2020 has reached the mid-year mark and Avalara is delivering a live presentation on this year’s sales tax changes. The report takes stock of what’s taken place in the world of sales tax since the year began. This includes emerging trends, unforeseen changes, and the curveball this year threw the world with the COVID-19 pandemic. Join us for a live webinar presented on July 15 at 1 pm by the sales tax experts at Avalara on their 2020 Sales Tax Changes Midyear Update.
COVID-19
The coronavirus (COVID-19) pandemic hamstrung brick-and-mortar commerce with a tremendous shift to digital operations and eCommerce.
All the while, businesses scrambled to deliver on fulfillment obligations to customers, remain solvent, and even retool to meet the demand for specific products.
Governments addressed the issue in several ways, with delayed VAT filings or temporarily cutting the VAT rate for industries bearing the largest impacts. For example, the United States pushed back state and federal income tax deadlines. This provides more time for individuals and businesses to file and pay.
2 Years Beyond South Dakota v. Wayfair, Inc.
If you recall the 2018 United States Supreme Court decision in South Dakota v. Wayfair, Inc., the ruling enabled states to tax businesses that have economic activity but no physical presence in the state. Otherwise known as economic nexus. It was a big deal. It still is. At the time, only a handful of states moved on to the new ruling and began charging states without physical presence sales tax.
Fast-forward to the June 2020 sales tax situation and the vast majority of states have signed on to adopt these economic nexus laws. COVID-19 has only heightened awareness among states that remain on the fence and it won’t be long before these convoluted rules apply to all 50 states.
States Need More Money
As the last six months have proven, the states are on their own in several social and economic areas. As the pandemic continues to send shockwaves through economies of every scale, states are sure they’ll need to supplement their coffers one way or another to remain effective in serving their residents. 2020 sales tax rules for individual states are likely to change to address the need for making up lost revenue.
Digital And Streaming Services Can Expect To Pay More
If you haven’t heard of Zoom or GoTo Meeting, chances are you’ve been living under a rock for the past six months. States are anticipated to raise taxes on these heavily utilized platforms. As a result, digital meeting and entertainment services are likely to see sales tax legislation expanded at their expense.
More Collection Requirements For Marketplace Facilitators
Marketplace facilitators like Etsy, Amazon, eBay, and others, are expected to collect and remit sales tax at an increasing rate. This shouldn’t come as a surprise. Most states already have such laws governing marketplace facilitator sales tax collections on the books. Just four states remain in this situation in the entirety of the US. One is already closely eyeing the implementation of such legislation.
The Dynamic Nature of 2020 Sales Tax
Nothing is guaranteed but death and taxes. Unfortunately, sales tax rules seldom retain the same state for very long. The last six months have seen reductions or eliminations of sales tax rules for feminine hygiene products. There’s even been discussion within some regions on the elimination of sales tax for firearms. Now, groceries are a focal point for communities hardest hit by job loss and economic downturn.
You can read more in Avlara’s comprehensive report, here: 2020 sales tax changes midyear update.
About Encompass Solutions
Encompass Solutions is a business and software consulting firm that specializes in ERP systems, EDI, and Managed Services support for Manufacturers and Distributors. Serving small and medium-sized businesses since 2001, Encompass modernizes operations and automates processes. Whether undertaking full-scale implementation, integration, and renovation of existing systems, Encompass provides a specialized approach to every client’s needs. By identifying customer requirements and addressing them with the right solutions, we ensure our clients are equipped to match the pace of the Industry.
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