eCommerce

Think eCommerce is Just About Your Shopping Cart? Think Again.

by Sarah Craig

As an eCommerce company, one of your highest priorities is ensuring your customers have a positive experience on your site. It’s essential: after all, if they have a poor shopping experience, they are unlikely to make a purchase. 

However, eCommerce is about more than a good shopping cart experience. You’ve got to think about shipping logistics, customer service, and just as important, sales tax. 

Having a sales tax solution in place is now more important than ever. We recently passed the two-year anniversary of the U.S. Supreme Court’s Wayfair vs. South Dakota ruling. Before the Wayfair decision, the Supreme Court precedent set through Quill v. North Dakota (1992) held that businesses must have some kind of significant presence in a state (a location, employee, inventory, etc.) before the state could require that that business register and collect sales tax from buyers in the state.

In 2018, Wayfair changed all that. South Dakota passed a law stating that any retailer who made more than $100,000 in sales into their state or more than 200 sales transactions into the state were required to collect sales tax – no matter if they had a physical presence or not. When South Dakota won their challenge, the court set a new precedent: “economic nexus.” Now, the majority of U.S. states have enacted similar remote seller laws, making sales tax compliance a hindrance for sellers. 

Now that we are two years past the ruling, the enforcement “grace period” is coming to an end. States will be enacting enforcement strategies to ensure companies are complying with new economic nexus laws. While COVID-19 has slowed the process down, the impact the pandemic has had on state revenue will give state tax authorities even more incentive to ensure companies are sales tax compliant. This often comes in the form of audits and letters from the state. For eCommerce companies, this means it is time to get sales tax compliant. 

The cost of noncompliance is high. Companies that are required to collect sales tax and do not face hefty fines and penalties. Often, they are required to pay back taxes. For example, TaxJar customer, Basecamp, a SaaS company, did not realize they needed to collect and remit sales tax. Until they were faced with millions of dollars in back taxes. Basecamp quickly realized how much of a liability sales tax can be unless handled properly, and now use TaxJar to ensure they aren’t risking the company by being non compliant again. 

That’s where a sales tax software like TaxJar comes in. With TaxJar, we’ll automatically file your sales tax returns, so you can prioritize your compliance without having to do the manual work. Our TaxJar API will ensure you are collecting the correct rate at checkout. As you reach nexus in new states, we’ll let you know, so you can make sure to register for a sales tax permit and add new states to AutoFile. Sales tax compliance can be a make or break point for your company, but with TaxJar, we can take that off your plate.

At TaxJar, we’re enabling eCommerce growth. E-Commerce is about so much more than your shopping cart. We can help ensure sales tax is not a liability for your company. We’ll keep your company risk-free and on the road to success. 

Want to try TaxJar for free? Our trial gives you access to our Professional plan, no commitment or credit card necessary. Try out our integrations, the TaxJar API, and full team and user management. All for free.

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