By Mike Sapp, Bayshore Solutions’ Controller
“It’s the most…wonderful time…of the year…”
Admit it, you have the sound of Andy Williams singing the iconic Christmas song in your head. If you are a parent, you are probably attributing it to back-to-school time for your children. Indeed, the most wonderful time of the year.
As the summer winds down and the school season begins, several states enact some type of sales tax holiday to provide financial relief to supply-shopping consumers. And as those consumers begin to beef up their shopping lists, retailers are scrambling to ensure all of their point-of-sale and e-commerce systems are compliant with each state’s long (and sometimes quirky) list of exemptions.
Generally, states only require retailers to collect sales tax for states in which the retailer has a physical presence. If you’re Target, you’re collecting sales tax from everyone. However, most online retailers are based out of one or two states and only collect sales tax from residents within those states. As you move through the tax holiday season, here are a few points to consider (and to discuss with your digital solutions provider):
Wait, what? What tax holiday?
If you’ve been completely blindsided, be sure to check with your state’s tax authority as to your specific responsibilities, timelines, etc. The Federation of Tax Administrators compiled a summary by state that can be referenced throughout the year. It’s not just at back-to-school time – some states have holidays for hunting and hurricane seasons.
I don’t sell school supplies, so I don’t need to worry.
Don’t be so sure. Some states have pretty specific guidelines as to what is considered exempt. For example, Florida exempts certain items of clothing up to $100, but not if that clothing is purchased at a theme park or airport. There are also some exempt items that might seem odd for back-to-school time, such as bowling shoes, non-floatation fishing vests, and costumes (better do your Halloween shopping now!).
I have thousands of SKUs – how am I supposed to go through all of them?
This is the largest complaint from retailers when it comes to the tax holidays – compliance. Although popular with consumers, retailers have to expend a great deal of resources to comply with sales tax holidays. Especially when these holidays are legislated without a great deal of advance notice.
Be sure to examine your ecommerce platform to see if you have any advanced capabilities when it comes to taxes. Some systems will allow for custom fields that can be selected temporarily or can allow for mass changes via data import. Another important area to examine is integration with 3rd-party tax compliance software. A platform such as nopCommerce, for instance, integrates with Avalara, an automated sales tax decision software that takes the manual element out of tax compliance.
Before your state’s tax holiday rolls around next year, you may want to sit down and evaluate your ecommerce platform’s ability for customization. Often times, these strategy sessions give way to larger areas of opportunity when it comes to the future of your company’s growth.
Contact Bayshore Solutions before you begin and learn about options like nopCommerce that offer more robust features for your online presence.