Depending on what products they sell, direct sellers must monitor changing product taxability rules and regulations as well as track sales tax holidays, product-specific exemptions, and items sold for resale. Additionally, direct sellers must ensure that agents/distributors are collecting the right amount of sales tax from their customers. Errors along the way can cost MLMs dearly. Direct sellers must ensure that agents/distributors are collecting the right amount of sales tax from their customers.
Product taxability is treated differently in different states, particularly from a sales tax perspective. In many states, product taxability and the sales tax rate depend on the type of product, the date it was sold, how it will be used, and the location in which it was purchased.
States often base audits on inconsistent or erroneous payment processes, especially those that lack adequate calculations, formulas, and other documentation. State auditors are likely to red flag any reporting that fails to stand up to what the tax authority views as a consistent and verifiable process.
Mapping each product to the SKU level is next to impossible without access to the right technology. Avalara AvaTax maps the SKU and applies all the rules (including applicable exemptions and sales tax holidays) automatically, so the direct seller of a specific product can rest easy knowing that product taxability is handled consistently in a repeatable, reliable accurate manner. To learn more….http://bit.ly/1xF3yeh