States across the country made plenty of changes this year in the imposition of sales taxes on online purchases after the Supreme Court’s ruling last year in the case of South Dakota v. Wayfair, according to a new report.
The 2020 Sales Tax Changes report, from tax technology provider Avalara, found economic nexus laws continuing to change in the past year and likely to change next year as well in many states. Businesses are struggling to deal with the many changes in the law, particularly those that sell products online to out-of-state customers. More than three dozen states have enacted laws requiring online marketplaces to collect and remit sales tax on behalf of third-party sellers, and more such laws are in the works.
Technology companies are leveraging artificial intelligence, big data and cloud computing to help businesses deal with the state sales tax challenges. A total of 24 states are now participating in the Streamlined Sales Tax program, which provides tax technology to businesses at no cost. A number of states made major changes this past year in their sales tax nexus laws, including California, New York and Texas.
“2019 was another landmark year for sales tax in the United States, with broad adoption of economic nexus and marketplace facilitator laws,” said Scott Peterson, vice president of U.S. tax policy and government relations at Avalara, in a statement. “As 2020 progresses, we can expect to see more changes take place domestically and abroad in the form of marketplace laws and global compliance.”
The international cross-border tax front is also presenting challenges for companies that sell goods abroad, the report noted. According to Accenture and AliResearch, cross-border ecommerce sales are expected to total $1 trillion by next year. According to a study by Stripe, the most difficult factor cited in expanding internationally is dealing with too many taxes.