Sovos recently hosted a webinar with Joe Hillstead, a tax and advisory partner with Squire & Company (Squire). Squire works with Sovos to support the sales tax needs of its clients. In the webinar, Hillstead and Charles Maniace, VP, Regulatory Analysis and Design, Sovos, discussed issues such as: knowing when to partner with a Certified Service Provider (CSP), how organizations can benefit from working with a CSP and finding the right CSP.
We’ve highlighted some key points from that conversation below.
Question: When do you suggest your clients consider the Streamlined Sales Tax (SST) program?
Charles: With economic nexus, where many sellers have an obligation to collect sales and/or use tax in numerous states, the SST program can be immensely helpful. SST member states have agreed to allow sellers who register and comply in select member states to select a CSP and use it for a single state or for multiple states. Essentially, you could register in just one state and then potentially register for the rest at another time or not at all, if you don’t meet the economic nexus requirements in those states. That option enables companies to think about compliance in manageable chunks.
Question: What are the key benefits for your clients when they work with a CSP?
Joe: Consumer product companies that sell all across the country may or may not have physical presence in a state that would trigger a sales tax requirement. Furthermore, many e-commerce companies don’t have a physical presence in any state except for the one that they’re headquartered in. But they’re still selling nationwide with tangible personal products. Prior to South Dakota v. Wayfair Inc., these companies wouldn’t have sales tax nexus, but many of those organizations have now triggered sales tax nexus because they’ve met certain economic thresholds.
For those businesses, it is definitely beneficial to partner with a CSP and to take advantage of the benefits of the SST program.
Additionally, some companies have a diverse listing of products. These organizations have all kinds of different products that may or may not have different sales tax treatment in different states. Working with a CSP that has the discipline and experience in working with organizations that really evaluates their product mapping is going to be extremely helpful. It is an important process of getting it right so that clients rest assured that the taxability of their product is correct.
Question: What sets Sovos apart from other CSPs?
Joe: Organizations want that peace of mind. Working with a CSP that has gone through the rigor of being certified reassures them that they will be protected, even if an audit comes up. Companies should work with the right partner that takes that responsibility seriously, and that has taken a deep dive into their product mapping and transaction flow because they want to get it right the first time.
Sovos has been very hands on with helping our clients through this process. When you leave product mapping to the client, key things can be overlooked because the client is not a sales tax expert. The company can try their best, but what happens if they are audited by a state several years later. State authorities might notice that a product was treated as X when it should have been treated as Y and taxed at a higher rate. Now the company owes hundreds of thousands of dollars.
For companies that are considering SST, if you are a remote seller and qualify, working with a CSP is an important move to make. Working with a partner like Sovos that is committed to helping you stay compliant and is an expert in sales tax is critical toward mitigating and managing risk.
To hear the full interview with Squire, watch the on demand webinar here.
For more details on CSPs, check out our back to basics blog on seven things you should know about the CSP and SST programs.