In a recent InternetRetailing webinar, Building for ecommerce growth - how to sell into the US and stay tax compliant, in association with Avalara, we heard from Sacha Wilson, director, tax technology solutions EMEA at Avalara on how retailers looking to sell online into the United States can understand their tax liabilities at a time when many retailers are seeing fast growth in order volumes from markets including the US.
Here’s a bulletpoint overview of the webinar.
Sacha Wilson started the webinar by introducing himself and Avalara.
- How online sales grew during April (Statista figures)
- How different categories were affected: rises for retailers selling home fitness, learning, but falls for those selling formalwear (Avalara data from its US retailer clients)
- US data (Avalara): rising demand for survival equipment, filling free time, recreating services that were otherwise unavailable, eg home learning, fitness, online food deliveries.
- But falling demand for categories including shoes and jewellery.
Introduction to US sales tax
- Sales tax controlled by more than 16,000 individual US jurisdictions, via more than 11,000 rules, and with lots of exemptions.
- Sales tax nexus: examples of the kind of activities that mean you have to pay sales tax, from renting warehouses to selling online, and more.
- Economic nexus: recent Wayfair decision: gave South Dakota the right to force Wayfair to pay sales tax on economic activity in that state. Now only four or five states don’t allow sales tax to be charged on online sales.
- Sales tax rates in the US: need to charge the right levels on the items you sell. Not related to ZIP codes. Rates vary widely.
- Product taxability: when sales tax liable or not liable varies by exact classification of the product, quantity of product and where and when the sale took place.
- 400+ tax changes a month.
- Examples: in Texas, sale of up to 5 donuts is taxable, but above that it’s exempt.
Compliance and associated risks
- Tend to see a lot of companies get audited - can be expensive. Extra penalties can range from 10% to 50% (in Ohio), inventory can be seized. Manual compliance can be time consuming.
- Compliance checklist: six steps for success, from identifying registration requirements to making filings and payments, and tracking and monitoring ongoing activity.
- How Avalara can help: includes time-limited promotions
The webinar ended with a Q&A session. To see the webinar in full, including the slides, speakers and Q&A session, visit the Avalara webinar page. To explore InternetRetailing’s previous webinars, click here.