I’ve been in the sales and use tax space for 26 years now. In that time, there has been one monumental change, one that completely turned our industry on its head.
The Wayfair Decision and Its Impact
From Physical Presence to Economic Nexus
From 1992 to 2018, our business was predicated on physical presence. There was quite a bit of nuance to that, but this substantial nexus ruled the land. In June 2018, the Supreme Court of the United States completely flipped that notion (the Wayfair decision) and ruled in favor of South Dakota, over Wayfair, saying that economic nexus was enough.
Increased Compliance Burden
The flood gates opened, giving states what they wanted for a long time – the ability to force sellers with no physical presence in the state to bill and collect their tax based purely on the level of sales into that state. Now, all states that impose a sales tax have economic nexus standards as well as marketplace facilitator standards. As a result, use tax obligations continue to decrease as more and more retailers are now responsible for collecting and remitting sales taxes in far more jurisdictions.
The Challenge of Keeping Up with Sales Tax Complexity
Modern Economy vs. Outdated Laws
There have also been a lot of other less significant changes, but when considered in light of the expanded footprint discussed above, it presents a greater challenge. For example, jurisdictions continue to grapple with modernizing their laws to try and reflect the economy in which we live today. In a lot of ways, we are a digital and service-based economy now and the sales and use tax laws are also, in a lot of ways, mired in the industrial past. New and different products and services are being offered and sold in new and different ways, ones that the existing sales and use tax regimes around the country just can’t keep up with or properly address. Consequently, we end up with various attempts at exempting, excluding, or taxing these new products and/or services, which in turn makes sales and use tax compliance even more daunting.
Wayfair and the Need for Software Solutions
Because of Wayfair, retailers are already faced with collecting and filing in far more jurisdictions, and now couple that with the issue of trying to comply with the ever-changing sales tax landscape in those expanded jurisdictions and you have a monumental challenge. A challenge that can only be substantively addressed with a sales tax calculation software solution.
Traditional Sales Tax Software for Sales Tax Calculation: Pros and Cons
Comprehensive Solutions, High Costs
Sales tax calculation software solutions like Vertex, AvaTax, Thomson Reuters, and others have diligently worked to include the various exemptions, exclusions, taxable base modifications, etc. into their platforms to give their subscribers/users a robust, all-encompassing solution. These platforms have thousands of product codes to choose from in mapping your company’s SKUs, all in an effort to provide for every possible taxing scenario. But not only do the content and research teams of these providers have to know of and research when to include the new changes, but they also have to continue to monitor and research potential changes and updates every month thereafter. For thousands of product codes, with more being added regularly, this is no small feat and adds a significant amount of embedded cost to the platform license fee itself.
Introducing AkuCalc: A Simpler Solution for Sales Tax Calculation
Designed for Straightforward Taxability
But what about those retailers that don’t need all those product codes and ongoing content research? What about those retailers that have nexus in every state, but the taxability of their products and/or services is straightforward and uncomplicated? For example, I have several clients that sell bedding. At the product level, these items are taxable in every jurisdiction. Why should they have to pay for those higher embedded costs within the current tax calculation engines?
AkuCalc and the K.I.S.S. Theory
Personally, I’m a HUGE believer of the K.I.S.S. theory – Keep It Simple, Stupid – and it is one of the main reasons why I, along with the rest of Clarus Partners, am so excited about our release of AkuCalc, our sales tax calculation engine (AkuCalc Sales and Use Tax Calculator | Clarus Partners). It is intentionally designed with these types of retailers in mind. AkuCalc is perfect for those companies that sell products and/or services with straightforward taxability, regardless of how many jurisdictions in which they have nexus.
Benefits of AkuCalc Beyond Sales Tax Calculation
User-Friendly Platform and Cost-Effectiveness
In AkuCalc, these retailers will get an extremely user-friendly, customizable platform with which they can reliably and instantaneously calculate and bill sales taxes on the sale of their goods and/or services, all for a fraction of the cost of the aforementioned solutions. Those clients of mine that sell clothing are another great fit for AkuCalc. The taxability of clothing is straightforward – there are exemptions/exceptions in seven states. AkuCalc will correctly calculate (or exempt as the case may be) the sales taxes due on sales of clothing and related items in those seven states plus the other 39 states (including D.C.) that impose a sales tax.
Comprehensive Service for Sales Tax Calculation
Our software is and will be supported by tax professionals. Our firm has extensive knowledge in all aspects of the sales and use tax function. Not only do we offer our own software solutions (the AkuSuite umbrella – AkuSuite | Clarus Partners), but we also have a robust compliance services practice as well as a deep tax-technical consulting/advisory practice. What does that mean for our clients and how is that different? It means that when a company becomes a client of ours by licensing AkuCalc or any of our other software solutions, we can also efficiently and cost-effectively take on their entire sales and use tax filing obligations and support them if/when any of their filing states decide to initiate an audit. The providers I mentioned earlier can’t do that
I think AkuCalc is going to be a game-changer for sales tax calculation. For that segment of the market that needs a calculation engine to provide straightforward, real-time tax calculations for uncomplicated taxing scenarios, let Clarus Partners show you why AkuCalc should be the one and only solution you consider.