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Vehicle telematics is also used to provide personal roadside assistance, keep tabs on parking locations, alert drivers to dangerous weather and road conditions, provide concierge-style ordering and reservation services, and even to deliver ecommerce orders to trunks via drones.
And that's just for the consumer sector. In the world of fleet management, vehicle telematics gets even more comprehensive with a seemingly never-ending array of operational, diagnostic, and tracking services to increase business productivity.
The consumer applications for automotive telematics are virtually limitless, and continue to expand along with technology advancements. And while this is an exciting area of high-growth potential, there's a much more immediate concern that should first be addressed: taxation.
The complexity of telematics taxation
Automotive telematics is growing at a rate that’s far outpacing state tax guidance. That means manufacturers and telematics service providers alike must proceed with caution to minimize potential communications taxation risks in an exceedingly complex industry.
As new innovations and offerings are rolled out, tax complexities will continue to increase. In this uncertain landscape, even one seemingly small oversight can lead to costly liabilities. This industry sells at large scale, and a massive tax penalty or class action lawsuit are both real possibilities. From resale certificates to consumer-facing verbiage used to describe offerings, there are many areas where a company could inadvertently open itself up to a complicated web of communications taxes and regulatory fees.
To future-proof automotive telematics services, there are a few critical things every provider should do:
Did you know? Avalara for Communications specializes in helping companies stay updated on the latest communications tax complexities. Learn more at avalara.com.