The Sales Tax Migration Guide

INTRODUCTION AND EXPECTATIONS

Switching sales tax platforms is a lot like moving your business into a new office. There are a lot of reasons to do it, but it takes planning and usually comes with its own share of headaches.

The good news? You’re not alone.

As businesses grow and evolve, many companies find that their existing tax provider no longer fits their needs. Pricing, limited support, inflexible integrations, are all common complaints. Sometimes, a company simply outgrows what their provider was built to handle.

No matter your reasons for switching, this transition doesn’t have to be a major hassle or create unnecessary risk.

In this guide, we’ll walk you through every stage of the transition process while highlighting best practices to follow and common pitfalls to avoid along the way.

PREPARING FOR THE SWITCH

Like any major system change, switching sales tax providers starts with preparation. Rushing this process can lead to compliance gaps, lost data, missed filings, and monetary penalties when things go wrong.

Unfortunately, you may not be able to rely on your existing provider past your contract expiry. If you haven’t taken steps to export copies of your tax data, you may find yourself locked out of the systems where that information is held after you part ways with your current platform.

The more that you can plan ahead, the better things will go. Use the checklist below to make sure that you’re fully prepared for the switch.

1. Choosing the Right Time

The best time to switch sales tax providers isn’t always clear.

Many providers operate on annual contracts, and switching mid-term can mean walking away from a paid service before the contract ends. If you’re not urgently dissatisfied with your existing provider, it often makes sense to time your transition around your renewal date.

At the same time, your new provider will likely need some lead time in order to prepare for your first filing cycle. This includes setting up your new account, mapping product tax codes, and integrating with existing sales channels or internal systems.

Here’s what to do:

• Review your current provider contract to understand the scope of your existing services and your renewal/cancellation terms.
• Plan your switch to align with the end of your current service period, if possible.
• Contact your new provider in advance — ideally at least 30–60 days before your target cutover.
• Avoid switching in the middle of a filing cycle (e.g., mid-month or mid-quarter), if you can help it.
• Plan for a short overlap period where both providers are active, so nothing falls through the cracks.

For most businesses, the best time to switch will be in the final two months of an existing contract. This gives your new provider enough time for a smooth transition while ensuring that all filings take place on time.

If you switch in the middle of a filing cycle (e.g., mid-quarter), be sure to coordinate with your new provider on whether they can support all your filing frequencies. Often, this can be supported if you meet certain deadlines and backfill your data for the filing period.

In many cases, you won’t handle the transition entirely on your own. Instead, you’ll work closely with an onboarding team who will help to ensure that all systems and fields are mapped correctly before the switch takes place.

2. Export and Save Your Historical Data

Before you cancel or deactivate your current provider, make sure you download and securely store all of the following:

• Copies of all filed sales tax returns.
• Sales tax reports by state or jurisdiction.
• Transaction-level data (ideally the past 12 months or more).
• Any product tax code mappings (if your provider uses them).

Even if your new provider won’t need all of this, you will in the event of an audit, dispute, or transition hiccup. In most states, you’re required to keep this data for at least three to seven years.

Organize these files by year and state. Cloud storage, like Google Drive or Dropbox, can help you retain access even after your provider account is shut down.

3. Confirm Filing Schedules and Cutoff Dates

A smooth transition depends on knowing exactly when your current provider stops filing and your new provider takes over.

When preparing to switch, make sure to verify this information so that you don’t miss a filing (or double-file by accident).

To avoid mistakes, do the following:

• Contact your current provider to confirm the final period they will file on your behalf.
• Ask your new provider when they will begin filing and ensure they’re ready for that date.
• Document the filing handoff date in your internal calendar or compliance tracking system.
• Share the handoff schedule with your accounting or finance team so everyone is aligned.
• Notify state tax authorities if required (some states require updates when changing providers).

4. Record State Registration Details

To ensure a smooth transition, your new provider will need detailed information about where and how your business is currently registered to collect sales tax.

Gathering this up front prevents delays during onboarding and helps to ensure a smooth transition with consistent information.

