If you sell products or services that are exempt from sales tax, your compliance challenges and audit risk can be more complex and burdensome. In the event of a sales tax audit, you must prove that your exempt sales are backed by valid documentation. If not, you’ll be assessed audit fines and penalties. Achieving complete sales tax compliance is only possible if you understand how to properly collect and maintain exemption certificates to support your company’s sales process.
In 2018, the world of sales tax compliance was shaken by the new economic nexus standard after the Supreme Court of the United States ruled on South Dakota v. Wayfair, Inc. This ruling continues to have a dramatic impact as it expands nexus obligations for many remote sellers; more nexus obligations leads to more registrations, more sales tax collections and remittance, and more exemption certificate requirements.