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How Complex Can Sales Tax Be?

Brett Thomas, our CTO, occasionally jokes that if he knew in advance how complex building a sales-tax module in Vindicia CashBox would be, he’d never have done it.

Given how much change is afoot as states gear up to tax digital content, Brett’s decision to include that feature in CashBox boded well for our clients. At last count, 18 states have explicitly imposed tax on digital content and many more state legislatures are contemplating it.

The nuances of sales tax are complex: What comprises nexus? How do you classify your service or product? How do you calculate VAT or GST for global transactions? What’s the difference between use tax and sales tax? Also, speaking of nexus, did you know that having data centers in some states can expose you to nexus there? Texas is a good example. If you have distributed computing facilities (for example, if you’re a cloud-computing provider of some sort), do heed the ramifications.

To learn our approach in determining and computing sales tax for online businesses of intangible goods and services, read this white paper. Calculation of sales tax might not be the most exciting topic on the cocktail circuit; however, our clients deem it a critical one as they navigate through the requirements of selling content online.

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