rates are determined by a combination of state, county, city, and local jurisdiction rules—which means the total rate can vary significantly even within the same ZIP code. For more information, explore our State-by-State Sales Tax Guide.
In most cases, no—businesses cannot claim sales tax back like they can with VAT. Once sales tax is paid on a taxable purchase, it typically becomes a cost of doing business. However, there are a few important exceptions, including some resale purchases, specific exempt use cases (manufacturing, agriculture, etc.), or in a situation where you were charged sales tax in error.
The seller is typically responsible for collecting sales tax from the buyer at the point of sale and remitting it to the appropriate state or local tax authority. If your business has established nexus within a state you are required to register, collect, and remit sales tax in that jurisdiction. This applies whether you’re selling in a physical store, online, or across state lines.
Missing a nexus obligation can lead to uncollected taxes, interest, penalties, and potential audit risk. That’s why many growing businesses rely on automated tools or compliance partners to track nexus and manage multi-state obligations effectively.
The U.S. beverage alcohol industry has long operated under the three-tier system, a structure born out of Prohibition’s repeal in the 1930s. Designed to prevent monopolies and encourage market access, the system initially resembled a pyramid: a few dominant suppliers sold to many mid-sized distributors, who then sold to a wide base of retailers.
Fast-forward to today, and the pyramid has warped into something closer to an hourglass: the number of producers and retailers has exploded, but the number of distributors—the “middle tier”—has steadily shrunk. That shrinking middle tier is creating market access challenges that have reignited conversations about alternatives, like direct-to-consumer (DtC) shipping, that can help producers reach their customers in new, compliant ways.
Since 1995, the number of distributors in the U.S. has plummeted from around 3,000 to just over 1,100—a decrease of more than 60%, according to WineBusiness Analytics. Additionally:
So, while the top and bottom tiers are continuing to grow, the middle is consolidating—and fast.
Today, the top 10 wholesalers control 80% of the market, with the top two accounting for over 50% of total revenue. That’s a dramatic shift from a system originally designed to create balance. And while many of these wholesalers operate nationally, smaller producers and retailers are increasingly finding it hard to gain access to the market.
Distributors, now faced with managing immense product volume, often prioritize high-volume accounts like large grocery chains. This isn’t necessarily a judgment call, it’s a business reality. Larger accounts mean streamlined logistics and predictable sales. But for smaller, independent retailers, this shift can make it difficult (if not impossible) to access a diverse range of craft brands from smaller producers.
Because alcohol distribution is state-mandated and regulated, producers and retailers are often locked into specific pathways to market. If those pathways become too narrow, it creates a bottleneck that limits consumer choice and stifles innovation from small and emerging producers.
This narrowing middle tier highlights an important question: What does protection of the three-tier system look like today? Initially, distributors were seen as needing protection from supplier or retailer dominance. Now, it’s the distributors who hold the market power. Laws like franchise protections, once designed to create fair terms for wholesalers, are now often viewed as barriers that disproportionately impact small producers trying to grow.
For some producers, especially those unable to secure broad distribution, direct-to-consumer shipping offers a compliant alternative route to market. DtC shipping won’t solve the bottleneck on its own, but it can be a pressure release valve by helping producers reach customers directly in states where it’s allowed and offering consumers more choice in what they drink and where they buy it.
The conversation around three-tier reform isn’t new, but this moment of extreme consolidation invites fresh scrutiny. As the market continues to evolve, with more producers entering the space and consumer demand growing for niche, premium and craft offerings, it’s worth asking: Should alternatives be available?
This isn’t a call to dismantle the three-tier system. It continues to serve a critical role in promoting accountability and regulatory compliance. At the same time, evolving market conditions and a significantly more crowded supplier landscape have introduced new challenges the original system was never designed to address.
There’s no reason the industry can’t have it all: a strong, compliant three-tier system and thoughtfully structured options like direct-to-consumer, direct-to-retail and self-distribution pathways for qualified producers. With the right regulatory guardrails, it’s possible to support small businesses, increase consumer choice and maintain the integrity of the market—all at the same time.
For producers and retailers navigating this landscape, awareness is critical. Understanding how consolidation affects market access can inform business strategy and advocacy efforts alike. While large wholesalers will continue to be a vital part of the system, the industry must consider how to ensure the health of the full ecosystem: top, middle and bottom.
Because in the end, a thriving market isn’t shaped by just the biggest players. It’s built on diversity, access and the ability for qualified producers, no matter their size, to find a place on the shelf or a path to the consumer.
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