TaxCloud is Growing: An Open Letter From TaxCloud CEO Nate Gilmore

We are thrilled to announce that TaxCloud, the sales tax platform for growing ecommerce businesses, has raised a significant round in growth equity, led by Camber Partners, a growth equity firm focused on product-led growth software-as-a-software companies. This is great news, not only for our company but also—and most importantly—for our customers and partners as it will allow us to continue investing in our platform while also remaining focused on delivering the exceptional service and value to our users TaxCloud is known for. 

Why? TaxCloud now has access to a deep bench of operational experts across marketing, sales, operations, customer success, and growth. These are people who are passionate about our platform, and about ensuring that the TaxCloud team achieves greater things for our customers in the near future. This is a tremendous opportunity for anyone in the TaxCloud ecosystem, and we couldn’t be more excited about what the future holds. 

As TaxCloud’s new CEO, I am excited about all we have to build on: this is a company established and grown to date by passionate, self-proclaimed “TaxGeeks” who have been laser-focused on delivering the best possible experience to our customers—ecommerce business owners, finance teams, and administrators just trying to get sales tax off their plate so they can get back to business. 

That won’t change. 

In fact, I want to emphasize here that we remain fully committed to delivering the right-sized sales tax solution that works with your ecommerce tools, like Shopify and BigCommerce. This is our bread and butter. 

With more than a decade in this business, our team deeply understands that sales tax compliance can be complex and challenging, and as always, we’re dedicated to making it as simple and straightforward as possible. We now simply have more horsepower.

We can’t wait to share more updates with you as we embark on this new chapter in our journey. And remember: we are here to help and support you, our community of customers, partners, and friends, every step of the way. 


Nate Gilmore, CEO, TaxCloud

TaxCloud Raises $20M in Growth Equity Round

Norwalk, CT — April 17, 2023 — TaxCloud, the leading sales tax compliance platform for ecommerce businesses, today announced it raised $20 million in a growth equity round. Camber Partners (“Camber”), the growth equity firm focused on product-led growth (PLG) software companies, led the investment round. The investment will enable TaxCloud to continue providing exceptional service to its customers, while expanding its product offerings, marketing efforts, and sales operations, ultimately driving growth in the ecommerce sales and use tax market. 

As part of the investment, TaxCloud announced the appointment of Nate Gilmore as its CEO. 

TaxCloud’s platform helps merchants calculate, collect, and file sales and use tax for transactions in all 50 U.S. states and the District of Columbia. The platform is trusted by more than 4,000 ecommerce businesses, and is a recognized leader in customer service and support in the sales tax management space. 

“TaxCloud is a great fit for our portfolio: it delivers a complete tax compliance product to ecommerce businesses. It’s non-optional: if you do business online, eventually you must pay sales tax,” said Scott Irwin, Managing Partner at Camber. “We’re excited to provide TaxCloud not only the capital but also the operational expertise to help the company build on the phenomenal business they have brought to market. Nate and I have worked together for more than five years in a similar business. He will be an exceptional go-to-market and operational addition to TaxCloud.”

Camber’s investment in TaxCloud marks its first in the ecommerce sales tax and use space.  TaxCloud matches the firm’s thesis to invest in SaaS and PLG products in large, addressable markets with under-optimized go-to-market muscle that can benefit from Camber’s in-house tools and expertise. 

On the announcement, Mr. Gilmore said: “I am thrilled to be joining TaxCloud’s team at this exciting time for the company. Camber’s dedication to growing industry-leading SaaS solutions is a perfect match for our mission of simplifying sales tax compliance for ecommerce businesses.” 

Mr. Gilmore will draw on his experience leading high-growth software-as-a-service (SaaS) businesses, in addition to coaching and investing in growth companies, to help TaxCloud achieve its mission. Mr. Gilmore was most recently Chief Revenue Officer and Chief Marketing Officer of PandaDoc and previously VP Marketing at Shipwire (acquired by Ingram Micro, now a CEVA Logistics company). 

