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Infographic: State 1099 Reporting Deadlines

By far, the biggest challenge facing organizations during 1099 reporting season this year was state reporting. With states tightening deadlines and multiple jurisdictions and reporting thresholds to deal with, Sovos customers found state reporting more complex than any other element of reporting season.

This updated infographic shows why. The map shows 1099 reporting deadlines by earliest deadline per state. In just a few years, the vast majority of 1099 first deadlines have shifted from March to January. Combine that shift with changing thresholds for 1099-K forms and other state-specific policies, and it is clear why state reporting has become such a challenge and will likely continue to be.

 

With reporting periods shrinking, organizations need to centralize and automate reporting processes in order to maximize efficiency, ensure compliance and avoid financial penalties.
Find out how Sovos can help.

Global Taxation is

Going Digital

Here's How to Prepare

An underappreciated revolution--the shift to digital taxation--is underway. More and more countries are requiring businesses to comply with a new model of tax reporting and compliance.

This is the digital transformation of tax: a climate in which global tax authorities demand more e-invoicing and e-reporting—which will likely lead to more e-assessments and e-audits. Here, we explore the transformation and offer a clear path forward for business and technology leaders to tackle its challenges and leverage opportunities.

Section-Dividers-FI-01

To date, about 30 countries have implemented some form of digital tax reporting or collection requirement—and many of those early movers are developing nations such as Brazil and Mexico. As Intra-European Organisation of Tax Administrations Executive Secretary Miguel Silva Pinto explains, a primary motivator moving developing countries toward digital processes is that “digitization is a highly effective means of countering fraud.”

But going forward, more nations—including developed economies—will up the ante on digital reporting requirements. Not only will the information collected swell to include more intimate details around corporate operations, it will also shift from taxpayer-submitted to government-issued returns.

“The rise of digital taxation turns the traditional tax collector-taxpayer relationship on its head,” says Carolyn Bailey, partner at Ernst & Young’s Tax Services. In a Forbes Insights survey of 250+ senior executives, majorities of cross-industry finance, tax and IT leaders report experiencing a variety of trends in digital taxation.

Companies Face New Requirements

80%
of leaders experience
localization
which requires that tax software and reporting processes meet local regulations
64%
of leaders experience
e-Reporting
which replaces manual periodic form filing of summary information to online transmission of files with transaction data
64%
of leaders experience
e-Accounting
which requires businesses to transmit entire accounting ledgers to the tax administration or maintain accounts hosted by the tax administration based on their own transaction data
56%
of leaders experience
e-Invoicing
which mandates the use of e-invoices and real-time submission to the tax administration
Section-Dividers-FI-02

The switch to digital taxation introduces a variety of challenges, risks and costs: some are immediate and tactical, while others are longer-term and strategic.

The Challenge of Digital Taxation

Transparency

Tax authorities will have a clearer window into a company’s tax operations

Smarter Tools

Advanced analytics and AI will monitor consistency, track compliance and more precisely choose audit targets

Scrutiny

This unprecedented visibility means more intrusive controls, higher income assessments and the potential for tax controversy

Short-term Challenges

Initially, companies will need to tweak or even overhaul their invoicing, payment, enterprise resource planning (ERP) or other financial systems. Challenges will multiply as individual jurisdictions implement and continuously update digital requirements and more nations join the fray.

Meeting multiple requirements on short timelines across a growing list of jurisdictions can lead to a patchwork of solutions amid a diversion of scarce local IT and tax resources. But failure to achieve compliance in real-time reporting of transactions impacting VAT and broader taxation leads to fines, business disruption and damaged reputations.

Long-term Challenges

Digitization of taxation is part of an even larger trend—the shift to sharing more intimate information with tax authorities, a process accelerated by the OECD’s Base Erosion and Profit Shifting initiative (BEPS).

Digitization of so much data “becomes tax disclosure on steroids,” says Bailey. Soon enough, there will be jurisdictions applying advanced analytics and AI to scrutinize enterprises in search of evidence that can be used to levy higher assessments.

“More nations will be collecting massive amounts of information about not only individual companies, but entire industries, giving authorities an unprecedented window into operations and profitability.”

Carolyn Bailey

Partner, EY Tax Services
Digital Tax Administration Services

Section-Dividers-FI-03

The path forward can be daunting for business leaders: 57% say that responding to digital taxation represents a significant challenge for their company. Forbes Insights research findings and Bailey’s guidance can help business leaders create an explicit strategy.