• Make a list of every state where you are currently registered to collect sales tax.
• Document the sales tax registration number for each state.
• Log in to each state’s tax portal and confirm your credentials are current.
• Note the filing frequency for each state (monthly, quarterly, etc.).
• List any physical nexus locations (e.g., warehouses, offices) tied to registration.
• Verify contact info on file with each state to ensure you’ll receive tax notices.

If you aren’t sure where you’re currently registered (or if you should be registered at all), your new provider may be able to help you with a nexus review. However, keep in mind that they’ll be relying on the tax information from your current provider in order to determine your tax obligations.

In order to make an accurate assessment, they’ll need past records and historical data. If your new provider offers economic nexus tracking, transaction records over the past year are essential when determining your filing obligations.

Without this data, your new provider will only be able to determine your obligations based on new transaction data, which can lead to incorrect remittance calculations during the transition.

5. Assess Your Tax Footprint

Switching providers is an ideal moment to reassess your sales tax obligations, especially if your business has recently expanded, launched new sales channels, or increased sales volume.

Even if you’ve been compliant in your tax obligations, economic nexus thresholds can shift, creating new registrations and filing requirements.

To conduct this assessment, do the following:

• Review your past 12 months of sales by state to identify any new states nearing or exceeding nexus thresholds.
• Check for physical presence triggers, like new warehouses, employees, or inventory in additional states.
• Make a list of states where you may need to register, but aren’t yet.
• Talk to your new provider to verify whether you’re fully covered — or if new registrations are recommended.

Additionally, you might consider scheduling a nexus review as part of your onboarding. Many providers offer this service, and taking advantage of it can offload some of the more labor-intensive aspects of nexus tracking.

However, be aware that your sales tax provider is primarily focused on economic nexus due to sales. You’ll need to determine physical nexus internally and report those obligations to your provider so that they know to file in that state regardless of whether economic thresholds have been met.

In this video, Grant Singleton, Founder & CTO of PangoBooks, shares how his team successfully switched to TaxCloud — saving time, money, and reducing compliance stress.

Lindsay Orr, Onboarding Manager at TaxCloud, explains what it takes to transition smoothly and shares key lessons from helping hundreds of companies switch providers in 2025.

NEW PROVIDER SETUP

1. Setting Up Your New Provider

Once you have all the information from your current sales tax provider, it’s time to connect your new platform to your sales channels.

In order to do this, the new platform needs to be connected to every system where transactions might occur. This can include e-commerce platforms, digital marketplaces, POS systems, and ERP or accounting software.

With smaller businesses, where the number of sales channels and internal systems is limited, this process is relatively simple. For example, if a new brand migrating to TaxCloud only sells on Shopify and has no ERP system, switching may be as simple as activating a pre-built integration and uploading any historical data.

For most brands, this process is more involved and may include some trial and error. The onboarding team from your new provider may need to map specific data fields to your ERP or coordinate closely with your in-house development team as they build custom integrations through the API.

Hiccups during the initial configuration are expected, which is why most providers request several weeks of lead time before the transition takes place.

2. Test Tax Calculations

Before flipping the switch, run sample transactions to make sure that tax is being applied correctly.

If possible, it’s best to run these calculations while you still have access to your old provider so that you can verify that the calculations are accurate.

• Create test orders across a variety of shipping destinations and product types.
• Compare results to what your previous provider would have calculated.
• Validate exempt transactions, like B2B sales with resale certificates.
• Confirm rounding, line-item handling, and shipping taxability are correct.
• Document any edge cases or anomalies and work with support to resolve them.

Even when working closely with an onboarding team, it’s important to test carefully and ensure accurate results. Don’t assume that everything “just works.”

Tax calculation logic can vary between platforms, but the final determination will be made by the state. Make sure that the calculations are correct so that your reporting is accurate.

3. Add Historical Transaction Data

Most modern tax platforms use historical data to support nexus tracking, reporting, and forecasting. This step also ensures continuity in your tax records and reports.

• Import at least 12 months of transactions, if your new provider allows it.
• Match imported data to your previous reports to confirm accuracy.
• Ensure product SKUs and tax codes align or are mapped correctly during the importing process.

In most cases, tax systems won’t talk to one another directly, so teams will need to move data via a CSV import.