About TaxCloud 

TaxCloud is the right-sized tax solution for companies who need to be compliant across the states they sell in. The TaxCloud team and technology automagically calculate the right tax rates across 13,000+ different tax jurisdictions in the US, collect the right amount at the moment of transaction, and file the right amount of sales tax with 100% accuracy. The company also manages audits as they arise. TaxCloud has been partnering with merchants in all 50 U.S. states and the District of Columbia for the past 15 years. TaxCloud: We eat sales tax for breakfast. To learn more, please visit: 

About Camber Partners

Camber Partners is a San Francisco-based growth equity firm focused on product-led growth (PLG) software companies. Camber Partners provides software companies with flexible capital and dedicated go-to-market and data science resources to drive long-term sustainable growth. To do it, the Camber team brings to its portfolio companies deep operational expertise across sales, marketing, growth, and product development. For more information, please visit or follow us on LinkedIn.

Filing Sales Tax Amidst The SVB Collapse

On Friday, March 10, 2023, Silicon Valley Bank (SVB) was hit with regulatory enforcement actions that marked the second largest US bank failure since the early 2000s Global Financial Crisis. Understandably, this has forced many businesses to reassess their banking relationships and contingency plans. For merchants who bank with SVB, this situation is particularly challenging and may impact their sales tax filing process.

In light of the recent news, we’re sharing everything that you need to know about how the sales tax filing process at TaxCloud will work if you’ve been affected by this event or should your bank become insolvent.

How Does This Affect TaxCloud Customers?

First and foremost, TaxCloud wants to reassure its customers that it has no exposure to SVB. TaxCloud is filing taxes and remitting to states normally.

While this situation is unsettling, regulators have said depositors will have access to their deposits starting Monday, March 13, and have set up a new facility to give banks access to emergency funds. The Federal Reserve has also made it easier for banks to borrow from them in emergencies such as this.

How Does This Affect Silicon Valley Bank Merchants?
For merchants who bank with SVB or whose bank becomes insolvent, there are some important things to know about state sales and use tax. State laws require that all returns be filed in a timely fashion, and if funds are not available, the returns should be filed without payment which will result in an unpaid sales tax liability.

State laws define penalties and interest to be assessed to merchants when late payments occur, but TaxCloud will work with affected merchants to file for an abatement when possible. It may take several weeks or longer to recover penalties that were applied by the state.

TaxCloud will also help retrieve tax remittances as soon as possible and remit that to each state. Returns filed without payment should be adjusted as soon as possible to include the sales tax remittance. Penalties and interest may apply in these instances, but state laws also provide abatement in certain circumstances.

TaxCloud does not assume liability for penalties or interest where a sales tax remittance was not funded in a timely fashion but we expect the unusual nature of this situation will be considered by each state as part of the abatement process.

Moving Forward Together

This is a difficult time for many businesses, and we want to be a partner to merchants through this process. We hope this post helps businesses like yours navigate these challenges and continue to thrive.

Please don’t hesitate to contact support at should you have questions or concerns.


Featured image: Focal Foto

Streamline Work Group Improves Exemption Certificate and Related Directions and Information


Alison Jares is Deputy Director of Business Tax at the South Dakota Department of Revenue. She has been with the department for 24 years starting as a Revenue Agent in the newly formed Taxpayer Assistance Center. In her role as Deputy Director, Alison focuses on sales and use tax policy and training as well as contractor’s excise tax policy and training. She is also active in the Streamlined Sales Tax Program currently serving as the chair of the State and Local Advisory Council. Prior to working for the Department of Revenue Alison worked for the Nash Finch Company in grocery retail operations throughout the Midwest. She is a graduate of the University of South Dakota where she obtained her Bachelor of Administration.

Alison was privileged to be in the first class of the governor’s State Leadership Excellence program in South Dakota. Alison and her family have called the Capitol City of Pierre home for over 25 years.

Russ:  Alison, Christie, David, Thanks for joining us today to talk about the Streamline Sales Tax exemption project.

One of the most significant decisions the SST Governing Board initially made was to allow sellers to be relieved of liability if they did not collect sales tax because they accepted an exemption certificate from their customer at the time of sale or within 90 days of the sale, without regard to “good faith.”  What does this mean and why is this so important to sellers?

