2022 Annual Report

The Continuing Evolution of Sales Tax

Where we are today


The size and scope of the sales tax universe can be overwhelming

As of December 31, 2021, there were 22,688 political subdivisions (states, counties, cities) in the United States. Of those political subdivisions, sales tax currently exists in 12,472 of those locations. This includes 44 states (along with Washington D.C. and Puerto Rico), 2,215 counties, 7,883 cities and 2,328 districts.  


The impact of South Dakota v. Wayfair, Inc.

When economic nexus became a reality with the Supreme Court’s decision in June of 2018, managing sales tax became a vastly more complicated exercise for businesses. Continuous change, new laws and greater oversight and enforcement all contributed to a tougher experience for businesses selling across multiple jurisdictions.

Year Sales Tax Changes
July 2018 – June 2019 652
July 2019 – June 2020 571
July 2020 – June 2021 640
July 2021 – April 2022 523**

For perspective on how frequently things change from a sales tax administration perspective, our team of regulatory compliance experts tracked all the rates and forms, changes and new laws/bills being considered, as well as trends since June 2018. 

State-by-state map

Stay up to date on all sales tax rates and obligations with Sovos’ State-by-State Guide to Sales Tax Nexus Laws


Complexity and change continue to define the state of sales and use tax

When it comes to sales tax, the only constant is change. Not only are we seeing a trend in new jurisdictions implementing sales taxes for the first time, but existing taxable jurisdictions are continuously changing and tweaking their laws in ways that can impact how you collect and remit sales tax. 

Year Total Forms Tracked Number of Form Revisions
2018 1422 843
2019 1431 754
2020 1452 657
2021 1460 592

Staying on top of changes and implementing them timely can be a business’ best defense against notices and audits. 

In addition to the number of changing forms, many jurisdictions are implementing technology that is changing traditional processes. This means that in several jurisdictions, the traditional tax return process has been scrapped in favor of electronic portals. 

“Without Sovos it would be a disaster for us to try and manage tax rates and rules, especially in states with multiple levels of jurisdictional rates. I’m confident in Sovos that all the rates are accurate and timely, and if we have a sales tax holiday then we know they are going to be handled. Sovos helps us avoid auditing issues and responds quickly to any questions we may have.”

– Mark Oulds
director of taxation, Boscov’s 


The tax gap is real, and governments are taking action

According to figures published by the IRS, the annual tax gap in the United States is more than $400 billion. To combat this, legislatures are constantly proposing new bills that impact how sales taxes are assessed, collected and remitted. The expectation is that sales tax is likely to become more complicated in the coming years as jurisdictions move to collect revenues owed.

A comparison of proposed laws tracked between 2020 and 2022 shows the escalating number of bills being considered to secure more revenue and ensure the collection of revenue legally owed. 

“If I were to offer a company advice on choosing a sales tax provider, I would definitely steer them towards a model like Sovos, where you have an individual who’s responsible for your account, understands your business and is responsible for it month over month. ”

– Erik Hinkie
CIO, Holmes Corporation


Four years have passed since the implementation of economic nexus laws based on the Supreme Court South Dakota v. Wayfair decision. Jurisdictions continue to implement, change and tweak their laws and processes while increasing their ability and desire for greater enforcement. 

With a large tax gap to pare down and coming out of a global pandemic, the expectation is that things will continue to grow more complex and confusing as jurisdictions grapple with how to collect revenue owed. 

Connecting QuickBooks to a Sales Tax Solution

Ensure sales tax calculation accuracy and streamline your filing process

Streamline and simplify sales and use tax compliance with an out-of-the-box integration to QuickBooks Online. Sovos’ easy-to-install solution effectively positions your business for growth especially when operating in complex jurisdictions.

Download the guide to learn how connecting QuickBooks Online to our sales tax solution can ensure you stay compliant with every sales and use tax change.

Key Benefits

● Seamless integration for enhanced and accurate tax calculations

● Always-on access to our robust taxability rules

● Increased compliance by reducing and minimizing manual errors

Get peace of mind for your growing business with a scalable integration between your QuickBooks Online solution and Sovos’ comprehensive sales tax engine.

Download the Getting Started Guide today.