If the onboarding team doesn’t have access to the accounts from your old provider, you may need to retrieve that information on their behalf and give them time to facilitate the upload.

4. Map Product Tax Codes

Incorrect product mapping is one of the most common causes of compliance errors.

If your provider supports product-level taxability rules, make sure that your catalog is mapped properly.

• Review your product list for any items with unique or reduced tax rates.
• Assign tax codes based on the product type (e.g., digital goods, apparel, food).
• Test sample products in multiple states to ensure correct rates apply.

Depending on your provider, bulk upload or tagging tools may be available to speed up this process.

If both your old and new provider support tax codes, you may be able to import tax code data as part of your initial import. However, be sure to validate this information.

Tax codes are often configured differently between providers, and the transition from one system to another may not be flawless.

MISTAKES

Even well-planned migrations can go awry when crucial steps and details are missed.

In this section, we’ll tackle some of the most common mistakes that organizations make when switching sales tax providers.

While preparing for the transition, take careful note of the errors in this section. Be sure to keep them top-of-mind as the migration takes place.

❌ Prematurely losing access to old data

Some providers make it difficult (or impossible) to recover historical records once an account is closed.

The information may be deleted, or the provider may bar login access once a contract expires. When this happens, companies can be left in the lurch without the critical information necessary to file accurate taxes.

Fortunately, this problem is easy to avoid with proper planning.

• Before your contract expires, download each of the following:
  • Filed returns
  • Detailed transaction data (inc. line items and assigned product tax codes)
    Sales tax reports
  • Login details and filing frequencies for your nexus states
  • Copies of your customer exemption certificates
• Back up your data in multiple locations (internal servers, cloud storage, etc.) to avoid loss or corruption.
• Export data in standard formats like CSV or XLS for easy reference and cross-system compatibility.

In many cases, leading sales tax providers won’t allow users to access any data on the platform once a contract ends, so be absolutely sure that you’ve gathered all essential data before the expiry.

If you’re planning to use your current provider through the end of your expiry, you may also need to wait until the final days of your contract to download the most accurate tax data available.

On the other hand, if the new platform comes online well in advance of your contract expiry, it’s best to select a hard stop so that the data from the old system isn’t duplicated in the new one.

Select a month in partnership with your new provider, and only upload historical data prior to that start date.

During the migration process, coordinate closely with the onboarding team to stay aligned as the transition takes place. By doing so, you can make sure that data flows smoothly from one platform to the next.

❌ Filing twice — or not at all

Transition periods are where many businesses miss a filing window or end up accidentally double-remitting tax.

This commonly occurs when brands forget to coordinate filing obligations across providers during the transition process.

When this isn’t properly communicated, both tax platforms may file separately on the organization’s behalf — creating a double-remit – or fail to file at all because they believe the obligation lies with the other platform.

To prevent this:

• Confirm with both providers exactly who is filing what, and when.
• Document the final period covered by your old provider.
• Verify your new provider’s start date for filings is confirmed and scheduled.
• Notify your internal team (and possibly the state) of the provider change.

Because of how filings work, determining exact dates can become a major source of confusion if instructions aren’t clear.

Although this may be frustrating, take extra steps to be crystal clear on which provider is responsible for filing within a given time period, and make sure that all remittance is accounted for as that responsibility shifts between platforms.

❌ Disrupting Tax Calculations on Your Website

If your storefront’s tax calculations go offline, you risk lost sales, customer complaints, and incorrect collections.

If the sale completes without appropriate calculations, your remittance will be incorrect, and you may end up paying for penalties, fees, or fines. When unable to calculate tax, some platforms may halt a sale entirely, preventing customers from a purchase.

Some of these potential headaches are unavoidable, but you can take steps to mitigate the problems before they occur.

Before the switch, take the following steps:

• Test all storefront integrations in a staging or sandbox environment before going live.
• Verify that tax is calculated correctly across product types, states, and exemption cases.
• Coordinate your switch so it doesn’t happen during peak sales periods.

In some scenarios, it may not be possible to fully integrate on an instantaneous basis.

If you’re worried that a switch will take too long, or if your storefront is always busy, the best approach may be to create a brief, planned outage and offer advanced notice to customers. This can be done during a regular maintenance interval, during off-peak times, to minimize the impact.

