Avalara, Inc. (NYSE: AVLR), a leading provider of cloud-based tax compliance automation for businesses of all sizes, today released its fifth annual sales tax changes report. Key findings in the report point to the continued impact of economic nexus laws, escalating tensions around marketplace facilitator laws, an increase in online cross-border sales, and the growing role of technology in tax compliance heading into 2020.
In today’s global, omnichannel business landscape, accurate sales tax collection and remittance are essential for businesses of all sizes seeking to stay compliant and competitive. Avalara’s 2020 sales tax changes report reveals major changes in legislation and consumer preference that are poised to disrupt ecommerce in 2020.
“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. “As 2020 progresses, we can expect to see more changes take place domestically and abroad in the form of marketplace laws and global compliance. This report should serve as a resource for business leaders and tax professionals to better understand the tax landscape and make more informed decisions that keep businesses compliant and improve efficiency.”
Notable highlights from the 2020 sales tax changes report:
- Many states are approaching remote sales tax differently. Economic nexus is old news and the new norm, but businesses continue to struggle with understanding their liability in each state and how to craft their tax strategies accordingly.
- Economic nexus laws will continue to change. Louisiana is set to begin enforcing economic nexus by July 2020. A bill recently filed in Florida, if approved, will make the Sunshine State the 44th state to adopt economic nexus. If passed, Missouri will then be the only state outside of those with no general sales tax that has yet to enact a similar rule.
- Marketplace facilitator laws are creating a “Wayfair 2.0” scenario. More than 36 states have adopted marketplace facilitator laws that require online marketplaces to collect and remit sales tax on behalf of third-party sellers. But, major marketplaces aren’t accepting this without a fight. For example, Amazon is “vigorously” fighting a sales tax assessment for marketplace sales tax in South Carolina. Other states, like Hawaii and North Carolina, are expected to enact marketplace sales tax laws in 2020.
- International selling will take center stage and bring new challenges. Forecasted to reach $1 trillion in sales by 2020, by 2022, cross-border ecommerce sales could account for more than 15% of the world’s online retail market. Major events around the globe will impact international gain for businesses, including Brexit, fraud, global marketplace laws, and shifting tariffs.
- Technology is responding to growing sales tax complexity. Artificial intelligence, big data analytics, and cloud computing are expected to reach a tipping point for practical application for sales tax in 2020. States are also embracing technology with 24 states participating in the Streamlined Sales Tax (SST) program and providing tax technology to businesses at no cost.
For additional information on state sales tax changes, please visit the Avalara sales tax rates resource. For more information on marketplace facilitator laws, please visit the Avalara state-by-state marketplace facilitator guide.
Download the 2020 sales tax changes report here.
Avalara helps businesses of all sizes get tax compliance right. In partnership with leading ERP, accounting, ecommerce, and other financial management system providers, Avalara delivers cloud-based compliance solutions for various transaction taxes, including sales and use, VAT, GST, excise, communications, lodging, and other indirect tax types. Headquartered in Seattle, Avalara has offices across the U.S. and around the world in Canada, the U.K., Belgium, Brazil, and India. More information at avalara.com.