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Indirect Tax Rules for Insurance Across the World

Many tax authorities are increasing their focus on the insurance industry in an effort to close tax revenue gaps, with many introducing Insurance Premium Tax (IPT) and other indirect taxes for insurance. Globally, IPT is fragmented across over 200+ countries and achieving compliance can be a complex process requiring specialist knowledge.

Insurers, especially those operating across multiple territories, can find keeping up to date with the latest IPT rates, rules and regulations to ensure compliance challenging.

This guide provides a helpful snapshot of the indirect tax rules that apply to insurance premiums across the world, including:

  • Europe
  • Asia
  • Africa
  • Australia and New Zealand
  • North America
  • South America

Download the Indirect Tax Rules for Insurance Across the World guide

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The guide provides a useful reference of indirect rules across Europe including:

Albania, Andorra, Austria, Belarus, Belgium, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Georgia, Germany, Gibraltar, Greece, Guernsey, Hungary, Iceland, Ireland, Isle of Man, Italy, Jersey, Kosovo, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Moldova, Monaca, Montenegro, Netherlands, Norway, Poland, Portugal, Romania, San Marino, Slovakia, Slovenia, Spain, Switzerland, United Kingdom

And across Asia including:

Armenia, Azerbaijan, Bahrain, Bangladesh, Brunei Darussalam, Cambodia, Hong Kong, India, Indonesia, Israel, Japan, Kazakhstan, Korea (the Republic of) (South), Lao People’s Democratic Republic, Macau, Malaysia, Maldives, Mongolia, Myanmar, Pakistan, Philippines, Qatar, Saudi Arabia, Singapore, Sri Lanka, Taiwan (Province of China), Thailand, Turkey, United Arab Emirates, Vietnam

Across Africa including:

Angola, Benin, Botswana, Burkina Faso, Congo, Egypt, Eritrea, Gambia, Ghana, Kenya, Libya, Mauritius, Mozambique, Namibia, Nigeria, Saint Helena, United Republic of Tanzania, Zambia, Zimbabwe

For Australia and New Zealand including:

American Samoa, Australia, Fiji, French Polynesia, Marshall Islands, New Caledonia, New Zealand, Wallis et Futuna

Across North America including:

Anguilla, Antigua and Barbuda, Aruba, Bahamas, Barbados, Bermuda, Canada, Cayman Islands, Costa Rica, Curacao, Dominican Republic, El Salvador, Greenland, Guatemala, Honduras, Jamaica, Mexico, Nicaragua, Panama, Puerto Rico, Saint Kitts and Nevis, Saint Lucia, Saint Martin (French part), Saint Vincent and the Grenadines, Trinidad and Tobago, Turks and Caicos Islands, United States of America, Virgin Islands

And, finally, the indirect tax rules for insurance across South America including:

Argentina, Bolivia, Brazil, Chile, Ecuador, Falkland Islands, Paraguay, Peru, Uruguay, Venezuela

Insurance Premium Tax compliance

The digitization of tax is a trend that will undoubtedly continue. Organisations need to prepare for any changes to reporting as this will impact compliance obligations for the countries they operate in.

Tax authorities have increased their focus on the insurance industry to ensure IPT and parafiscal taxes are collected correctly, accurately, and on time.

Operating in multiple countries inevitably means also having to comply with many local regulations in line with IPT statutory and parafiscal filing. Compliance regimes can be simple or complex, but the difficulty is that they’re varied.

Download our guide to ease this burden.


The Sales and Use Tax Pressure Index

How does your company compare?

Complying with ever-evolving sales and use tax regulations is not an optional business consideration. Small and medium-sized businesses can be hit especially hard with complicated, complex and distracting requirements. SMBs face a tremendous amount of pressure as they often don’t have the layers of resources that larger companies have at their disposal. 

Economic nexus is now in play in nearly every U.S. state, and SMBs cannot afford to assume that increased sales and use tax scrutiny doesn’t apply to them. With regulators looking to close the tax gap, there are now increased chances of notices, audits, penalties and fines. 

To gauge just how much pressure those who have responsibility for sales tax management/administration at their organization, Sovos surveyed 250 individuals meeting this description to learn about their concerns and frustrations. Nearly eight out of 10 respondents said that they work at companies earning less than $10 million or between $10 million and $25 million in annual revenue.