❌ Skipping Product Mapping or Configuration

Depending on your tax platform, products may need to be mapped manually for accurate taxability. If this step is skipped, tax can be miscalculated or may not be collected at all.

• Review your catalog for products with special tax rules (e.g., clothing, food, digital goods).
• Assign tax codes using your new provider’s tools or bulk import.
• Test sample products across multiple states.

In some scenarios, you may be able to export the taxability codes from your old tax provider to your new platform.

However, this isn’t a guarantee because there’s no single national standard. Many providers maintain their own taxonomy for tax codes, while others may style their codes after more universally recognized systems like the Streamlined Sales Tax program. Different product codes and tax categories also exist, further complicating these issues.

Most businesses use the tax codes available in the sales platform they chose when they started up. This creates mismatches and breakages when choosing to work with dedicated sales tax vendors, since those codes need to be mapped correctly to the new partner.

During the migration, be sure to coordinate with the onboarding team to ensure that any automated product mapping is correct and has been appropriately applied. In many cases, aligning tax codes takes multiple rounds of review and may even require developer involvement.

FINAL STEPS

Pre-flight and Launch

Once you’ve set things up with your new providers and tested your system, you’re almost ready to go. Before flipping the switch, it’s worth taking the time to do one final check.

If you’ve followed the steps in this guide, you’re well-positioned for a smooth launch. In this section, we’ll walk you through what to expect as the system goes live and what support you should have in place going forward.

Going Live

Once your new platform is configured and tested, you’re ready to make the switch official. When you launch, the new provider takes over live tax calculation and begins preparing filings on your behalf.

Typically, that involves each of the following:

• Activating live tax calculations in your ecommerce or POS platform.
• Monitoring real-time transactions to verify tax is applied correctly.
• Ensuring filing schedules are active and ready for the next due date.
• Turning off or disconnecting the old provider, if it was embedded in your store.

If something doesn’t look right, reach out to your new provider immediately. It’s essential that any issues are corrected and resolved before filings begin.

Post-Launch

Sales tax is constantly evolving as new regulations are passed. After launch, your provider should help you stay informed, compliant, and prepared as your business evolves.

Most of this information should update automatically within the system through regular updates. Only some of these may be relevant or visible to you.

For example, if a jurisdiction in the U.S. changes its tax policy, this is likely to be reflected within the software through an internal update. Tax will apply correctly at checkout based on new rules and regulations, but you may not be notified of the change.

However, other data may be highly relevant to you. Be sure to check your reporting and tracking tools to ensure they’re working properly. If your provider offers nexus tracking, you should be alerted when you’re approaching a threshold in a new state.

Lastly, many onboarding and transition teams offer added support in the first weeks after a transition takes place. Lean on these resources while you have them in order to smooth out any kinks in the migration process.

After the migration is complete and things have had time to settle, you’ll likely be in contact with regular support, rather than the onboarding and transition team.

FINAL CHECKLIST

1. Review Your Provider Settings

Ensure that everything in your new platform is ready for live tax collection and filing:

• All integrations are live and syncing (ecommerce, marketplaces, ERP, etc.).
• Tax rates and calculations have been tested for key product and shipping combinations.
• Filing frequencies and state registrations are configured correctly.
• Your bank account or payment method is on file for remittance.

2. Communicate Internally

A provider change touches multiple teams, especially finance and operations. Make sure everyone’s in the loop.

• Notify your accounting/bookkeeping team of the switch and go-live date.
• Update internal compliance documentation or SOPs.
• Share new login access (if applicable) with team members who manage filings or reports.

3. Keep Final Records from Your Previous Provider

Even after the transition, you’ll need historical data for reconciliation, audits, or reporting.

• Save copies of your last sales tax filings and reports from the old provider.
• Archive any exported transaction data in a secure location.
• If applicable, download user or role permissions in case of future access questions.

4. Set Your Go-Live Date and Stick to It

Choose a specific date to officially transition, and avoid switching mid-cycle if possible.

• Coordinate with your new provider to confirm your official start date.
• Make sure your previous provider knows their services are ending.
• Avoid going live during high-volume sales periods, if you can help it.