Sales Tax Goes Mobile

How mobile devices and geo-location will revolutionize commerce taxation.


The use of mobile devices to sell goods and services is growing exponentially. By 2016, mobile commerce (mcommerce) sales could reach a staggering $31 billion. But as portable, web-enabled devices and smart phones continue to drive the rapid growth of mcommerce, mobile businesses face challenges in incorporating accurate sales and use tax collection as part of each transaction.

While the term mcommerce includes a wide range of mobile transactions, two categories that are particularly impacted by sales taxation are mobile merchants, such as exhibitors at special events, and field enterprises, such as businesses working on oil rigs and forestry projects. Solving the tax collection challenge for these organizations requires a way to capture the precise location of where sales transactions occur. This is where geospatial technology makes a difference. Using Global Positioning System (GPS) coordinates provided by a location-aware mobile phone or device, in conjunction with an automated sales tax solution using geospatial technology, a business can identify the correct tax jurisdiction and applicable tax rates without adding any complexity to the end user experience.

Isn’t It Simpler Than That?

There is a bewildering array of overlapping sales tax jurisdictions and complex filing requirements. Not all taxing jurisdictions conform to simple municipal boundaries: they can extend to remote areas lacking physical addresses or split up half of a city block into its own special tax region. Businesses that are unable to attend to these sales and use tax obstacles and ensure accurate sales tax application to transactions face increased audit exposure, stiff penalties, dissatisfied customers, accounting adjustments and bad publicity.

All businesses must be proactive in understanding the monthly, quarterly, semi-annually and annually changing tax rules and laws to ensure tax tables remain current for each product, service and exemption certificate. Mobile merchants and field enterprises face growing challenges as their place of business is not static like a brick and mortar location and neither are their customers. Tax calculations can be a moving target in mcommerce. Merchants must be able to apply accurate information to each transaction in order to avoid being liable for penalties and interest due to failure to collect and remit the correct sales taxes due to the correct jurisdiction.

Mobile Means On The Go

Technology sales tax solutions delivering geo-location information means mobile merchants and field enterprises can automatically correlate the location data with the appropriate tax information. With the right automated sales tax solution, rules-based results are combined with the sales tax rates for each applicable taxing jurisdiction in order to complete the transaction—on the spot. Mcommerce means “on-the-go” and using geo-location for sales and use tax results in precise tax calculations—at any location.

With geospatial technology, field enterprise personnel can travel to a construction site or remote location where roads do not exist and accurately apply tax information on products delivered or services provided. Using GPS coordinates to calculate taxes can also accelerate the billing cycle. For example, service providers such as plumbers, cable installers and HVAC repair technicians can process their invoices right at the point and time of delivery, rather than waiting to send the invoice days later after calculating the tax. When payments are received promptly, businesses have a more consistent revenue flow, rather than waiting 30 or 60 days for payment.

A geospatial sales tax solution using latitude and longitude coordinates enables mobile merchants and field enterprises to roam freely wherever business opportunities take them.

Sales Tax On The Go—What Solution Works?

With a variety of tax solutions available, it’s important for businesses engaged in mcommerce to have a solution that provides the services that will help their business, strengthen customer relations and ensure compliance. Below are three important considerations for businesses looking for a mcommerce sales and use tax solution:

Does the solution provide essential mcommerce sales tax services?

Automating sales tax calculations, exemption certificate management, filing and remittance helps to streamline and accelerate mcommerce initiatives at organizations of all sizes. An ideal solution provides three key functions for simplifying mcommerce sales and use tax challenges:

Real time tax calculation – An mcommerce tax solution should calculate actual tax rates in real time from any browser-enabled device using an easily integrated, dynamic tax decision engine based on geo-spatial coordinates. The business benefits to mcommerce include real-time transaction processing anywhere, anytime, increasing the mobile commerce reach while improving sales tax compliance with relative ease. Integration into the corporate billing system enables the ability to incorporate and deliver an end-to-end sales quality process.

Exemption certificate management – Organizations selling wholesale at trade shows or expos must manage customer exemption certificates to prove the non-tax status of customers or transactions. A manually managed process of handling paper copies of certificates encumbers the sales process and increases the risk of lost certificates during travel, as well as the inability to find and produce a certificate or apply it to future transactions in a mobile environment. Being unable to associate a regular customer’s certificate to future mobile transactions or collect digital certificates that can be easily sent to a virtual database causes poor customer service and slows business. A comprehensive mcommerce sales tax solution enables digital exemption certificate management to provide easy online collection, verification, and transaction, as well as customer association.

Filing tax returns – Sales tax compliance is only complete once accurate sales and use tax returns have been filed and the sales and use tax liability remitted. Going mobile opens doors to your capability to automate the whole sales and use tax process by connecting point-of-sale to back office to filing and remittance. Using a solution that pulls data from your transactions and applies them to the proper forms for each taxing jurisdiction while managing filing schedules for on-time remittance reduces the workload and improves the accuracy of your mobile commerce business compliance.

Does the solution seamlessly integrate with accounting software?

Even though you are a mobile commerce business, you still rely on a back-end financial application to manage your income, payables and tax. Using a geo-location solution for sales tax that is web-based doesn’t have to restrict that information to one application. Look for a solution that empowers your business to flow information from your mobile application to your back-end financial application with seamless, transparent integration. Mobile commerce is about being on the go and ensuring information is accurate to reduce liability; the fewer hands touching your transaction information helps ensure integrity of data.

Does the solution offer flexible options for mcommerce?

Mcommerce vendors come in all shapes and sizes—from the small town plumber who manages a couple of invoices a day to the retailer selling thousands of dollars of merchandise a day. Meeting the needs of companies of all sizes engaged in mcommerce is vital. The ideal solution offers a variety of service plans so mobile merchants of all sizes can realize the most value from the solution.

So when looking for a provider of an automated mcommerce compatible sales tax solution, ask yourself: Is the solution flexible and scalable? Can it grow with your business? Is it easy to expand and continue to deliver sales tax information? Does it integrate into your back-office software? Does it deliver sales tax rates and calculations based on geo-location using the proper rules of each jurisdiction?

By combining a geo-location engine that correlates tracking data from mobile devices with appropriate tax rules, the guesswork is removed from sales and use tax calculations for mcommerce transactions. Geospatial technology used within a complete sales tax solution, simplifies end-to-end sales tax compliance with revolutionary, location-based mcommerce solutions.

Mcommerce means simplicity and ease—Your sales tax solution should deliver the same

The mcommerce tax environment is rapidly changing. Not only is collecting taxes on all mcommerce transactions necessary, but accurately calculating those taxes is just as important. With over 11,000 taxing jurisdictions in the U.S. and Canada alone, mobile merchants and field enterprises face a daunting array of overlapping taxes, rules and zone-based exemptions for every sales transaction. In addition, remote locations may not have a physical address, but this does not exempt a business from charging the appropriate tax and remitting the funds to the administrative agency. Manually populating tax tables provides little or no value, burdening the business with errors and the risk of audit.

Solving the challenge requires using the technology available to capture the precise location of where sales transactions occur and matching this information with tax jurisdictions, accurately calculating the tax, then recording and remitting the information for proof of tax compliance. Whether a mobile business needs assistance with tax calculations, filing or exemption management services, a flexible solution can be tailored to fit any requirements. A geospatial technology-based solution solves the mcommerce tax challenge and simplifies the entire sales tax lifecycle. With a geospatial solution, businesses engaging in mcommerce gain peace of mind through an accurate, easy to use application that reduces sales tax audit exposure—allowing mobile merchants and field enterprises to focus on growing their mcommerce revenue.

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