Global tax software provider Sovos today issued its annual “State of Sales and Use Tax” report focusing on the trends, impediments and technology facing organizations as they try to solve sales tax issues in a post-Wayfair economy. The report focuses on the here-and-now of sales tax compliance, examining trends in nexus laws and regulations, and how economic circumstances brought on by the COVID-19 pandemic affect state efforts to collect taxes and preserve revenue streams.
Governments at every level have expanded technology investments to digitize the sales tax collection process and close tax gaps. Since the Wayfair decision, which vastly expanded the nexus footprint of organizations, states have moved quickly to establish new regulations to maximize income. Sovos’ report details how rapidly the sales tax landscape is evolving:
- Number of tax jurisdictions has eclipsed 12,000
- More than 7,000 different tax forms currently in use
- 637 form revisions in 2020 alone
- There have been 571 rate changes in the past 12 months
“Businesses are struggling to keep up with the number of changes being mandated and the pace at which they are being implemented,” said Charles Maniace, vice president, regulatory analysis and design, Sovos. “Gone are the days when businesses could manage sales tax on their own schedule. States are becoming far more proactive in their oversight, and they’re using notices and audits to collect what they are due.”
The digitization of sales tax is forcing organizations to reexamine how they manage and execute sales tax strategies to ensure compliance. While manual processes and custom solutions may have been suitable in past environments, increased levels of speed, oversight and complexity now demand more sophisticated methods. The report shows why tax compliance is increasingly an IT challenge and how these two teams collaborating earlier and more frequently should be an integral part of your compliance strategy.
“The digitization of tax has completely changed the game for organizations trying to achieve and maintain compliance. The sheer number of form updates and rule changes now applicable to an organization and taking place on a near daily basis make it all but impossible for businesses to track and implement on their own. The importance of an approach which combines tax and technology to guard against organizational risk cannot be overstated,” said Pawel Smolarkiewicz, chief product officer, Sovos.
For more information:
- Explore our State-by-State Guide to Sales Tax Laws
- Review the most recent COVID-19-Related Tax Changes
Sovos is a leading global provider of software that safeguards businesses from the burden and risk of modern transactional taxes. As VAT and sales and use tax go digital, businesses face increased risks, costs and complexity. The Sovos Intelligent Compliance Cloud is the first complete solution for modern tax, giving businesses a global solution for tax determination, continuous transaction controls, and tax reporting. Sovos supports more than 7,000 customers, including half of the Fortune 500, and integrates with a wide variety of business applications. The company has employees throughout North America, Latin America and Europe. Sovos is owned by London-based Hg. For more information visit http://www.sovos.com and follow us on LinkedIn and Twitter.