The hidden tax cost of skipping Apple’s in-app purchases

Until the recent ruling, Apple acted as the merchant of record. Apple handled payments, tax collection, and compliance for in-app transactions. For businesses, this meant one less thing to worry about. But that convenience came at a cost: 27% of each sale.

The new ruling allows companies to integrate alternative payment methods, like web-based checkouts, and keep more revenue per transaction. Companies can reinvest in product development, user acquisition, or expansion. But by removing Apple from the process, they also remove the tax safety net Apple provided. Now, businesses are on their own when it comes to handling U.S. sales tax.

If your app now processes payments directly from U.S. users, regardless of where your company is based, you may be responsible for collecting and remitting sales tax in multiple states. That means:

• Determining taxability of digital goods or services by state
• Calculating the correct rates at the point of sale
• Registering and filing in each jurisdiction where you exceed economic thresholds

Without the proper setup, companies run the risk of audits, penalties, or forced back payments. And these consequences can snowball fast, especially for high-volume transaction environments.

The Epic v. Apple ruling applies only to the U.S. However, other countries are already following suit. In March 2025, the European Commission adopted new measures under the Digital Markets Act for Apple to comply with. Your payment infrastructure needs to be tax-compliant and scalable across regions.

Many companies will choose to use third-party payment providers. These are secure and offer fast integration — but they don’t calculate taxes. That’s your responsibility.

Consider this: A business with 500,000+ transactions per year could easily face exposure across 20–30 states. Each state has its own rules, rates, and filing schedules. Managing this manually is virtually impossible.

This is where Avalara can help. Our platform integrates with popular payment gateways and custom-built systems, offering:

• Real-time tax calculation for digital products
• Dynamic rate updates across jurisdictions
• Automated filing and remittance
• Economic nexus tracking and alerts

Avalara adapts to your payment environment — whether you bring payments in-house or go through a gateway. With over 1,400 prebuilt integrations, our tools plug into your stack quickly and scale as your business grows.

We support companies of all sizes, from startups to global gaming leaders. Our cloud-based compliance engine ensures your transactions are taxed correctly, every time, in every state.

The ruling gives app developers more freedom — and more responsibility. While the upside is clear, the hidden tax costs of ignoring compliance are just as real.

Download our Five-step guide to U.S. sales tax compliance to learn how to manage compliance with confidence.