Taxes are misery for the one collecting as much as it is for the one paying. The constant overhauling makes it challenging to keep track of changes. New regulations are framed every week, keeping in mind a nations overall economic state.
The repercussions are always on this small component that then fluctuates so much that it becomes difficult on the average eCommerce guy to monitor the daily updates.
Plus, these are inescapable, if you are making money you are due on taxes at some point. As the saying goes
Institutions earn a good amount of money and as such become susceptible to these deductions. Also, the framework that governs major businesses is far more complex than what a civilian must deal with.
Ecommerce had acquired its own distinct identity as soon as it gained momentum in the early nineties, as such at some point this domain was heading towards its own specific tax laws, that’d govern it in years to come.
Ecommerce tax is a certain percentage that is fixed to be deducted from the final order before the shipping charges are applied. During the payment process, you’d often come across this element. Once the payment is sorted, the entire sales tax is forwarded to the state governments tax coffer.
What complicates the matter even further, some of these states don’t settle for a common tax, therefore as per the new reforms every state is entitled to a little cut, regardless of whether you are based in that state or not.
Quill Law
In 1992, Quill Corp vs. North Dakota ruling prevented any state from collecting sales tax on any retail purchase, if the business in question did not have a physical presence in the concerned state.
The whole litigation was initiated by North Dakota who wished to avail a certain amount from Quill Corporation that by then had established itself as a major seller of licensed computer software and stationary.
Despite not having a presence in North Dakota and being a Delaware based company, it could sell to anyone in the state and not incur any state taxes.
Quill conducted any marketing via pamphlets, brochures and national periodicals, and as such was considered to not have a nexus, the outcome therefore was ruled in favor of Quill.
If the ruling had favored State of North Dakota, Quill would have to pay up back taxes from the last three years.
Meanwhile, the brick and mortar stores continued to pay taxes, for every state where they had a physical presence.
Which then led to a strong resentment as it found the unfair advantage bestowed on eCommerce merchants to be unethical and a drawback for them.
Kill Quill
Initiated in the late nineties, was a collective effort from all the states to extract tax from sellers, conducting business with the residents of that state.
Wayfair along with Overstock.com, Newegg, and Systemax were challenged by South Dakota in 2016. Systemax obliged, Wayfair protested, which by then had established itself as the seller of domestic goods.
A South Dakota vs Wayfair hearing was ruled in favor of South Dakota. States are now free to pursue sales tax from businesses. Everything changed on June 22nd, 2018.
All the 46 States that had suffered heavily (lost nearly $13 billion), up until then, realized the biggest relief when the Supreme Court overturned the Quill law, considering the previous judgement of 1992 to be “unsound and incorrect”.
Now, eCommerce businesses regardless of where they originate will have to cough up state tax, if they are currently trading in that state.
Also, as per the recent change if your revenue in any state exceeds $100,000 or 200 transactions then you’d be considered to have a Nexus, known as “Economic Nexus” and you will become eligible to pay taxes. This is called the economic threshold of that state.
The new tax law applies to every merchant who has an online eCommerce store, whether it's through a privately-owned website or through a third-party vendor such as Amazon.
If you surpass a state’s economic threshold for total revenue or the total number of orders, you are required to register, collect and remit sales tax henceforth.
You could be selling on Amazon Marketplace and still find yourself paying the income tax for the state where your customers are based. Deduct the same from the buyers and remit it to the respective state.
Tax Tools
Due to the complicated nature of tax laws, there comes a time when every eCommerce manager wants to give up and transfer all the extensive formalities, paperwork and documentation on someone else.
Extracting tax info from every order and them reporting and filing them, consumes a lot of time and results in a deviation from your core business plans.
Such a convoluted space necessitates the need for modules that assist in navigating this tax mess.
So, at the close of any fiscal month you would be assured that all your sales tax commitments are handled with care.
Dedicating time on your business is vital due to the competitive nature of the field, as such tax compliance issues are relegated to tools that can comprehensively handle all the diverse tax mechanisms and do so without any labor from your end.
Here’s listing some of the extensions which would help you to defeat every tax worry ever:
TaxJar
A one Click connection to your e-store that lets you deduct the correct tax, straight out of the customer’s order.
TaxJar even lets you AutoFile, which is merely electronic filing of state sales tax. It uses information from all the providers and even from marketplaces to prepare and submit returns to the state, along with the payments.
Besides this, you also have the option to file your sales tax manually. TaxJar will create a “return-ready” report for each jurisdiction where you submit, taking only minutes to complete your state returns.
AutoFile, therefore, is comparatively more comfortable than doing it yourself. All you need is a premium account with TaxJar, valid state credentials, and a US-based bank account to process the necessary tax.
TaxJar is currently available in 2 plans:
- TaxJar Basic which comes at $17/ month but consists of a whole host of features like Instant access to reports, the ability to AutoFile, Real-time sales tax calculations via SmartCalcs for developers and most importantly a dedicated “human” email support, to address any concern that emerges doing your use.
