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REVIEW: Sales and Use Tax Software 2014

A sales tax is a tax paid to a governing body for the sales of certain goods and services. It differs from a use tax, which is assessed on tangible personal property purchased for use, storage, or consumption in a locality regardless of where the purchase took place. While those definitions may be clear, the remittance of these taxes is not. The collection, accounting and remittance of sales and use taxes has always been a mess, and is hardly less so in 2014.

"There's one specific question that has stood out in terms of how the sales and use tax market has changed over the past few years and how it will continue to change in the future: How are states treating remote sellers or ones that lack a proper connection with the state to compel them to collect the state's sales tax?" says Chris Donie, director of corporate product management for CCH Tax and Accounting. "Five years ago, this topic seemed to only play out in the state court systems and behind the closed doors of large online retailers' legal departments. Today, the environment is quite different and states are aggressively writing tax law that goes beyond the Fortune 500's online sales presence. Smaller sellers are finding that they are now caught up in the mix of collecting sales tax in states where they've never been required to do so – and all indications are that this will continue. Of course, this is all a direct result of the dramatic increase in both B2B and B2C ecommerce."

"The increasing complexity of sales and use tax regulation has only amplified the need for an easy, affordable offering to manage sales and use tax compliance," adds Pascal Van Dooren, EVP sales and marketing at Avalara. "At our core, we believe it's rapidly becoming impossible for businesses to manage sales tax manually in an electronic world, and we fundamentally believe all sales, use, and VAT tax will be automated in the coming years."

In response to this complexity and the confusion it creates, the states banded together in support of a Streamlined Sales and Use Tax Agreement (SSUTA) that became effective on Oct. , 2005. To date, 24 states have signed onto the agreement, including Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, Nevada, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Rhode Island, South Dakota, Tennessee, Utah, Vermont, Washington, West Virginia, Wisconsin and Wyoming. The District of Columbia has also agreed to it.

The SSUTA focuses on four major requirements for simplification of state and local tax codes:

State Level Administration. Sales taxes would be remitted to a single state agency and businesses will no longer be required to submit multiple tax returns for each state in which they are conducting business.
Uniform Tax Base. This would require each state to make their jurisdictions use the same tax base, meaning the same goods and services would be taxed or exempt the same way within each state. Each state would retain the choice whether an item is taxable and at what rate.
Simplified Tax Rates. This would require the same tax rates be applied across the states' tax jurisdictions. There could be an exception rate for food and drugs.
Uniform Sales Sourcing Rules. For in-state sales, the seller would be expected to collect the tax for the purchaser's location – what is known as "origin" taxation. For sales into a state from a remote seller, the vendor would collect the applicable state wide tax for the destination state, or "destination" taxation.

"While the basics of Sales and use tax has changed very little in the past five years," notes Dean Sonderegger, Executive Director of Product Management for Bloomberg BNA/Software Segment, "the increase in on-line commerce (e-commerce) has propelled legislation to be drafted that would require small businesses to collect sales tax on on-line retail sales."

The SSTP will also establish up a system by which Internet e-commerce companies can voluntarily pay state taxes to the states in which their customers reside. The incentive the SSTP is offering companies is rather than try to work out how much tax a company owes for each locality they can instead use a CSP (Certified Service Provider). In addition, "the states that are in compliance with SSUTA may offer advantages to those sellers who use a CSP.

Bainbridge Island, Wash
(206) 826-4900
(877) 780-4848
This email address is being protected from spambots. You need JavaScript enabled to view it.
Price: Subscription model based on the number of transactions anticipated by the customer; the end cost can range from under a hundred dollars per year to thousands of dollars per year.

Avalara AvaTax dynamically delivers instantaneous sales tax decisions based on precise geo-location in more than 10,000 taxing jurisdictions in the US. A cloud-based application, AvaTax automatically assigns hundreds of thousands of taxability rules and the latest jurisdiction boundaries to deliver the right rate and tax calculation.

AvaTax automatically delivers highly accurate tax decisions in real time. Working behind the scenes within a customer's financial application, ecommerce shopping cart, or point of sale system, AvaTax ensures that the right tax is collected on every transaction. Key capabilities include address validation, jurisdiction assignment, tax rate and product taxability determination, application of sourcing rules, and data retention for reporting purposes. The application also includes robust exemption certificate management and fully automated returns processing, filing, and remittance.

A patented jurisdictional assignment engine allows for accurate calculations when zip code information alone may result in errors. Avalara's Geo-Location Engine technology, based on precise latitudes and longitudes of each location, handles the full range of 10,000 taxing jurisdictions with accuracy. The service is optimized for mobile commerce applications, and Avalara is a certified Streamlined Sales Tax (SST) provider.

AvaTax directly integrates with hundreds of financial systems, such as. QuickBooks, NetSuite and Epicor, and ecommerce shopping carts, such as Magento and Demandware, giving businesses accurate rates and taxability inside the software they already use. A full list of accounting programs with which it integrates can be found at http://www.avalara.com/integrations/categories/accounting/.

Recent enhancements to the web-based service include Global VAT tax management coverage in nearly 100 countries; expanded product taxability content for numerous industries, including standard rates, reduced rates, super reduced rates, zero rated scenarios, and parking rates; consumer use tax calculation and reporting capabilities; proprietary geospatial technology to provide a heightened level of accuracy in calculating sales tax; and mobile products for iPhone, iPad and Android devices.