Your Transformation Agenda

Take Inventory

“Take inventory of where you’re operating and where these requirements are being introduced,” recommends Bailey. It’s essential “to gain an understanding of the deadlines and to find out about penalties and enforcement.” Inventories should also take into account future investments.

Centralize & Standardize

83% of surveyed executives say they will be taking steps to move global taxation into a more centralized model. Greater centralization will eliminate the need for local IT patches and workarounds, in turn creating “opportunity for companies to achieve greater standardization,” says Bailey.

Streamline

The shift to digital processes—and away from manual, paper-based and often error-prone single-country systems—presents an opportunity to reduce costs while improving quality and efficiency.

Outsource

Executives are seeking assistance from specialists with expertise in digital VAT/GST operations around the world, as well as working more closely with ERP and other financial software providers. Most will be hiring additional IT and tax staff at headquarters and locally.

Collaborate

Perhaps the greatest necessity is to unite leaders across functions and processes. This begins with IT and tax, but also includes the broader finance, operations and strategic planning teams.

Turn Risks Into Opportunity

Synchronize Solutions

A comprehensive response is essential. Many companies need country-specific e-invoicing and related tax solutions, which requires a more systematic approach. And as tax authorities leverage their increased insight, companies must also prepare for more intrusive tax administration controls, tax controversy and intense scrutiny on transfer pricing. A coordinated response linking core business processes and ERP systems with new interfaces and improved solutions for reporting and compliance can significantly reduce costs and risks.

Dig Into Data

Greater standardization of information exchanged with tax administration platforms leads to vast new caches of mineable data. Tools like AI could help sift through detailed cost, revenue and related operational data, leading to more optimal decisions and strategies. Companies can also leverage the same data and tools to proactively scour their business models for tax efficiency and compliance—allowing for improved tax planning, contemporaneous documentation and justification of transfer pricing policies. 

Overall, the trend is clear and unavoidable: taxation is going digital. The best way forward is to use this as an opportunity to improve business outcomes.

Learn more about digital tax transformation and how business leaders are responding

Full Report

Growing Pains: Tax Information Reporting Obstacles

Companies operating in the technology space often see rapid growth. However, leaders may be blindsided by multiple Tax Information Reporting obstacles that can cripple their progress.

See the infographic below to learn more.

Cyber Monday 2019 – Sales Tax Preparation Key to Success

Cyber Monday 2019 is anticipated to be one of the most challenging to date for ecommerce and finance teams. More spending, in fewer days, and many more states imposing economic nexus, may subject more online retailers to sales or use tax collection and remittance responsibilities.

5 steps ecommerce retailers should take to prepare for Cyber Monday 2019

New sales tax laws require ecommerce retailers to step up Cyber Monday 2019 preparations. Are you ready?
Read the blog post

Infographic

Do 2021 Sales Tax Holidays Impact Your Products?

Sales tax holidays – or a tax free weekend, depending on where you live – are welcome reprieves for consumers, looking to save money when they can. But retailers’ tax departments might not be as excited. 

It takes careful monitoring of all the jurisdictions where businesses have sales, and an extra complexity has been added with economic nexus requirements following South Dakota v. Wayfair, Inc. Accurately applying sales tax before, during and after a sales tax holiday can take a lot of time, energy and resources. This can be especially tricky as local areas can send a notification of participation just days before a sales tax holiday begins. 

Online retailers with a diverse product portfolio, and with sales spanning the country, will truly feel the extra burden that can come with sales tax holidays. For example, there is no uniformity in state-to-state exemptions. If and when a holiday has a similar focus (e.g. “Back to School”), online retailers must familiarize themselves with individual state rules to stay compliant.

But which states have a sales tax holiday? What products are eligible for a holiday exemption?

Alabama
Severe weather preparedness (February 26-28)
Back to School (July 16-18)

Arkansas
Back to School, August 7-8

Connecticut
Clothing and footwear, August 15-21

Florida
Disaster preparedness (May 28-June 6)
Freedom Week (July 1-7)
Back to School (July 31-August 8)  

Iowa
Clothing and footwear (August 6-7)

Louisiana
Second Amendment (September 4-6)

Massachusetts
All-Inclusive (August 14-15)

Maryland
Energy Star (February 13-15)
Clothing and footwear (August 8-14)

Mississippi
Back to school (July 30-31)
Second Amendment (August 27-29)

Missouri
Energy Star (April 19-25)
Clothing and footwear (August 6-8)

New Mexico
Back to school (August 6-8)

Ohio
Back to school (August 6-8)

