Destination Based Sales Tax

[rosech252]

Our state (WA) begins the destination based sales tax next month. It won't have a major effect on our business, but will have major impacts on other businesses. I am wondering if any of you know of a Peachtree "add-on" that is designed to help with this type of program. I can see the writing on the wall for needing to access sales tax information and file reports/payments across state lines in the future. Thanks!

[rick Prindivill]

Peachtree currently allows you to assign a Sales Tax Code to the Ship To Address (Maintain - Customers - ShipToAddress - Sales Tax Code). Typically, the Sales Tax is defined by the Destination Address or the point of delivery or transfer. Are you attempting to describe something different here?

[Lisa_p]

I agree with Rick - Peachtree already has that ability.

I have clients who collect and remit sales tax to dozens of states with numerous jurisdictions within some of those states

[rosech252]

Rick, I think that will be what works for us too. As I mentioned it is a minor inconvenience for us.

[rosech252]

Lisa, how do your clients determine the proper tax rate and proceedures to remit payment with all those jurisdictions? As a new sale is made, do they manually look up each customer? It seems so labor intensive!!! I know there are "services" like ADP for payroll that will handle this for a business. I have heard that they are expensive, though havent had cause to look into it myself.

[Lisa_p]

Yes, it's extremely labor intensive. As I understand it, if you're "doing business" in a state, you have to register and learn about all the sales tax rules for each jurisdiction. This is how Al Franken got in trouble with his taxes.

I know there is a company that does something with sales taxes, but I can't think of the name. It starts with an A: something like Alavera, or Avalara, or something like that. I don't know anything about how it works though.

Now, if you're only shipping stuff into a state and don't have a presence there (and I'm sure each state has their own rules about what constitutes a "presence") then you probably don't have to collect sales tax. I had one client who did a one day festival in another state and she had to register for a temporary sales tax number and file. ICK!

[rosech252]

Lisa, you are right on with the "presence" issue in each individual state. We don't have a physical presence, and as such aren't required to collect sales tax on items shipped into other states. However, with the "streamlined sales tax act" or something like that, it appears that this will be changing in the future. I am willing to bet that within five years, we will be required to charge/report/pay sales tax in every state without regard to whether we have a presence. It will be interesting to see what happens with that.

[sbrader]

California is the worst! I think there are something like 70 different taxing districts and they make updates and changes quarterly. We finally had enough and worked with our representative to force all California sales to go through distributors so we don't have to worry about it.

[homan]

The whole destination sales tax issue is still in flux and to be honest its just as hard for the states to try and figure it out as is with us small businesses. As the rules evolve I would definitely work closely with an accountant who can keep up with the rules and your exposure.

I have a craft business in Ohio and also do not have a brick and mortar presence. I do a lot of shows and I have to charge sales tax based on the location of each show. If I'm out of state I have to follow the current rules of that state.

If I sell an item online and the person is not located in Ohio, I dont charge sales tax. If they are in Ohio I charge them the sales tax where my home is located.

Those are the guidelines for "destination taxing" as it stands now in Ohio. From the people I've talked to locally at shows that's what they do too. From a legal perspective if I was ever audited, I can prove that I am charging sales tax to the best of my abilities.

If anyone tries to tell you that you need to charge sales tax based on where the purchaser is located - for now - you can just laugh at them. There is no way that we as business owners could track and pay all the different sales taxes in the different places anymore than any of the states could figure out if we are doing is correctly.

that's probably more info that you want to know, but having a good accountant is critical for mental health on this one.

[rosech252]

If they are in Ohio I charge them the sales tax where my home is located.

Those are the guidelines for "destination taxing" as it stands now in Ohio. .

That is the way it is in Washington for another week! Here it has been called "origin based" Then on July 1st, we have to start charging SST based on where (within the state) the item is being shipped or delivered. If a customer lives in one area and comes to pick up the product from us, we charge based on our tax rate. If that same customer has his next purchase sent UPS or by USPS, we have to charge based on the "destination." Multiple overlapping tax districts within the same city name and zip code makes this a nightmare!

Can you imagine what this will be like for a pizza delivery service? (we aren't a pizza service, thank goodness!)