Sales tax is hard! Every business needs to consider the following when thinking about sales tax management:
Sales tax calculations are not based on zip code.
Although it is popular belief that you can look up a zip code and apply a correct sales tax, there can be multiple sales tax jurisdictions within a given zip code—all with different rates. For example, a school district may impose an additional percentage on the sales tax in order to fund programs or build a new building. This tax is sometimes a temporary tax and only affects those within the school district. A special district tax may be a museum tax that only applies to individuals within a specific radius. As stated by the Minnesota Department of Revenue, “Some zip codes are not entirely within a taxing jurisdiction so entering only the 5-digit code may result in an incorrect” sales tax rate.
Tax-exempt transaction compliance is as important as sales tax applied transactions.
Wholesalers who sell to retailers must collect a tax-exempt certificate from the purchaser and prove the relationship to an acceptable tax-exempt transaction, if audited. Retailers who sell to non-profit organizations that are allowed to purchase certain products sales tax-free also must collect exemption certificates. In today’s economy, states are increasing their scrutiny of these transactions and reducing the number of products that can be purchased sales tax-free as well as who is allowed to purchase a product tax-free.
Sales tax calculations can easily be automated within your Microsoft Dynamics product using AvaTax Calc. Fully integrated, accurate sales tax calculations based on exact address and geospatial technology (latitude/longitude) are delivered in seconds.
Automating your sales and use tax calculation, exemption certificate management and filing and remittance reduces your audit risk and improves your process workflow. Accurate calculations prevent errors, while digitized exemption certificates displayed within Microsoft Dynamics make handling tax-exempt transactions a breeze. AvaTax also allows sales tax information to be passed through to enable on-time filing and remittance of sales tax liabilities.
Contact Avalara and find out more about how affordable and easy sales tax compliance can be! Visit www.avalara.com or call 877.780.4848 today!
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