Oklahoma
Clothing and footwear (August 6-8)

Puerto Rico
School supplies (January 8-9)
Back to school (July TBD)

South Carolina
Back to school (August 6-8)

Tennessee
Gun Safety (July 1, 2021 – June 30, 2022)
Back to school (July 30-August 1)
Prepared Food (July 30-August 5) 

Texas
Emergency preparedness (April 24-26)
Energy Star & WaterSense (May 29-31)
Back to school (August 6-8)

Virginia
Back to school, Emergency Preparedness and Energy (August 6-8)

West Virginia
Back to school (July 30 – August 2)

Sales tax holidays can be a headache for retailers, regardless of when they occur. Many tax departments file sales taxes monthly or quarterly, though some may file annually or semiannually. Retailers’ tax and IT departments must remain vigilant and properly adjust their systems to correctly charge tax on every transaction. They will also need to account for changes should they be audited later. Retailers need to be able to update systems quickly, efficiently and accurately, ensuring that the correct sales tax holiday rates are only in place when they should be. 

Sales associates also have to know sales tax holiday details so they can process each transaction correctly. Overall, sales tax holidays can help consumers save, but cost retailers a lot of time and energy in ensuring taxes are accurately charged. Having an automated sales and use tax system can be extremely beneficial in helping to manage these complexities.

Talk to an expert.

See how Sovos can help with evolving sales tax holiday needs.
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Ecommerce Sales Tax: 3 Tips for Success in Your New Online Channel

Customers continue to seek out online options, pushing numerous types of businesses to implement ecommerce channels. But how can organizations ensure that their sales tax processes continue to run smoothly? Whether a business is just starting out or is looking to add ecommerce options, there are critical steps to take that will ensure sales tax compliance, happy customers and continued business growth.

Get Ready for the 2021 EU E-Commerce VAT Package

Download our infographic to understand the upcoming changes.

If you’re an EU business with B2C sales in other EU Member States or based outside the EU with B2C sales to the EU, 1 July 2021 will bring significant change.

The EU VAT e-Commerce Package aims to simplify cross-border trade and ensure VAT is charged correctly on cross-border B2C sales.

The change to the Distance Selling threshold means that VAT will be immediately due in the Member State of consumption and this could lead to a requirement for several additional VAT registrations. This will add cost and complexity to businesses and so the package introduces a One Stop Shop (OSS) to ease the burden.

OSS has many benefits but it’s not simple.

It’s important that companies prepare and make informed decisions now as to whether or not OSS is right for their business.

Download our infographic

Our One Stop Shop infographic will help you understand the key changes the new EU VAT e-Commerce Package will bring including:

·       Union OSS, Non-Union OSS and Import OSS

·       OSS record-keeping requirements

·       Excise goods eligibility

·       Place of supply rules

·       Changes to distance selling thresholds

·       Marketplace liability

·       Low value consignment relief  

·       How to prepare for OSS

·       The consequences of OSS noncompliance

As part of the changes, it’s important to understand which OSS applies to your business to ensure VAT compliance. Requirements vary for EU and non-EU businesses, for sales D2C or via an online marketplace depending on the final steps of the supply chain.

The three variations of OSS are:

·       Union OSS

·       Non-Union OSS

·       Import OSS (IOSS)

As OSS isn’t currently compulsory it’s better to understand internal timeframes and implement OSS when your business is ready, rather than try and rush to meet the 1 July 2021 introduction date.

The main choice businesses with total intra-community sales of >€10,000 need to make is whether to use OSS or register in every Member State where they trade.

Download our infographic to understand the upcoming changes and how they could affect your business.

Sovos can help you prepare for OSS

Implementing the changes required to comply with the 2021 EU e-Commerce VAT Package into your ERP system could take significant time and resources. Sovos can help ease the tax burden and help you prepare for and understand the right solution for your business.

Our large advisory team can help you navigate the complexities of modern VAT compliance.

5 Sales and Use Tax Questions Every Manufacturer Must Ask

Manufacturers face increasingly complex sales and use tax requirements, but are not always aware of what challenges lay ahead in the short- and long-term. Knowing the right questions to ask is an essential first step toward understanding how sales tax developments impact the manufacturing industry.

Sales Tax Filing Checklist: 7 Questions for Compliant Returns

Properly submitting and filing a compliant sales tax return should be a top priority for any business. But it is not always that easy. If organizations don’t have all necessary information, are unaware of required reporting frequencies or have not correctly reported deductions, the sales tax filing process can be difficult – and could even lead to hefty fines or an audit. 

