Advantage in the Wake of Wayfair
It’s been a little over a year since the groundbreaking decision by the Supreme Court of the United States in the Wayfair vs. South Dakota court case. In short, the decision expanded the taxable landscape across the United States. States are no longer bound by the physical presence requirement set by the 1992 Quill court case. Effectively, this means that states can start requiring sales and use tax for everyone that meets an economic nexus.
There are a lot of one-year-later posts by experts that provide great overviews. Try Accounting Today , Wolters Kluwer (my favorite) or Digital Commerce 360. This Bloomberg (PDF) survey is also interesting.
This decision affects nearly all Advantage clients; even our non-USA based clients that sell into the USA are subject to the new rules. (We do have some non-USA based clients that do not sell into the USA, so they are spared.)
Note: For clients dealing with both GDPR and Wayfair… sorry!
We're here to help
Here are some things Advantage clients are doing:
- Contacting us to assist with navigating through the options - We are here to help!
- Determining economic nexus - Unfortunately, there are 50 states with potentially 50 different nexus thresholds. It’s even more complicated in that some states haven’t enacted a remote sales tax law yet (I’m looking at you, Florida). Clients are going through the exercise to determine in which states, if any, they have economic nexus. (If you haven’t done this, Sovos has a good state-by-state chart that appears to be up to date.) We have been helping with the reporting needed by finance departments.
- Determining auditing/reporting requirements - Each state can have different auditing and reporting requirements. Depending on the complexity, clients are evaluating the process/means of that auditing/reporting.
- Evaluating Advantage Tax vs. third-party - Some of our clients have had great success using the built-in Advantage Tax engine over the years. Others have opted for a third-party integration, due to tax complexity. With Wayfair, some clients previously using Advantage Tax are now implementing a third-party integration as tax liability has increased.
Third-party versus Advantage Tax
Although Advantage Tax is already a part of the Advantage software package, there are two other major points to consider:
- Reporting, auditing and automatic filing – Third-party tax systems excel at these services whereas clients using Advantage Tax must do their own filing and reporting.
- Changing rules – Advantage Tax requires manual setup maintenance whereas third-party tax systems are constantly being updated automatically. For example, whenever Florida decides to join the fun, those systems will reflect that change automatically.
Which third-party tax solutions does Advantage support?
Advantage supports two of the market leaders in sales tax calculation: ONESOURCE and TaxJar. Advantage also has an extensibility framework allowing you the ability to integrate any tax system of your choice.
Whew. As someone in our office routinely says, “tax is hard." But we are here to help you through this change. Navigating the shifting reader demographics, consumption preferences and business models is enough to keep busy full time—adding a new, mandated financial requirement is never on the radar.
Please reach out to your account manager if you want to go through the options, learn what other clients are doing or see what Advantage can currently offer.