|Organization: Automotive aftermarket leader||Need: Comply with multi-state sales tax rules to avoid hefty penalties||Outcome: Avoids $200,000 in sales tax and fines|
Understanding the situation
The U.S. Supreme Court’s ruling in South Dakota v. Wayfair expanded requirements for collecting sales tax across state lines, which worried this automotive aftermarket leader. Their small CPA firm had no experience with requirements for collecting taxes across state borders. With e-commerce sales spanning multiple states, were the company’s sales taxes being collected properly?
Exploring the challenge
After attending a CLA e-commerce seminar, the company’s CFO realized taxes were not collected properly … for years.
The company turned to CLA’s nationwide industry and tax professionals to support its growing business. CLA’s corrective steps included:
- Filing voluntary disclosures state by state, to limit the company’s exposure to uncollected taxes, interest and penalties.
- Putting exemption certificates in place with the company’s marketplace retailers to avoid collecting sales tax twice.
- Collecting exemption certificates for appropriate customers, e.g., wholesalers/retailers.
- Establishing procedures for drop shipping from any state.
CLA is a key resource for bringing value to our company.
CFO, automotive aftermarket leader
With CLA at its side, the company avoided $200,000 in sales tax and fines, an amount that would have continued to multiply.
Today, the company’s e-commerce business tops $500 million with strong growth forecasted in the future.
Cross-border tax management for e-commerce is complex and state rules change regularly. Supported by CLA’s nationwide tax professionals, the company is now well prepared to meet its tax requirements wherever it should grow next.
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