Whether you run a small business with one brick and mortar location or you oversee a large organization that has e-commerce sales in numerous states, your sales tax needs cannot be overlooked. There are varied regulations, jurisdictions and forms that need to be properly followed. Sales tax laws are evolving all the time, meaning you cannot assume that things will be the same from one year to the next. For example, the South Dakota v. Wayfair, Inc. Supreme Court decision has had widespread impact nationwide on how businesses must register, collect and remit sales tax.

The bottom line is: double check everything: from reporting frequencies to pre-payment obligations to valid exemption certificates and more.

This is especially important if you have expanded into new areas, whether it is a fresh jurisdiction in the same state or a new state entirely. Verify if any thresholds have been crossed and what additional sales tax filing rules must be followed. Business growth is great, but you want to make sure it does not come with overlooked sales tax filing requirements. 

Additionally, compile all data from each sales channel you have: brick and mortar, e-commerce and marketplace. Did your company integrate online sales into daily operations earlier this year? Have you started selling online into a new state, even if you only have one physical store? These will both likely require additional sales tax filing steps, and must be considered in your filing process. 

It is easy to feel overwhelmed as you prepare to file your sales tax returns, but you are not alone. It is okay to not know everything about filing compliant sales tax returns. But it is key to know that there are experts out there who are willing to work with you and make sure that everything is properly reviewed. 

That’s why we created this sales tax filing checklist, complete with seven key questions that your business should be able to answer on its way to filing a compliant return. Also be sure to reach out to our team of sales tax experts for even more information on staying up-to-date and ensuring that all of your bases are covered.

VAT Solutions From Sovos – Tax Peace of Mind

It is time to get ready for the digital transformation of tax with Sovos VAT solutions.

New VAT reporting requirements are sweeping across the world with increasing intensity and diversity. Tax authorities are on a digital transformation journey, profoundly impacting how companies operate and comply with VAT law. As a result, the challenges that a company trading cross-border faces today may well be among the most onerous in history.

We are here to help.

The Rise of Continuous Transaction Controls

The end of this tax revolution, caused by varying forms of digitalization, is not yet in sight. Many countries around the world, particularly in Europe, have just started their individual journeys toward continuous transaction controls (CTCs). Then there are other countries such as Chile and Brazil in Latin America that have had them for many years. They continue to add new features to further close VAT gaps and to add interoperability. As a result, these additions increase economic benefits to the foundations they built.

Multinational companies need a global VAT solution that grows with them. Many companies feel lost among the rapid succession of CTC mandates around the world. They don’t know how to avoid placing themselves in a costly and perilous corner by using a multitude of diverse local solutions. In working with such companies and their solution providers, we know how crucial it is for responsible executives to help all affected corporate functions cooperate toward forming and adopting a coherent approach that turns CTCs into an advantage rather than a risk.

Tax peace of mind

Sovos is a global leader in tax compliance with global coverage and local expertise. We process more than five and a half billion tax compliance transactions every year in more than 100 countries. Our global coverage is supported by over 2,500 employees in more than 15 countries.

We provide our customers with complete tax peace of mind by providing the first complete global cloud solution for modern tax.  Our team of 100 regulatory experts constantly monitor the VAT landscape for regulatory changes across thousands of jurisdictions.

As more tax authorities introduce tax reforms to increase efficiency and close VAT gaps, we make sure our customers are prepared. We ensure they’re able to meet the challenges that increased compliance requirements bring. We help businesses stay ahead of fast-changing government regulations allowing them the breathing space to innovate and grow.

Get ready for the digital transformation of tax

Our solutions are built into the business process platforms used today, including SAP, Oracle, and Magento. Sovos provides seamless integration with one global provider and a centralized global VAT solution.

Speak to a VAT Expert

Find out why Sovos is trusted by half the Fortune 500 and the world’s smartest companies
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Sales Tax Compliance Readiness Assessment

Sales tax compliance should be a top priority for businesses. Federal, state and local regulations are ever-evolving, meaning companies can never assume that things will stay the same from one year to the next. Technology also evolves quickly, and businesses cannot afford to lag behind – failure to meet new sales tax filing obligations could lead to hefty financial fines or audits. 


Follow our Sales Tax Compliance Readiness Assessment below to make sure that your company has crossed every T and dotted every I on your path to compliance. And be sure to check out our multitude of resources for any questions you may have.