Christie:  The purpose of the Streamlined Sales Tax Agreement (Agreement) is to simplify and modernize sales and use tax administration to substantially reduce the burden of tax compliance. The Agreement focuses on improving sales and use tax administration systems for all sellers and for all types of commerce in several areas, one of which is the simplified administration of exemptions (SSUTA Sec. 317).  As part of the exemption administration simplification effort, a single certificate of exemption was created that all SST member states accept. With limited exceptions, if a seller accepts a fully completed certificate at the time of sale or within 90 days of the sale, the seller will be relieved from liability for any tax that might be due if it is determined that the purchaser improperly claimed an exemption and the purchaser will be held liable for the nonpayment of tax. Prior to the adoption of SSUTA Sec. 317, and member states amending their statutes or regulations to comply with Sec.317, a seller was generally not relieved of liability unless it could show that the certificate was accepted in good faith.  In the context of exemption administration, “good faith” means that the exemption claimed on an exemption certificate must be:

  • statutorily available on the date of the transaction in the jurisdiction where the transaction is sourced,
  • applicable to the item being purchased, and
  • reasonable for the purchaser’s type of business.

To require an out-of-state seller to know the answers to the questions raised in this definition for all its customers and for all of the states to which it ships its products is unreasonable and does not fall within the goal of reducing the burden of tax compliance.  So, in the spirit of simplifying sales tax administration and reducing the burden of tax compliance, the Agreement provides for the relaxation of the good faith requirement.   If states are imposing good faith requirements, they are not easing the burden of tax compliance, particularly on remote sellers.   

If, however, a state finds that a purchaser is repeatedly issuing incorrect certificates, the state has the right to contact the purchaser to determine if the purchaser simply does not understand their responsibility or if the purchaser is knowingly claiming an exemption that does not apply and can hold the purchaser responsible for the tax due on those transactions.

Russ:  Has this decision created any problems for the states?

Christie:  Historically most states have had a “good faith” standard in their laws related to sellers claiming an exemption and the documentation required to demonstrate the right to the exemption.  The change to remove that “good faith” standard may have proved more difficult for some states than others.  What difficulties the change has caused the states cannot be specifically identified here.

From an efficiency standpoint, if a state determines a purchaser is improperly issuing an exemption certificate to a particular seller, that purchaser may be improperly issuing exemption certificates to numerous sellers, and it is likely in the best interest of the state to contact that purchaser to correct the situation.

While all member states are required to remove the “good faith” standard from their laws to be in compliance with the Agreement, there is currently a full member state that has not removed the “good faith” standard from their law.  This has put the state out of compliance with the Agreement.

Russ:  Obtaining and retaining exemption certificates is a critical part of sales tax administration.  The three of you head up a work group that made revisions to the SSTGB Exemption Certificate and the accompanying instructions.  We appreciate your efforts in addressing the complexities of exemption certificates. It is very important for us and our merchants.  You are also working on a disclosed practices matrix for the Streamlined Sales Tax States.  Why did SSTGB think this was an important undertaking?

Christie:  The SST staff identified the need for updates to the Streamlined Exemption Certificate after receiving numerous questions about how to properly complete the certificate. Businesses asked questions specifically regarding the ID number to list when claiming a sales tax exemption on purchases of items to be resold.

Alison:  The business community also asked for clarity regarding what is a “properly completed exemption certificate”. Streamline member states, in accordance with the Agreement, relieve a seller of sales tax liability when the seller accepts a properly completed exemption certificate. The recent changes made to the exemption certificate provide direction to both sellers and purchasers regarding how to properly complete the exemption certificate. Sellers and purchasers want to do what is expected but need states to provide clear instructions.

Russ:  The exemption for resale is one of the most common.  While it is not uniform across the states it is fairly well standardized.  What are some of the most common pitfalls or mistakes for sellers?

Alison:  The most common questions that SST and states receive from sellers include:

  • What is a properly completed exemption certificate?
  • How frequently do exemption certificates need to be updated?
  • Is my business liable for sales tax if a purchaser claims a sales exemption as a resale purchase but then does not resell the item?

The recent updates and changes to the Streamline exemption certificate as well as the disclosed practices member states are working on to assist sellers with these questions.

 Russ:  What are some of the most common pitfalls or mistakes purchasers make when completing an exemption certificate for resale?

David:  Not providing correct ID numbers.

Russ:  What are some significant pitfalls and mistakes for purchasers and sellers with other exemptions? 