- TaxJar Plus is a premium solution to manage all your sales tax-related concerns, which according to their Infolog describes the plus version as being more suitable for companies that have a higher sales volume, a wider nexus. Get live assistance and 24/7 phone support.
TaxJar will compile all your sales data into one easy to read, return-ready sales report. Even the SmartCalcs, which is a leading API, helps to arrive at the exact figure the moment you set up your store.
With the help of this, you will never miss a due date or get penalized for late submission. TaxJar can easily rectify even an incorrect submission. Choose TaxJar for all your Volusion sales tax compliance needs and rest assured you will never lift a finger for any future formalities.
TaxCloud
Tax filing is reduced to just mere clicks and completed within a matter of seconds. Painless and easy to submit is what makes TaxCloud so efficient and effective at handling tax related worries.
Determine the applicable sales tax based on the product and jurisdiction then deduct the same accordingly at the time of Checkout.
Remit the appropriate sales tax to the state and file the state report in local jurisdictions automatically with the help of TaxCloud.
Another feature that makes TaxCloud stand out from its competitors is its ability to assist you with any state-issued notices and audit inquiries. Plus, TaxCloud accepts offline transactions as well.
At the end of each month, TaxCloud creates a monthly report of the corresponding sales tax for every county and gives a detailed breakdown of deductions for your analysis.
Returned packages will also not be a concern as TaxCloud will adjust the same, thereby ensuring that the amount subtracted as tax is credited back into your account. Refunds are taken care of.
They currently have 2 plans in place:
The Member State Plan, where Automated Compliance Service is free for the merchants, as the member states that have certified TaxCloud end up paying it. No setup, registration or filing fee.
The Non-Member State Plan, the Automated Compliance Service will cost you 0.125% of the gross sales in all non-member states put together. Now, the filing will never be bothersome.
TaxCloud comes equipped with a wide variety of functionalities. A feature to honor sales tax holidays, support for product entity, real-time batch sales tax collection and products that are exempt from any Tax.
TaxCloud takes care of your Volusion sales tax. It automatically detects what you sell, determines the accurate tax from the Taxability Information Code (TIC) assigned for each item in the shopping cart and further checks if the same is taxable in a state and automatically file the returns, as required.
TaxCloud comprises of an expert team of former eCommerce retailers and state revenue officials in the back end, so all your Volusion sales tax queries are handled seamlessly.
Communication with all the states and merchants via a dedicated channel, which means any issue that arises will be handled with thorough dexterity and care.
Due to the ever-evolving nature of the tax landscape and more than 10,000 jurisdictions in the USA, tax glitches could occur anytime, let the professionals handle all your tax apprehensions. Build your business and let TaxCloud handle everything in the sales tax front.
Avalara
The first Cloud-based automated solution for all your tax compliance issues, across the USA, regardless of the size and nature of your business. Operates in all the 10,000 plus jurisdictions in the USA and delivers a seamless merchant friendly method of tax calculation.
State passes new legislation, and laws fluctuate from time to time, creating compliance slip-ups, due to your inability to track the same in real time and causing major fines and other charges.
With Avalara, you equip yourself with a full proof solution that tackles all your sales tax concerns in the back end, so you can concentrate on growing your business.
Avalara plugs into your system and extracts the essential details to match the correct tax for the order, that is the tax engine linked to your invoice system to diminish the complexity of arriving at the exact tax.
Auditors can be irksome with your tax findings. Ensure that with Avalara you give the best most accurate results. Automation helps you to minimize these errors by managing the same on its own and drawing payments from the connected bank account to be remitted to the concerned state.
Cloud storage helps you to keep track of all your Volusion sales tax filings, helping you to comply with the government record retention requirement.
700+ prebuilt integrations, means solutions come ready to connect to today's most widely used ERP’s or custom connect with any of the advanced API’s.
Even comes with Avalara CertCapture that helps to hold and manage all your tax-related confidential documents in one place and notifies you about renewal dates.
Focus on growing your business and leave the miscellaneous sales tax calculation, remittance, filing and reporting to us. Your center of attention should be your business. Leave the tax plague to Avalara.
Taxility
The brilliant minds at Virtina have conceived a smart solution to all your Volusion tax compliance issues. Taxility creates an API call to either of the above extensions and helps to diminish the tax burden on you.
API call retrieves the correct data from the concerned order and submits the same to other side which then helps to determine the corresponding tax for that order and state.
The relevant information requested will be looked up; whenever a merchant accepts an order, it will then be accounted, and the correct sales tax will be brought back in a matter of seconds.
The key questions are always the same, do I need to collect the tax, is the customer taxable, is the product taxable to figure the sales tax for that bracket and finally the date of the transaction.
Get in touch with Virtina to solve all your Volusion Sales Tax Woes. Set your resources and employees to revolve around the business agendas and leave the tedious sales tax chores to us.
Struggling with Volusion tax issues?
