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Sales tax compliance in 2022: Changes you need to know
How does an edgy, Instagram-famous sunglass and apparel company manage exponential growth? By choosing the right partner to help them manage compliance.
When Chris Garcin’s friend, Chuck Mumford, came across a pair of military supply sunglasses eight years ago on a ski trip in Idaho, they knew they were onto something. Chris quickly set up a website and after selling 10,000 pairs of these military-style sunglasses, they launched a crowd-sourced campaign to increase production of the now infamous Pit Viper sunglasses. Now with sales in over 30 states and growing, Chris and team are relieved to have a sales tax compliance platform that provides convenience and peace of mind.
Like many other nationwide retailers, Pit Viper was directly affected by the 2018 South Dakota vs Wayfair Supreme Court ruling that determined states could set their own economic nexus thresholds. As a young and growing company, Pit Viper wasn’t sure how the ruling would affect their business — especially since the rules were unclear and each state was still deciding how they wanted to approach their new power to determine economic nexus.
As the pace of the company’s growth increased, the need for a strategy to manage their sales tax compliance became unavoidable.
Being a lean team, Neil Almy, the Chief Financial Officer, knew they needed to find a sales tax solution to help them not only calculate the right sales tax rate during checkout, but also collect all the transaction details for reporting and filing. After starting out with a different solution, Pit Viper eventually switched to TaxJar for its cost effectiveness, convenience, and customer support team. Now, they can focus more on continuing to grow their business and less on worrying about sales tax.
Fast growth = more sales tax responsibilities
The combination of the Wayfair ruling and the company’s fast growth made finding a sales tax solution top priority. Because Pit Viper was growing so quickly, they were reaching nexus in many new states, fast. Understanding the complexity of sales tax, the team knew this was not something they wanted to handle in-house. So the search for a sales tax solution began.
Chris said it all started with nexus: “We really just wanted to know where we had reached nexus. And how can we do this accurately and reliably, over and over again.”
They knew they needed something where automation was the key feature, along with a nexus tracking capability. Keeping these features in mind, their search led them to one particular solution that they believed fit the bill. But during the implementation process, Chris and Neil started to wonder if they had made the right choice.
Making the switch to TaxJar
As the integration progressed, Pit Viper started raising concerns about the sales tax partner they chose. “We were focused on running our business and finding a partner that could handle the taxes and take that off of our shoulders,” Neil said. “It seemed that [their initial solution] still put the onus on us to figure out absolutely everything that needed to be figured out. And in doing so, there were many balls dropped on their side. And that took more time and cost us more money in not only filings, but back filings.”
But they persevered. It was after Pit Viper was completely set up and integrated with the software tool that they met with a company representative to talk through some outstanding issues.
“I think after we got off that call, Neil and I talked, and we’re just like, this isn’t the right partner,” Chris said. “We need to find someone else that cares about our business, and will actually take this compliance issue that we have and help us figure it out and file taxes for us.”
With a better understanding of what a true partner looks like, the Pit Viper team evaluated a new slate of candidates to step in as their sales tax solution, which is when they found TaxJar. And, they’ve already seen the difference. “Although [ending one partnership and needing to start another] added a lot of time and frustration, I think we ended up in the right place,” Chris said. “And now we’re extremely happy with TaxJar.”
In addition to providing superior service quality, TaxJar was the lowest cost option for Pit Viper. “With all those back filings we ended up having to do,” Chris said, “Neil went through and laid out everything that we were going to end up being charged from [the initial solution]. Even given all the onboarding and everything that we needed to do to move solutions, it was still going to end up being cheaper in the long run to go with TaxJar.”
The TaxJar difference
After their previous frustrating onboarding and integration process, Pit Viper was much happier with the sales tax software implementation the second time around. Neil said, “I felt that the onboarding process was super easy.”
Having the right resources to support onboarding was key. Pit Viper appreciated having a designated account manager that walked them through the process. Their TaxJar representative explained what they could expect from onboarding, provided helpful videos, laid out tasks for the team, and provided an overall understanding of the TaxJar website portal. “I thought that was really useful,” Neil said, “and made it really easy to register and [do] onboarding [in] each state.”
Even after onboarding, the communication Pit Viper receives from TaxJar continues to make the sales tax process simpler. Here’s how it’s going in Neil’s own words:
“The emails are really straightforward and super helpful. It’s, ‘hey, this is what you missed, this is what we need from you’ and all the support that [TaxJar] has is super responsive and gives clear instruction of how to appropriately onboard a state, which I thought was super useful.”
Pit Viper also has an integration with Shopify, and is finding the reporting and filing of sales tax with TaxJar to be seamless.
The Pit Viper team is currently enrolled in TaxJar’s AutoFile in 30 states. The tools and resources TaxJar provides helps the team onboard new states as efficiently as possible. It’s a world away from when they started their sales tax journey, and goes to show the difference selecting the right partner can make for a growing company.
Do your homework and avoid choosing the wrong partner
When asked what advice Pit Viper would give other eCommerce companies searching for a sales tax solution, Chris and Neil were clear: “Personally, I’d say don’t bother trying to set up with a [competitor] and go directly to TaxJar. Just to do it once with the right partner instead of twice. Don’t pick the wrong partner first.”
In addition, the two had other advice to share: Do your homework and research first. “This is a big partner that you’re bringing on, it controls a lot of the cash that you have to spend on taxes, and find the right partner that works for you. And for us, due to convenience, support, and cost structure it was TaxJar.”
Personally, I'd say don't bother trying to set up with a [competitor] and go directly to TaxJar. Just to do it once with the right partner instead of twice. Don’t pick the wrong partner first.