David:  Purchasers and sellers might assume a sales tax exemption allowed in their home state is also allowed in all states. This is an incorrect assumption. Purchasers and sellers must research the tax exemptions provided in the state the sale is sourced to. This is one reason Streamlined is creating the disclosed practices specific to the use of the Streamlined Sales Tax Exemption Certificate. These disclosed practices provide direction and resources for purchasers and sellers regarding exemptions allowed in the member states.

Purchasers sometimes mistake use-based exemptions for entity-based exemptions (e.g., agricultural production) and purchase items exempt that do not qualify for the exemption because it is not an exempt use.

Russ:  What encouragement would you give to other states to join the Agreement?

David:  The Agreement provides many benefits to its member states. First and foremost, one of the biggest benefits to membership was the Supreme Court’s favorable view of South Dakota’s membership in Wayfair. While state laws differ, the Court’s holding that membership reduced undue burden on sellers gives comfort to other member states that their economic nexus policies are on firm constitutional footing. 

Disclosed practices, such as the current work on exemption claims, also greatly reduce burden on sellers. It provides a one stop shop for a seller to gain a large amount of information regarding many states. This is not only a benefit to sellers in other states, but also to sellers located in each member’s own state as it provides your own constituents with a vast body of very helpful information. I would encourage non-member states to consider voluntarily responding to the Agreement’s disclosed practices as a way to help reduce burdens on sellers. 

Streamline’s registration system, which allows for registration in all member states by filing one registration also reduces burdens on sellers and encourages sellers to register in states due to how easy it is.

Finally, CSPs provide a low burden and cost effective way for sellers to comply with state sales and use tax laws. 

Russ:  There are hundreds of other state sales and use tax exemptions across the states.  What are the best methods for individual taxpayers and practitioners to understand what exemptions may apply to their businesses and clients and what the requirements are to claim them?

Alison:  The best advice I can give anyone is to contact that state directly. Each situation can be unique. Discuss your specific transaction directly with the state the sale is sourced to.

Many states have written guidance provided on their state website. Use the information as a source to start your review but contact the state to ensure you are understanding and applying the guidance correctly, particularly if the guidance is dated. Streamlined provides links to every (member and nonmember) state’s website and sales tax division under the “Contacts” tab on its website.  This is a quick way to find information for any state.

Russ:  What are some of the most unusual sales and use tax exemptions you have encountered in your careers and in this study?

Alison:  Each state’s tax exemptions are often specific to the leading industries of that state. For example, South Dakota’s primary economic driver is our agricultural industry. There are numerous sales tax exemptions specific to the agricultural industry.

David:  One strange exemption in Michigan is for aquatic vegetation harvesters.

Russ:  What are your recommendations for record keeping so that purchasers and sellers can be comfortable with their practices and know they will be ready for any potential inquiry or audit?

Alison:  Sellers, maintain copies of all exemption certificates, proof of exemptions (such as method of payment), bills of lading or proof of deliver location. These documents can be held in paper or electronic form. Be sure to maintain the documents to support any exemption that your provide to your customers.

David:  Purchasers that did not claim an exemption and paid tax on a purchase should always maintain a copy of their receipt, invoice, bill of sale, etc. that indicates the amount of tax paid.  Failure to do so will likely result in a use tax liability. 

Streamlined Sales Tax Audits – Extra Help For The Merchant

Retailers are facing new obligations for collecting state sales taxes (State Sales Taxes- Where do I need to collect?). As these obligations expand, you may be worried about your potential liability associated with charging, collecting and remitting these taxes. Worse, what happens if I get audited? This article will discuss how state audits work in this new world of sales tax administration.  

How a state sales tax audit would work depends primarily on three things: 1) do I have a physical presence in the state, 2) does the state that is conducting the audit provide special protections and processes for retail audits, and 3) am I using a state certified software provider, such as TaxCloud, to manage my sales tax compliance?  

Physical Presence- in a state where you have a presence (nexus in tax terminology) a state may compel you to collect their sales tax and may audit you at any time. The state will generally contact you directly with compliance questions or for the purposes of an audit. There are many things you can do to prepare for a possible audit and to manage the process if you do get audited (Direct Audits – What to know). 

If you do not have a physical presence in a state, state audit procedures can differ.  

State Provided Liability Protections- the 24 Streamlined Sales Tax states (List of Streamlined States) and the State of Pennsylvania have adopted protections that significantly lessen the audit risk for remote retailers (a retailer making sales into a state where they have no physical presence).  