BNA Sales & Use Tax Rates and Forms
BNA Software
Arlington, Va.
(800) 424-2938 (select option 3)
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.
Price: 2014 pricing starts at $1,010.

BNA Sales & Use Tax Rates and Forms
BNA Sales & Use Tax Rates and Forms provides up-to-date rates and forms for more than 58,000 taxing jurisdictions in the United States, and is offered in both on-site and online versions that are updated monthly. Product strengths lie in the product being reliable, cost effective, and web-based. It is comprised of two products that work together.
The rates product offers CPA firms a customizable product to handle sales tax filings in multiple jurisdictions and/or with a medium to low volume of sales tax returns. Rate information can be exported ready to integrate into rate tables within POS/billing/financial applications. Included are more than 3,400 sales and use tax forms, including exemption certificates, business registrations, powers of attorney and form instructions. All of the forms are government approved and feature built-in calculations. The web-based rates lookup and maintenance system allows users to bookmark frequently referenced locations for easier rate monitoring.

The Forms Filing system prepares and prints signature-ready sales and use tax forms in blank form or in PDF file formats.

Recent enhancements include continuously updated tax rates via the Internet. And the use of email push technology, which sends rates information on a scheduled and automatic basis via email, facilitating the maintenance of rate tables through ready-to-import updates in the file format preferred by the professional.

CCH CorpSystem Sales Tax SaaS
Riverwoods, Ill.
(866) 513-CORP
Price: Varies based upon expected usage and other factors. Annual license fees can be less than $1,000 for smaller companies and up to mid-five figures for larger businesses.

CCH CorpSystem Sales Tax SaaS
CCH CorpSystem Sales Tax SaaS Pro is a cloud-based, console-driven system for CPAs and CPA firms that provides sophisticated tools for the preparation, filing and remittance of sales and use tax returns for multiple clients. CCH is a Certified Service Provider under the Streamlined Sales and Use Tax Agreement.

It offers three easy-to-use editions on single, integrated platforms for calculations and returns. Sales Tax SaaS Core is the essential fully automated calculation service, integrated to the financial or e-commerce application. Sales Tax SaaS Plus is the full suite service, extending functionality offered with Core to include automated returns, filing and remittance. Pro is an expert-level automation and management service is exclusively designed for CPA firms servicing multiple clients.

Pro allows firm preparers to have a single set of log-in credentials for access to all assigned clients, and multiple preparers and reviewers can work on the same client simultaneously. It is part of a product family of sales and use tools that also includes Core for CPA clients to calculate sales and use tax, and the Sales Tax SaaS File and Remit for CPAs or clients who prefer to outsource their entire sales and use tax compliance process. These products exist on a single platform, so preparers may easily drill down into details on transactions, make adjustments to either calculations or returns, and designate processing methods (normal or gross-up at the client and tax authority levels.

The console and interface simplify data entry and update for details that include nexus, taxability, sourcing rules, exemptions, exceptions, shipping locations, SST volunteer status and other settings. In addition, the system seamlessly integrates with leading ERP solutions from Sage, Microsoft, NetSuite and Intuit.

Recent enhancements include complete incorporation of Wolters Kluwer, CCH content for the general sales and use tax market; a new API version allowing for greater control directly from the ERP application; and a custom product mapping feature to cover all business needs. Support for location based reporting and filing is scheduled for 2014.

Vertex Indirect Tax O Series
Berwyn, Pa.
(610) 640-4200
(800) 355-3500

Vertex Indirect Tax O Series
For more than 30 years, Vertex has provided indirect tax solutions for thousands of enterprises in North America and across the globe. It provides an up-to-date, on-premise platform to streamline United States sales tax, consumer use tax, and global tax management for over 8,000 U.S. taxing Jurisdictions.

Vertex Indirect Tax O Series is best suited for the manufacturing, services, wholesale, retail, leasing, food and beverage, communications and other industries. In addition, it offers retail and lease customizations. When enhanced with the addition of Vertex® Sales & Use Tax Returns, Vertex O Series the only automated indirect tax calculation system need for sales and use tax management.

The Vertex Indirect Tax Reporting and Analysis business intelligence reporting tool enables on-demand, real-time, customized graphs and charts from transaction and taxability data. Taxability drivers identify exempt and non-taxable purchases to determine which items are exempt from sales and use tax based on the characteristics of the goods or services purchased and uses of the items within the organization.

It supports indirect tax calculation in over 240 countries and territories, including Brazil, China, India, the European Union and other regions. A scalable, service-oriented architecture offers seamless integration for customization with all retail point-of-sale (POS) systems, whether legacy or new. And it offers the ability to customize for lease tax compliance, including complete rules and leasing taxability drivers and the ability to create specific taxability rules for special circumstances.

Dave McClure

David P. McClure is a technologist and business consultant whose career has included eight years with the NASA Space Shuttle Program and assignments in marketing, environmental services, software publishing and broadband.  He founded the US Internet Industry Association, the nation's primary trade association for Internet and broadband companies.  In 2004 he was awarded a Cornerstone Award for leadership in the broadband industry.  In the same year, he was named to the Board of Directors of the Universal Service Administrative Corporation, the non-profit corporation that oversees the nation's $8 billion universal service telecommunications fund.  His areas of expertise include software management, strategic and market planning, global technology policy and technology audits.  He is the author of more than 100 white papers on business management, technology, customer service and strategic planning.

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