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The survey revealed the following key takeaways: 

  • New technology can help ease the burden – Eighty-three percent of respondents said automating their organization’s tax management process would make them happier in their current role, and they would be more likely to stay with the company.
  • IT is feeling the pressure – Over 50% reported seeing a strain on IT and other resources, with 35% saying that the growing complexity of sales tax distracts from core business priorities.
  • Fearing the financial consequences – Nearly 80% said either generating an audit or facing a financial penalty was their biggest fear if a mistake was made when remitting sales tax.
  • Anything but sales tax compliance – There were numerous other chores respondents said they would rather be doing than attending to sales tax compliance requirements. Going grocery shopping (63%), doing the laundry (51%) and even going to the dentist (39%) were all cited as better alternatives than attending to sales and use tax compliance processes. 

Is this a pressure point for your organization? Are you finding core business objectives being pushed to the side, while employees buckle under the added responsibilities? There should never have to be a choice between losing a sale or processing a sale when you know that the sales tax is wrong.

It doesn’t have to be difficult to get your sales and use tax management under control. The right partner can help ensure that the burden of regulatory compliance shifts from your organization to theirs, providing peace of mind so you can focus on core business priorities.

Understanding VAT Obligations: European Events

Global events are popular once again and conferences and exhibitions often create VAT registration obligations in different European Union Member States that your business operates in.

Navigating these complex place of supply rules can be challenging. Legislation varies country-to-country and the type of event you’re organising affects this. Download our helpful guide to understand what your VAT obligations are.

Place of Supply Rules

When determining where tax applies to an event, it’s important to consider the place of supply rules.

These can be confusing and hard to interpret. When organising events and conferences, there are two basic rules to think about:

  1. Does the service being supplied fall under the general place of supply rules, in which case, if the supply is B2B, VAT is due where the customer is based. In this scenario if the customer is established outside the UK, then the customer has to account for VAT on behalf of the supplier in the country they are established in under the reverse charge rules in the EU or potentially equivalent if non-EU.
  2. Does the supply fall under any of the exceptions to the main rule? The most common example being admission to conferences and events whereby VAT is due where the event is held.

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As you can see, VAT and events is a complex affair.

Admission to events, exhibitions and conferences in the EU is subject to VAT in the country where the event takes place. In addition to admission, other considerations include stand rental, local suppliers, sponsorship packages and catering services.

Our guide covers these topics:

  • VAT registration – where should I register and what VAT rules should I consider?
  • Event organisers – what VAT liabilities apply and how does it affect clients?
  • Online events – how do the rules differ for online events, both for B2B and B2C?
  • Hybrid events – are these taxed differently?
  • VAT reclaims – what claims are possible and what VAT can I recover?

Tour operators margin scheme (TOMS)

In addition to these common concerns, the Sovos Understanding VAT Obligations: European Events guide also explores TOMS – the tour operators margin scheme.

If a business buys in and sells services such as hotel accommodation, passenger transport or excursions to its clients/delegates in its own name, TOMS may well apply. The supply of services that fall under the scheme receive a different tax treatment to most supplies of services. They can require the undertaking of a complex calculation.

Also covered is a summary of non-EU events and how to apply VAT when hosting an event outside of the European Union.

For example, some non-EU countries will apply similar rules to the EU and a registration may be

Needed. However the issues will often be complex and require a business to carefully consider the organisation of the event at the outset. VAT recovery in non-EU countries will also vary and not all countries will allow refunds to overseas businesses.  

Compliance peace of mind with a complete, global VAT Managed Service from Sovos

Whatever your VAT implications, Sovos has the expertise to help you navigate your global events and the complexities of cross-border VAT obligations. Our VAT Managed Services ease your compliance workload while mitigating risk wherever you operate today. In addition, we ensure you’re ready to handle the VAT requirements in the markets you intend to lead tomorrow.


Italy: Electronic Invoicing and Reporting Requirements

Seeking to close a 35 billion euro tax gap, Italy has implemented a clearance e-invoicing model for domestic transactions. Get the details in the mandate and the requirements it involves with this guide.

Colombia: Electronic Invoicing and Reporting Requirements

Latin American compliance is a challenge for multinationals operating in the region. Inability to achieve or maintain compliance can cost companies hundreds of thousands or even millions of dollars each year. Colombia is a pioneer in electronic invoicing and VAT enforcement.