  • These states provide liability relief for collecting the incorrect amount of tax if the error was the result of reliance on incorrect data provided by the state. Information provided by these states includes the taxability of certain products, rate information covering all state and local jurisdictions, and address data that assigns individual street addresses to the correct taxing jurisdictions. 
  • They also provide liability relief for the tax calculations made by TaxCloud (see discussion below).  

The remaining states with a sales tax provide varying levels of information and liability relief related to the collection of sales taxes. TaxCloud can provide additional information about collecting sales tax in these states.  

Using TaxCloud’s “Certified “ Software- the 24 Streamlined Sales Tax states (List of Streamlined States) and the State of Pennsylvania have also certified TaxCloud’s tax management software and provide additional liability protections for retailers using our services.  

  • Each of these states have tested and certified our tax compliance software and provide protections if the system returns an incorrect tax amount. Our system utilizes Taxability Information Codes (TICs) which group products into categories and apply the tax treatment of each category by state (TaxCloud TICs). 
  • TaxCloud utilizes state provided rate, jurisdiction, and taxability information to take advantage of the liability relief available for the use of state provided data. 
  • The Streamlined States have adopted a uniform standard for what constitutes a physical presence for the purposes of making collection services free for remote merchants. (Explanation of Streamlined Services).  These services include audit support. 

Direct Audits – What to know.

Retailers with new obligations to collect sales taxes (State Sales Taxes – Where to collect) worry about their potential liability if they collect the wrong tax amount. They are concerned about their audit risk and are looking for ways to lessen their potential exposure. This exposure can differ significantly depending on the laws of the individual states you are collecting for, your sales or other activities in that state, and how you decide to meet your collection obligation (Streamlined Sales Tax Audits – Extra Help For The Merchant).  

In states where you do not have a physical presence, using TaxCloud can substantially reduce your audit risk. We do all the collection and remittances for you, so the states will be looking to us to make sure your returns are accurate and complete on your remote sales. 

In states where you have a store or other physical presence the state may select you for an on-site audit, which may or may not cover all the taxes in the state. The notes below can help you ace an on-site audit. 

Sales Tax is Complicated-  Rules, taxability, rates, definitions, exemptions, and forms vary tremendously across the sales tax states. And while the Streamlined Sales Tax states have made significant simplifications and standardizations, they are still far from uniform. If you are selected for an audit by a state where you have a physical presence, you will do yourself a favor by learning how that state’s sales tax regimen generally applies to your business in advance of the audit. At the end of this blog are some resources you can use for that purpose. 

Being Selected for Audit-  Being selected for an audit does not feel like winning the lottery. But it does not have to be the fear inspiring event and messy, time crunching distraction some small businesses experience. With some advance preparation and the correct frame of mind your business can come through an audit unscathed.   

Be Prepared-  The best time to prepare for an audit is during the ordinary course of your business operations, not after you get a letter telling you your business has been selected. Yes, it will take some of the time you could devote to other activities for your business. But preparing for (and learning from) an audit will also help you keep your business records in order and give you insurance and assurance you have the processes and controls in place to be fully compliant with sales tax laws and regulations for the future. 

Why Me? – It is not worth worrying too much about why your business was selected for audit. Every state has its own methods and reasons for audit selection, but they often include regular audit cycles for some businesses, targeting by industry where past audits show compliance could be improved, checks on compliance with recent changes to nexus or other statutes, and (usually) a certain number of random audits just to keep everybody honest. 

Entrance Conference-  On site audits usually start with an entrance conference. The auditor will discuss the process with you and how they plan to proceed. Be sure to ask any questions about any aspect of the process you do not understand. Where, when, and how the auditor will work will be covered. Be clear on who you have designated to assist the auditor besides yourself and introduce them. It is entirely appropriate for other employees to respond to an auditor’s question by saying “Let me get Sally or Joe to help you with that.” 

The Auditor Is Not Your friend.  She Is Not Your Enemy Either- The auditor is a professional employed by the state with an important job to do. The auditor is making sure the laws regarding taxes are properly implemented, and that businesses are complying with their obligations under state law to collect and remit the correct amount of tax. But it is true that people drawn to careers in audit generally like order, numbers that match where they should, and for people and businesses to follow the rules. That’s just their nature. You may be focused on the creative aspects of your business, but the auditor is going to be focused on your business records. That being said, most auditors are reasonable people, and they will not ding you for the occasional minor error in record keeping. 