In Focus: Greece’s Upcoming VAT Reform

Greece is introducing a tax reform to increase efficiency, prevent fraud and close its VAT gap by digitizing its tax system. Although 1 October 2020 had been the intended date for mandatory participation, late changes announced by the tax authority meant only some taxpayers were obliged to use it during 2020. The date has since been delayed by the Greek government several times and will now not be mandatory for all taxpayers (but not all transactions) until November 2021. It’s expected that it will be fully implemented in January 2022.

Download the Infographic

A collaborative environment

The new platform offers a collaborative environment where the data provided by businesses to the IAPR will not affect their own books but will also often auto-populate their trading partner’s tax records in myDATA.

The aim of the reform

Apart from the benefits of the digital tax transformation for businesses, the reform enables the Greek government to have increased visibility over business and financial data and impose audits or penalties where discrepancies arise.

All Greek established companies in scope

All companies established in Greece that maintain their accounting records in line with the Greek Accountant Standards regardless of their size, form, or their type of accounting books are all in scope and are affected by the reform.

Central to the new reform is the IAPR’s e-books scheme, myDATA, which means my Digital Accounting and Tax Application.  It requires trading partners to report a series of accounting data, captured within 17 types of documents under 52 different account classifications, to the IAPR’s digital platform.  The IAPR’s digital platform has the same name as the scheme.

Why Sales Tax Partnerships Matter

Selecting the right tax partner is key to effectively managing the complexities of modern tax environments. See the key traits that make a successful partnership.

Ready to see how the sales tax experience can improve?

Hear from real customers.
Learn more

5 Things to Know About IRS Form 1099-NEC

Keeping pace with the number of regulatory updates and tax form changes has become a challenge for businesses. Just when you think you have everything figured out, along comes another complicated form. 

In 2020 the IRS re-introduced Form 1099-NEC for nonemployee compensation. This change impacts organizations of every type and size. We have assembled a list of the five things you absolutely need to know about Form 1099-NEC.

Additionally, Sovos has a resource center for for Form 1099-NEC & Direct to State Reporting. Learn more. 

Have additional questions or need assistance with 1099-NEC reporting?

Get in touch with an expert today.
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The Five Hidden IT Costs of a Sales & Use Tax Solution

Talk to an expert.

Tax solutions shouldn't come with hidden costs.
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Not All Clouds are Created Equal

Talk to our cloud experts

Cloud is too important to take chances
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Will You Be Ready For What Comes Next?

Talk to an expert

Ask our tax experts which solutions meet your needs.
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E-Invoicing in India

India has introduced an e-invoicing framework that requires taxpayers to transmit their invoice data to its government portal.

The Indian e-invoicing system now falls under the category of continuous transaction controls (CTCs).  Invoice data must be transmitted to the governmental portal before an invoice can be issued.

As the fifth largest economy in the world, the scope of the mandate is far reaching.

For a snapshot of the key details for this mandate, including the mandate aim, scope, quick facts and key dates, download the infographic.

E-invoicing since 2017

E-invoicing has been explicitly permitted in India since the implementation of GST Laws in the country in 2017.  The e-invoicing system has been classified as a “post audit” system in which taxpayers had much freedom and few constraints on how to generate or exchange e-invoices.

However, following the global trends in indirect tax control, India recently introduced a new e-invoicing framework which envisages transmission of their invoice data in a structured JSON format to the tax authority’s portal before the invoice is made available to their buyers.

Continuous transaction controls

Under the new framework, the Indian e-invoicing system falls under the category of CTCs due to the invoice data reporting obligation to the government portal being a mandatory step before an invoice can be issued.

As a result of successful transmission of the JSON, the invoice registration portal (IRP) will assign a unique number for each invoice. The legal validity of the invoice is conditional of the IRP digitally signing the invoice and providing an invoice reference number (IRN). The JSON schema is only mandatory for the invoice data to be reported in the electronic format to the IRP and to receive the corresponding signed file from the IRP.

Taxpayers have the discretion of exchanging their invoices in JSON or PDF format as well as in paper form.  Invoices corresponding to business-to-business, business-to-government and export transactions are in the scope of the CTC clearance invoicing system.  Business-to-consumer invoices are left outside the scope of the clearance process, however additional QR code requirements exist for this document type.

E-invoicing at the core of India’s digital tax controls

The e-invoicing platform will have backend connectivity with the GSTN and e-waybill platforms. Data collected from the e-invoicing system will be recycled and used by the government portal to auto populate the ANX-1 part of the GST returns for the seller and the ANX-2 for the buyer as well as to generate e-waybills. Therefore, the e-invoicing platform will be at the core of India’s digital tax control system.