For more details on the evolution and requirements of the mandate, fill out the form to download the guide on e-invoicing in Colombia.

Key Considerations For IT and Tax to Ensure Alignment on the Journey to a Cloud-Based Sales Tax Solution

Why sales tax processes should be included on your journey to the cloud

The business needs of a multi-faceted organization are endless and priorities can quickly become skewed. It is important that businesses take steps to align strategies on ensuring tax is included in the cloud approach. 


Tax Team
IT Team
Tax Team

How do we ensure alignment with IT?

  • What is IT’s cloud strategy?
  • What are IT’s near-term priorities?
  • Are there upcoming changes to transactional systems (ERP, eCommerce, P2P)?
IT Team

How do we ensure alignment with tax?

  • How are we currently supporting the tax function?
  • Does tax have any limitations in their existing processes?
  • Are they aware of our IT roadmap?
Tax Team

Assessing our current tax solution

  • How reliant upon IT are we?
  • Can we manage systems within tax?
  • What processes can we automate? 

IT Team

Assessing how tax fits into strategic planning

  • How much time are we spending on sales tax processes?
  • Where do we want to reduce the resource impact/manual work?
  • Do we have a strategy to move to S/4HANA? What are the implications of tax data migrations when we move to S/4, and the impacts of not properly accounting for this?
Tax Team

How do we prepare tax for the migration?

  • Identify and confirm ideal end state.
  • Review customizations and identify what needs to be changed.
  • Identify key stakeholders and migration concerns.
IT Team

When and where should we consider tax?

  • When changing to a transactional system.
  • When aligned with a cloud strategy.
  • As early as possible – don’t make tax an afterthought.

Migrating your tax engine to a cloud-based sales tax solution is the perfect time for IT and tax to align on strategic priorities.

Getting tax and IT aligned early and often eliminates issues and increased costs.

Sovos can help bring the two sides together with minimum interruption and maximum output. Talk to Sovos if you have questions about moving your tax engine to the cloud.


Form 1099-NEC & Direct to State Reporting

Tax and accounting professionals managing 1099 reporting will need help this tax season. Here’s why.

New 1099 Form

In 2020 1099-NEC was resurrected to replace box seven on Form 1099-MISC. This means the 1099-NEC is the new form for reporting nonemployee compensation for services amounting to $600 or more. As a result, this form has a significant impact on all types of businesses and their 1099-MISC reporting processes.

New Reporting Requirements for Federal & State

The IRS announcement in Publication 1220 added Form 1099-NEC to be included in the Combined Federal/State Filing (CF/SF) program. It will be up to the state agencies whether or not to make a change to participate in CF/SF and not continue to require direct reporting. This means businesses will need to:

  • Track individual state guidance for the 1099-NEC that will continue to change late in the season
  • Understand state-specific requirements around data, reporting thresholds, format, timelines and adapting reporting processes for each state

MarketScape Report

Sovos named a leader in the “IDC MarketScape for SaaS and Cloud-enabled Sales and Use Tax Automation Software for Enterprise”


Sovos named a leader in the “IDC MarketScape for SaaS and Cloud-enabled Sales and Use Tax Automation Software for Enterprise”

The IDC MarketScape: Worldwide SaaS and Cloud-Enabled Sales and Use Tax Automation Software for Enterprise 2021 Vendor Assessment has been released, and Sovos has been recognized as a leader.

IDC MarketScape is the premier vendor assessment tool for the information and communications technology (ICT) industry. The report provides in-depth technology market assessments of ICT vendors for a wide range of markets. The comprehensive assessment of market competitors offers critical information needed to evaluate technology solutions.

As noted by Kevin Permenter, IDC research director, financial applications, “Sovos combines local expertise with a global customer experience across its full suite of compliance solutions. They are a strong choice for companies of any size looking for cloud tax software and services to meet compliance and regulatory demands anywhere they do business.”

Download your complimentary excerpt

Download The IDC MarketScape For Sales and Use Tax

The IDC MarketScape states that Sovos’ Global Tax Determination Cloud scales horizontally to handle unlimited transaction volume. It delivers active-active clusters across globally distributed, secure data centers to enable differentiated reliability and no downtime, even in the event of a data center outage. The solution has flexible deployment options, with modern APIs, certified integrations, batch processing and localized calculation.

