What’s a Tax Engine?

A tax engine is a crucial tool that businesses rely on to navigate the intricate world of sales tax. With ever-changing regulations and varying tax rates across jurisdictions, ensuring compliance can be a daunting task. A tax engine empowers businesses by providing accurate and up-to-date calculations, surpassing the limitations of a simple zip code-based approach. By incorporating specialized knowledge of specific item tax rates and industry regulations, a tax engine becomes an indispensable asset, enabling businesses to stay on track and meet their sales tax obligations with confidence.

Your sales tax reporting software calculates your report and helps you file, keeping you compliant in every jurisdiction where you have nexus — and that can be a complicated question to begin with. But there’s another point of complication: changing sales tax laws and regulations.

Sales tax laws are complicated. They vary from state to state and even from town to town. And right now they’re changing fast. A recent Supreme Court decision allows each state to make laws requiring out-of-state sellers to collect sales tax. Not only are states still deciding what to do about the end of Quill, but they are also figuring out how their new laws work and even going to court over the details.

So an ordinary tax table just isn’t enough to keep you on track. You need a tax engine.

What’s a sales tax engine?

If you have e-commerce on your website, you probably have a simple sales tax engine. When your customers put in their addresses, the tax engine checks the tax rate in their town and calculates the sales tax on their purchases.

That’s great — but it doesn’t have the level of accuracy you need. For one thing, it probably relies entirely on zip code, which may not be enough information to get the exact rate for each jurisdiction. It probably also doesn’t take into account special tax rates for specific items or detailed regulations for your industry. Chances are, it doesn’t even update often enough to catch all the changes in rates and regulations.

This doesn’t always matter at a typical small online retail shop. Your average basket size might be $35 or $86, and you may have limited numbers of sales in each state. You can miss a few cents here or there and end up close enough.

Does your sales tax engine meet your needs?

Larger scale retailers need greater accuracy.

For manufacturers, construction, and large items like industrial machinery, it’s a whole different ball game.

Sales Tax DataLINK works with your sales tax engine, providing the tax rate database that works like rocket fuel to make your tax engine robust enough for all your needs. We can get you invoice-level accuracy that makes sure you’re compliant in every required jurisdiction and supports you in an audit.

Give us a call. We’ll be happy to prepare a demo that will show you exactly what Sales Tax DataLINK sales tax reporting software can do.