Understanding Tax Exemptions and Taxables
Top compliance challenges for sellers
The US landscape for sales and use tax causes complexity for sellers in the following areas:
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Managing exemption certificates.
Ensuring proper registration for the correct jurisdictions (i.e. tracking movement of employees and property for
purposes of determining "physical presence" or tracking volume of sales for purpose of determining "economic
nexus" presence.
Properly characterizing "what" is being sold - this is particularly difficult in the area of digital goods and products,
streaming content, software, software as a service, infrastructure as a service and technology related services.
Properly capturing data to determine where a sale should be sourced and to apply the correct tax rate for the
location where a sale is sourced.
Dealing with issues such as "caps" (i.e. only a certain amount of the sales price of an item is subject to tax),
"thresholds" (i.e. clothing with a sales price of less than US$250 is exempt), and "sales tax holidays" that may last
on specific items for specific time periods (i.e. back to school).
Tracking pre-payments for sales tax (submitting tax payments prior to due date of return) and tracking credits for
overpayments.
- Keeping up with the volume of returns for the number of jurisdictions on a monthly basis.
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