Online Sales Tax Management Solutions

Online sales tax is not bound to disappear – they will stay with us for as long as these taxes are an accepted method for funding of government activity. State and local governments will not allow an entire, substantive, stream of commerce continue its commercial activity tax free, unless there is a conscience decision that these transactions are to be managed tax free. States are starting to come down with a heavy step to enforce taxes in this environment.

Those who believe that the failure of local governments to effectively collect taxes on Internet sales indicates that the Internet is a tax free haven, do not truly understand the online environment. It is important to realize that true commercial activity of substance on the Internet is a very new creature – less than five years old. Before 1999 - 2000, people were still afraid to conduct commercial activity on the Internet – it was new, and people did not understand how the Internet operated. Consumers were concerned to insert their credit card number necessary to make purchases online. Till that time period, the Internet was predominantly used as a marketing tool, web sites were fancy brochures, which provided a telephone number for the consumer to call in with their order. Companies more and more are realizing the need to implement an online sales tax managment solution for their internet businesses.

That phenomena has changed in recent years, and with it, the attitude of local governments in their approach towards enforcement of sales tax rules. Governments cannot allow billions of dollars to go uncollected under existing tax rules, because that will nullify their ability to increase taxes in other arenas. Accordingly, they have taken steps in recent years to increase their enforcement efforts – tactically and legislatively. Such catch-up steps are typical of government authorities, which are constantly running to catch-up with recent business trends. The fact that they are only several years behind the curve is a feather in the cap, showing that they realize the importance of this arena.

In parallel to the increase in government enforcement activities, technology providers are improving their ability to meet the needs of retailers to balance between the seemingly conflicting interest of minimizing resources and focus upon compliance needs, without compromising upon quality of compliance. The currently emerging Next Generation Solutions are filling those needs. They are increasing efficiencies, reducing human intervention in the process, and leveraging upon seamless automated processes to reduce cost. The automated processes are also operating to increase reliability and accuracy, reduce lead time necessary for filing and paying taxes, as well as addressing the ever increasing requirements for seamless and reliable audit trails. A reproducible, auditable trail is the true difference between First Generation form filling tax solutions and those of the Next Generation Tax Solutions. Next Generation Tax Solutions are the true sales and use tax compliance engines. They develop the data; gather it from the transactions, and address all requirements imposed by state and local governments, including reporting, tax payment and transparent accurate and reliable audit trails.

The bottom line though is that the burden is upon retailer to make their choice. Tax auditors a enforcing the rules with increasing vigilance, and d not accept excuses for failure to collect and pay sales & use taxes on a timely basis.