Finance News & Insights

Sales and use tax compliance: What to expect in 2019

Last year, you saw sales and use tax became increasingly complex with major taxability changes and more state-by-state rules. And that trend is only going to continue into this year.

So say the tax experts at Avalara who just released the new 2019 Sales Tax Changes Guide.

Here are the highlights that your A/R and A/P teams need to stay compliant.

The top trend now

Sales and use tax was once all about location. But since the physical presence limitation was killed across the board with the Supreme Court’s Wayfair ruling, it’s a whole new world for taxation.

Now, every state’s making unique rules that A/R and A/P staffers must know and work by.

In 2018 alone:

  • 31 states (and Washington, DC) added economic nexus laws
  • 10 states added marketplace facilitator laws (with a handful more coming in early 2019), and
  • 5 states added new use tax reporting requirements.

While “economic nexus” was the phrase on everyone’s lips in 2018, that’s not the only kind of nexus states are looking to for the future, Avalara explains. Your staffers will want to keep an eye out for more cookie nexus (putting software on in-state devices) and click-through nexus (putting links on in-state websites) rules coming, too.

Lastly, be forewarned: Even if your state added nexus rules recently, things could still change. Congress has introduced three bills that aim to “limit the effects of” or even reverse the Wayfair ruling:

  1. The Online Sales Simplicity and Small Business Relief Act of 2018 would protect small remote sellers and prevent retroactive taxation.
  2. The Protecting Businesses from Burdensome Compliance Costs Act of 2018 would require states that want to tax remote sales to have a statewide uniform tax rate and uniform taxability rules.
  3. The Stop Taxing Our Potential Act of 2018 would reverse the Wayfair decision entirely and reinstate the physical presence standard.

We’ll keep you posted as these bills progress.

More trends to watch

Nexus as a whole was definitely the hot topic in 2018, but there are other trends Finance, Purchasing and Sales should also keep on their radar in 2019.

Here’s a rundown to share with your teams:

  • Cryptocurrency payments: Ohio was the first state to let companies pay sales and use tax via bitcoin. Several other states (including Arizona, Georgia, Illinois, New Hampshire and Utah) are now looking into it, too.
  • Digital purchases: New taxes on digital goods and streaming services keep cropping up. And states continue to debate whether these should be taxed, which has led to different states taking different approaches. (Example: While Iowa just started taxing various types of services, Missouri and Arizona have banned new sales and use taxes on services.)
  • Product taxability changes: You’ll likely see states change the way they tax specific products, from sugary beverages and motor vehicles to essentials like hygiene products.
  • Rate changes: No surprise, your team can also expect to see thousands of local rate changes in 2019, Avalara says.
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