2018 was a volatile year in indirect tax compliance for tax, finance and IT professionals worldwide.
With an increase in globalization and tax gaps surpassing tens of billions in some countries, it’s not surprising that one of the biggest challenges governments are addressing is revenue collection. Like enterprises, governments are creating new, technology-driven processes to improve transaction-level tax reporting accuracy and gain visibility into business transactions and taxes owed.
Throughout 2018, we tracked local and global regulatory trends that are creating a new world of modern digital tax, as well as the challenges these regulations are presenting to businesses.
Let’s take a look back at our most popular posts and the biggest changes in tax compliance in 2018 from a 1099, e-invoicing, sales and use tax, and VAT perspective:
Sales and use tax compliance
The South Dakota v. Wayfair ruling
With these words, the world of sales tax as we knew it was turned upside down:
Held: Because the physical presence rule of Quill is unsound and incorrect, Quill Corp. v. North Dakota, 504 U. S. 298, and National Bellas Hess, Inc. v. Department of Revenue of Ill., 386 U. S. 753, are overruled.
The following quote from Sovos Director of Regulatory Analysis Chuck Maniace pretty much sums it up:
“We are officially in a new era of sales tax. What we have considered to be foundational principles that define where businesses must collect and remit sales tax, are now entirely out the window. States now have almost a blank slate on which to write, and businesses will face a wave of new rules for tax compliance.”
Learn more and get valuable resources to keep track of these sweeping changes.
With one of the largest VAT gaps in the EU of €35 billion, Italy is the first EU country to introduce a clearance model. Few people will have failed to notice the extent of the ongoing VAT reform in Italy and its impact on businesses.
Italy Finalizes Expanded e-Invoicing Requirements
Italy will soon join Hungary in requiring real-time, transaction-level reporting. With the launch of the first phase (1 July 2018), Italy’s tax authority recently released new information, again, on its e-invoicing requirement extension.
Learn more and check out available resources, here.
At the beginning of the year, we shared a post about six countries across Europe and Latin America facing significant changes in e-invoicing and/or VAT reporting, including Hungary, Italy, the U.K., Spain, Mexico, and Colombia.
Hungary VAT Reporting Is Here: Are You Ready?
In June, the Hungary VAT reporting requirement went into effect. The country’s approach is unlike most other electronic invoicing mandates found throughout the world, as it is based on invoice amount – not company size.
This change affected every company in Hungary that make business-to-business transactions.
Learn more and download our Hungary VAT Reporting eBook while you’re there to learn more about the country’s requirements.
1099 Tax reporting
The 1099-K reporting threshold changes enacted in Massachusetts and Vermont earlier this year have started to have repercussions for states, online businesses and companies doing tax reporting.
Lower 1099-K Reporting Thresholds Rake in Money for States, Surprise Businesses and Put Companies on Notice
Additionally, two trends have converged to create a nightmare for tax information reporting. First, the sharing economy has redefined work and taxation of wages. Second, the IRS has decided it needs to bridge the gap between revenues and taxes paid—a divide that the sharing economy has only made wider.
Check out our 1099 predictions for 2019 and download our 1099-MISC Nonemployee Compensation Reporting eBook for more details.
Beverage and alcohol tax compliance
Back in September, Sovos revealed data on the performance of the direct-to-consumer (DtC) winery shipping market through the first six months of 2018. Among the notable trends in the report were Napa County wine sales slowing but remaining steady, while sales of Oregon wines rose, and Rosé continued to build momentum after strong gains last year.
Sovos Announces 2018 Mid-Year Direct-to-Consumer Channel Data
Even if you’re not in the beverage and alcohol direct-to-consumer business, check out which wines have been the most popular this year before heading to your local liquor store or online retailer for New Year’s.
In June, Sovos unveiled its S1 platform to prepare businesses for digital tax enforcement globally. See our full line of tax compliance solutions and let’s Solve Tax for Good.