In addition to Sovos Global Tax Determination, Sovos sales and use tax solutions include Sovos Use Tax Manager, Sovos CertManager, Sovos Sales & Use Tax Filing and Sovos Taxify for small to medium-sized businesses.

Among the strengths identified in the IDC MarketScape are:

Reporting and analytics: Sovos Sales & Use Tax Filing allows users to consolidate data from any system and automatically analyze all transaction data from a given period to create the needed returns at the push of a button. Customers have maximum control and visibility into their data with the ability to drill into transactions, hold data, recalculate returns, and view historical versions of each return, including who made edits.

Cloud platform: Sovos provides users with a strong cloud software platform that gives the user access to tools and data in a consistent user experience. The cloud platform is supported by a multiple physical datacenter approach. Additionally, Sovos APIs are compatible and optimized to work with SaaS, on-premises and customer-built financial systems and workflows.

Regulatory change management: There are only 50 states in the United States but more than 12,000 state and local tax jurisdictions, and the rules and regulations shift frequently. Sovos has invested heavily into maintaining their regulatory tax content. Sovos has a regulatory analysis team of nearly 100 professionals around the world to ensure customers can streamline compliance and react to new mandates.

Read the excerpt now

Marketscape Report

Sovos Named a Leader in “IDC MarketScape for Worldwide SaaS and Cloud VAT Software”

Marketscape Report

Sovos Named a Leader in “IDC MarketScape for Worldwide SaaS and Cloud VAT Software”

Citing multiple customer references, IDC identified Sovos’ capability with mandated e-invoicing as a major benefit.

“Sovos combines local expertise with a global customer experience across its full suite of compliance solutions. They are a strong choice for companies of any size looking for cloud tax software and services to meet compliance and regulatory demands anywhere they do business.” – Kevin Permenter, IDC research director


Download The IDC MarketScape For Value Added Tax

Sales Tax Toolkit: Your Guide to Q4 and Annual Filings

We’ve compiled resources and tips from our experts in this toolkit to help you create a plan for confidently meeting your sales tax deadlines while maintaining a work-life balance.

Be prepared instead of stressed

The U.S. currently has 12,274 sales tax reporting jurisdictions across the different states, counties, districts and cities. 

If you continue to file taxes the same way you always have and hope that nothing is overlooked, it might be time for a new strategy. Remember, hope is not a plan. Our team understands that the sales tax filing landscape is changing and we want to provide you with the knowledge and tools you need to ensure sales tax compliance, even as your filing obligations change.

This sales tax toolkit is a digital experience, including:

  • Key things to consider about modified business operations due to COVID-19 and how your filing obligations may have changed.

  • An ideal monthly workflow for tax filing teams, including a compliance filing checklist to reduce your risk of inaccurate reporting and penalties.

  • A list of all state filing deadlines and a printable calendar for you to prioritize your tasks and deadlines

  • Tips from our Managed Services team on maintaining work-life balance and avoiding burnout.

When you download our Sales Tax Toolkit, you’ll also have the option to select a gift for added boost when it comes to juggling the increased workload come January.

Get your toolkit

January is closer than you think, meaning now is the time to start preparing for sales tax filing. Regulations change and failing to ensure your filing process evolves along with those changes will not help ensure compliance. Sovos has the tools and guidance you need to create the right strategy that can continue to grow with your company and all sales tax regulations.  

It’s easy to feel overwhelmed with ensuring sales tax filing compliance. Burnout can happen when businesses lack necessary tools that help employees stay on track, with the ability to also maintain a healthy work-life balance. It may be more difficult for your employees to focus when they are stressed, which could lead to overlooked steps with your sales tax filing. But is there really a way to guarantee that balance? How can businesses make sure all sales tax filing deadlines are met without overwhelming employees? 

Then there is the sales tax filing process itself. But it doesn’t have to be a process. January is a stressful time of year, but businesses often have monthly, quarterly and annual returns to finalize and submit. If you operate in multiple states – either with physical presence or as a remote seller – there may be numerous state annual reconciliations to consider. Additionally, local, state and federal tax regulations are ever-evolving, meaning businesses must remain vigilant to avoid inaccurate reporting that can lead to hefty financial penalties. 

