Retail: Making Sense of Sales Tax Compliance

September 02, 2014


Nobody shares quite the same view about sales tax. For shoppers, it’s nothing more than an added cost to the items they want to purchase, and one which some go to great lengths to avoid altogether. Most state and local governments will argue that sales tax represents revenue they need for infrastructure, education, and to help essential services remain functional — and one they cannot afford to lose. They may have a point. According to a study by the University of Tennessee’s Center for Business and Economic Research, states lose an estimated $12 billion a year from untaxed online sales. Retailers, on the other hand, have a completely different responsibility. Left with the burden of being the collection point for sales taxes, the emphasis on how they can most efficiently achieve this is left firmly with the retailer, and the methods they use to administer and monitor sales tax compliance can vary greatly.

Tax Reporting for Different Retail Models

Someone trying to help shed some clarity on the sales tax collection issues for retailers is Patrick Burns, Barnes & Noble College’s Manager, Sales Audit, who spoke at this year’s Epicor Insights Conference on the subject of maintaining tax tables. Like most retail companies, Barnes & Noble College operates both brick-and-mortar stores and also has a strong commercial presence on the web. Those distinct kinds of retail models can present different tax reporting issues, and Burns was asked to give a presentation to conference attendees on how his company manages sales tax tables from both in-store and online transactions.

Although Epicor hosts the annual conference, Burns points out the advantages of sometimes having the attendees themselves present on some of the challenges they face. “There’s an advantage in having clients talk about their experiences because it helps the other attendees see how those experiences fit into their own world,” he says. “My presentation, “Managing Sales Tax Master Tables and Sales Audit,” was really an opportunity for a lot of dialogue about the different ways retailers handle that issue,” he adds. That can include handling the maintenance of the tax tables process for different retail operations separately. Because the web is unique, some companies opt to use an outside vendor to manage sales tax on internet sales, while handling sales tax on in-store purchases in-house.


Epicore Conference 2014



The attendees of the conference included representatives from every area of retailing, from exclusive high-end fashion to mass merchandise, big-box stores. “We had some really good feedback on how different retail companies use different methods,” Burns remarks, adding “and this kind of event can provide some really valuable opportunities to network, share common experiences and learn from other professionals in your own industry.”

Flexible Solutions

Sales tax compliance is an essential part of any retail operation, and Burns’ presentation at the Epicor Insights Conference was an opportunity to highlight both the complexity and the possible solutions on the issue of tax tables. Sales tax rates vary widely by jurisdiction, ranging from less than 1% to over 10%, and with wide variations, there’s no such thing as an out-of-the-box solution, as Burns points out. “Our job is to ensure that when the tax rates are created and sent out to our stores, we can categorically verify that the taxes are being charged correctly.”