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What’s the fate of incentives for voluntary sales tax collection?

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Editor’s Note: This guest blog post comes courtesy of Gail Cole with Avalara.

Will incentives for voluntary sales tax collection go the way of the dodo bird? 

To encourage voluntarily collection, some states provide perks to remote retailers that volunteer to collect and remit sales tax. Are such incentives still needed now that states have been granted the authority to tax remote sales? 

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Until quite recently, states were largely prohibited from imposing a sales tax collection duty on businesses with no physical presence in the state. However, on June 21, 2018, the Supreme Court of the United States overruled the physical presence rule that long prevented states from taxing remote sales. In its decision in South Dakota v. Wayfair, Inc., the court found economic and virtual contacts between a state and out-of-state businesses to be a sufficient basis for nexus, or a sales tax collection obligation.  

Since states are now free to impose a sales tax collection obligation on remote businesses, they no longer need to encourage voluntary collection. And already, at least two states are altering or doing away with such incentives: Alabama and Utah. 

In certain other states, voluntary collectors may be able to take advantage of a different sort of benefit. States that are members of the Streamlined Sales and Use Tax Agreement, or SST, may help defray the costs associated with automating sales tax collection and remittance. You can learn more about the benefit of working with an SST certified service provider (CSP) here. 

States are still coming to grips with their newfound right to tax remote sales, and many are still incentivizing voluntarily compliance. It remains to be seen whether such perks will endure. Learn more about incentives for voluntary sales tax compliance in this Avalara blog.  

Perficient and Avalara drive business optimization through automating tax management for Oracle E-Business Suite customers.

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Gail Cole

Gail Cole is a guest blogger for Perficient on behalf of Avalara. She began researching and writing about sales tax in 2012 and has been fascinated with it ever since. Gail has a penchant for uncovering unusual tax facts and endeavors to make complex sales tax laws more digestible for experts and laypeople alike.

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