If you’ve ever thought, “Help me sales tax,” Sovos is here. Whether you are concerned about annual sales tax liability, updates at the local or state level or just with meeting all sales tax filing dates, we understand. Our team knows that the sales tax filing landscape is changing and we want to provide you with the knowledge and tools you need to ensure sales tax compliance wherever you file.


Taming the Value-Added Tax Beast with Technology

Value added tax (VAT) continues to increase in complexity as governments explore new methods for increasing revenues and closing tax gaps. In our newest IDC sponsored InfoBrief, “Taming the Value-Added Tax Beast with Technology” we explore the driving forces behind the VAT evolution and why it has led to increased complexity for organizations conducting business internationally.

The global VAT evolution is the result of many countries scrapping their local tax infrastructure and implementing a common global value-added tax (VAT) structure or significantly changing their VAT system. This shift adds a significant amount of change (for countries that switched to VAT) and uncertainty (for countries that are yet to switch) into corporate tax processes, especially for companies with interests in these new VAT countries.

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Why companies need to think globally when it comes to VAT.

VAT complexity is primarily a result of how widespread VAT is and the lack of uniform approaches among member countries. Situations that add to the complexity include:

  • VAT returns can differ greatly from country to country.
  • Different countries means translation issues abound.
  • Different industries can have different requirements.
  • The list of eligible transactions/ services is growing rapidly.

We have reached a point in the evolution of VAT compliance where localized point solutions can no longer keep pace with the demands of governments looking to close tax gaps and increase revenues.  Attempting to manage the complexity of modern VAT through disparate IT systems creates support and maintenance challenges that are essentially unsolvable.

With the tax gap continuing to increase globally, regulatory authorities have embraced the digitization of tax to increase revenue by eliminating suspicious supply chain activity and VAT fraud. This has provided a greater degree of control in implementing necessary reforms and changes.

Digitization has also lessened the burden on compliance by reducing paper trails through the automation of systems. Perhaps most importantly, it has allowed for the sharing of data between countries for cross-border transactions which has been plagued by inefficiencies and fraud.

This IDC InfoBrief provides in-depth analysis of why businesses need to consolidate and standardize platforms and IT processes to effectively implement compliance processes to create greater agility to capitalize on emerging markets. By having a single source of truth for data and reporting, organizations can better protect themselves against audits, fines and penalties.

Get your complimentary copy of the IDC InfoBrief now to ensure your organization is prepared to respond to the growing complexities of global VAT.

Are You Getting What Your Sales Tax Solution Promised?


Is Your Sales and Use Tax Solution Falling Short of Expectations?

Many sales and use tax solutions leave you feeling underwhelmed once they become operational. What was billed as a complete solution to your organization’s increasing sales tax complexity has become instead a source of increased stress and anxiety.

You’ve become skeptical. We get it.

But manual approaches are no longer practical. You need to protect your business from painful tax audits and potential fines. 

Maybe you’re  thinking sales tax is just so complicated that the technology solution you’re using might be as good as it gets.

It’s not.

Maybe you think all vendors are the same.

They aren’t.

Or, maybe you think that the cost and pain of switching from one solutions provider to another would be more expensive and painful than it’s worth.

It isn’t.

Relieve your sales tax burden and refocus your efforts on other critical business functions. 

This free guide will help you review the state of your current sales and use tax solution and start you on a path to better tax compliance management with fewer surprises and better results.

Download your complimentary copy of our guide today, and then talk to Sovos. We can help.

Because when sales and use tax management is easier, life is better.  

Marketscape Report

Sovos Named a Leader in “IDC MarketScape for Worldwide SaaS and Cloud VAT Software”

Marketscape Report
Citing multiple customer references, IDC identified Sovos’ capability with mandated e-invoicing as a major benefit. “Sovos combines local expertise with a global customer experience across its full suite of compliance solutions. They are a strong choice for companies of any size looking for cloud tax software and services to meet compliance and regulatory demands anywhere they do business.” – Kevin Permenter, IDC research director

Take Action:

See IDC’s full breakdown of Sovos’ capabilities

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