Work Space and Treatment-  Be courteous. To the extent you can, provide a quiet, orderly space away from your business operations. The combination of a decent working space and readily accessible records will make the audit go more quickly, eliminating frustrations for the auditor, and minimizing the time you have to spend on the audit and away from improving your bottom line. Most states have restrictions on what an auditor can accept while at your business. The safest bet is to stick to offering water and coffee. Soft drinks or other treats are fine if they are freely available to all your employees. Do not be offended if the auditor refuses everything. Don’t offer to take them to lunch, even if you would do so for other visitors to your company.  

General Business Documents- The auditor may want to see your general ledger and journal entries, bank statements, federal tax returns, and any other state or local tax returns. Having these ready when she walks through the door will get you off to a quick and smooth start, and help establish a good relationship, which can be very useful in the rest of the audit.  

When the auditor asks for additional documents, supply them as quickly as you reasonably can. Don’t be afraid to ask questions. It’s important for you to understand the reasons documents are being requested. Understanding what is going on in the audit will enable you to be responsive, and occasionally suggest better or more representative alternatives to the request. 

Sales and Use Tax Documents-  The auditor will want to see sales tax returns, use tax returns, invoices for both sales and purchases, resale certificates, exemption certificates, and shipping records. But she may not want to see all of them. Have them organized so you can readily pull what she needs and wants to see. Have a process in place to make sure exemption and resale certificates are properly executed and stored. Make sure the product descriptions on your invoices are specific enough for the auditor to be certain of what was sold (e.g. Was Goldfinger a book, a DVD, a soundtrack, or a download?).

Sampling-  It’s pretty unlikely an auditor is going to want to look at every sales tax record you have. She is likely to use various sampling methods in order to arrive at an approximation of any liability and to expedite completion of the audit. This can be a good thing and save everyone time if the sampling results in an accurate representation of your overall sales, exempt sales, sales for resale, and merchandise retained for your own business use, and overall liability. It can, of course, be a bad thing if the result is not a good representation, potentially leaving you with more liability than you actually have. Discuss any sampling with your auditor in advance. It’s easier to prevent a non-representative sample than it is to correct one after the auditor has done the work. Make sure you understand what the auditor is looking for. 

Make sure the auditor understands the nature of your business. If your business is highly seasonal, that needs to be reflected in the sampling. If it is not, that needs to be reflected in the sampling. If you have more sales for resale during some periods, and more direct retail sales in others, that needs to be reflected in the sampling. If you sell major equipment during certain months and not in others, that needs to be fairly represented. You may want to consult with your accountant or other tax professional and have them assist you with any discussions about sampling. 

The auditor may want to specifically examine transactions over a certain dollar threshold and apply sampling to the remainder of your transactions. This is usually a good idea if you have occasional big ticket sales because it tends to avoid distortions that could otherwise result from a flawed sample. You may want to suggest this if the auditor doesn’t. 

Statute of Limitations Waiver- It is common for an auditor to ask you to extend the statute of limitations by signing a waiver for a specific period, especially if the audit will occur near the limitation. With a signed waiver the auditor does not have to rush the audit to avoid missing a tax year and will be less likely to include items that could have been resolved with some discussion. You will probably have more time to pull records and prepare for the audit. However, any interest on liability will continue to accrue. Make sure the waiver is both reasonable and for a limited period of time. You don’t need to sign a waiver a year in advance and you don’t want to keep the statute of limitations open indefinitely. 

Materiality-  If errors in your records are minor and involve negligible amounts an auditor may have the ability to not assess your business for them and provide future reporting instructions instead. Rest assured though, if you come up for audit again and the future reporting instructions have not been followed, you will be assessed. 

Penalties and Interest-  When your audit is complete you will owe interest on any unpaid taxes. You may also be assessed a penalty on any unpaid taxes. Auditors sometimes have the ability to waive penalties, and will often do so if they find the errors understandable and not a result of negligence. It doesn’t hurt to ask. Interest is a different story. Most states will not allow an auditor to waive interest. 

