2021 Tax Rate Changes for Localities
This post is for companies that are considered remote sellers and required to collect sales and use tax on interstate transactions – we hope you find it useful.
The 2018 Supreme Court Wayfair Ruling stipulates that states have a right to require sales tax collection and remission from online retailers and other remote sellers that do not have a physical presence in their states.
It’s crucial for remote sellers, such as online retailers or distributors, to accurately track and administer required interstate sales tax collection. Failure to comply with state and local tax collection regulations can result in steep fines and back taxes.
Sales Tax Jurisdictions
According to taxfoundation.org, U.S. sales taxes may be levied at the state level and also by city, county, tribal, and special district governments. There are roughly 11,000 local jurisdictions that levy sales taxes, and accurate rate and payment tracking are crucial for remote sellers to remain compliant under the 2018 Wayfair Ruling.
Forty-five states and the District of Columbia collect statewide sales taxes. Local sales taxes are levied in 38 states in addition to state-levied sales taxes.
Tax Rate Changes for Localities
Although state tax rates have remained stable over the past year, in 2021 city and district sales taxes have increased.
An Accounting Today article (September 14th, 2021) explains that states are generally reluctant to raise sales tax rates because these taxes are regressive. Regressive, or uniformly applied taxes, take a larger percentage of income from the low-income bracket than from the high-income demographic.
The Accounting Today article continues, stating that in the first half of 2021 there have been numerous sales tax changes below the state level – there were 127 new district sales taxes enacted, and many cities legislated new sales taxes.
Remote sellers need to accurately track and comply with changing sales tax rates for accurate collection and remission, or face potentially steep penalties and back taxes.
Many distributors are remote sellers, and it’s crucial to accurately track changing sales tax rates to remain compliant in collection and remission, or face potentially steep penalties and back taxes.
Passport Software’s Distribution ERP helps with rapid and accurate order fulfillment, as well as with sales tax compliance management.
We have partnered with Avalara, a leader in cloud-based automation for sales and use tax compliance to enable tax calculation within our platform that is fast, accurate, and easy to use.
PBS Distribution also helps streamline inventory management from purchasing to order shipment. Our distribution software for small business and mid-sized companies is flexible, customizable, and scalable to grow with your business.
Our distribution solution helps provide greater operational visibility with business intelligence across all your processes. And, we provide Sales and Use Tax compliance management for remote seller laws.