Exit Conference-  The auditor will explain what was found and the nature of the assessment, if any. You may be asked to accept the finding to avoid further interest and penalties. That’s fine if you fully understand and agree with the changes, but if you need more time or want to consult an advisor, you have the right to do so. Make sure you fully understand your appeal rights and what deadlines you have. 

How to appeal an audit assessment-  As noted above, it’s very important to understand your appeal rights. The specific requirements and deadlines vary greatly from state to state. States typically require a written protest within a relatively short period of time. It is important that you understand the specific deadlines and requirements of your state. Calendar the deadline as soon as you get the audit report. You could lose your appeal rights if you do not file a written protest by the deadline that meets the state’s requirements. 

Next Time-  You may be tempted to quickly put the audit behind you once you’ve been given the results, especially if they were not too bad. This is exactly the time to set yourself up for a successful audit the next time around with this or any other state. Note any problems that were discovered in your records and figure out ways to improve your business practices to avoid them. And then implement those improvements. Generally speaking, any improvements you make that will help you in audit will also help you in documenting and understanding your own business. 

Audit Resources-  Depending on the nature and size of your business, and how complicated the state tax laws are in the state auditing your business, you may need to do more or less research on your compliance. Below are some of the resources you can use. 

Individual States-  Many states have publications geared to a general understanding of particular tax topics. Contact the state that plans to audit you for general information about how their sales tax works, and for any specific questions you may have based on your business and clientele. 

Streamlined Sales Tax Governing Board-  The 24 member states supply information about taxability and administrative practices in easily accessible matrices. You can access this information at here.

Tax Professionals-  If you anticipate your sales tax audit will be pretty straightforward and you are prepared for it you probably don’t need to incur the expense of having an accountant or other tax professional assist you with the audit. If you anticipate your audit could be a complicated and sizable undertaking you need assistance with, then having a tax professional assist you during the process may make the most sense for you, especially if your time is more valuable spent elsewhere. 

TaxCloud-  If you are a TaxCloud client we may be able to assist you. While we do not provide accounting or legal services and therefore can’t officially represent you in an audit, we can provide auditors with the data they need in electronic format in a timely and organized manner.  And the fact that you are using our services means there won’t be many errors to find in the first place. 

State Sales Taxes- Where do I need to collect?

If you are a small to medium sized retailer, and you are concerned about your obligations for collecting sales taxes, this article will help you sort through your potential collection obligations so you can confidently address the complexity and expense of collecting for multiple states with differing collection requirements.  

Where do I have to collect sales taxes? 

This has always been a very difficult question, but thankfully it may be getting a little clearer.  

Physical Presence- the standard has traditionally been that a retailer is required to collect sales tax for sales made into any state where the retailer has a physical presence. It is not always easy to know if you have a legal presence in a state as state definitions of a physical presence are not consistent. Obviously, a retail outlet in a state creates a physical presence (or nexus in tax terminology). This presence can also be created by making deliveries, doing installations or repairs, or having inventory or payroll in a state.  

The 24 states that are part of the Streamlined Sales and Use Tax Agreement (List of Streamlined States) have all adopted a uniform standard for what constitutes a physical presence for the purposes of making collection services free for remote merchants. (Explanation of Streamlined Services).  These services include audit support. Other states offer online guidance on what activities can create this collection obligation.   

Economic Nexus- with the U.S. Supreme Court decision in Wayfair states can now compel the collection of sales taxes from retailers that have sufficient economic activity (sales delivered to residents of that state). Individual states set the level of economic activity, by the dollar volume of sales or the number of transactions, that triggers a collection obligation. For additional information on economic nexus go to Economic Nexus and Your Business. You can view the collection obligation thresholds for each state here (TaxCloud State Guides). Many states have adopted the same guidelines.   

No Presence- In a state where you don’t have a physical presence and you are below the economic nexus threshold; you are not required to collect sales taxes on sales delivered into that state. Keep in mind that your customers are likely to have a legal requirement to self-pay taxes owed on their purchases if you don’t collect them. Also, just because you don’t have a legal requirement to charge sales tax, it can be worthwhile to do so. The states in the Streamlined Sales Tax Agreement and Pennsylvania will pay TaxCloud to manage you sales tax collections so that it is free to you. Yes, free. TaxCloud offers pricing incentives to retailers that collect for all these states. Our services are available in all states that have a sales tax.