A Growing Challenge in Sales Tax Compliance
State and local governments collected approximately $137.7 billion in sales tax during the first quarter of 2022, a 17% increase from the $117.7 billion collected in the same quarter of 2021, according to the U.S. Census Bureau. This surge in sales tax revenue is a testament to the growing e-commerce industry and its impact on state and local governments’ finances.
However, with this growth comes a significant challenge: navigating complex sales tax laws and regulations across different jurisdictions. Rohit Bhadange, co-founder and CEO of Zamp, explains that every state, county, and city has its own unique tax jurisdiction, resulting in over 12,000 taxable districts that businesses must comply with.
The Supreme Court Decision that Sparked Change
The South Dakota v. Wayfair Supreme Court decision made in 2018 ruled that online sellers were required to register for a sales tax permit and then collect and remit sales tax to each jurisdiction. This decision led to the implementation of physical nexus laws, which require sellers to have a physical presence in the state through employees and warehouses, as well as economic nexus laws, which require sellers to exceed revenue and/or transaction thresholds within the state.
Sellers must comply with these laws when they meet the above criteria, making it increasingly difficult for businesses to navigate the complex sales tax landscape. This is where Zamp comes in – an end-to-end platform that manages the sales tax life cycle for e-commerce, enterprise resource planning, and marketplace platforms, including nexus monitoring, product categorization, rooftop-level tax calculation, registration, and filing.
The Challenge of Staying Compliant
Bhadange explained to TechCrunch that businesses using current software options can spend up to 500 hours per year to stay compliant with sales tax regulations. This is a significant burden for e-commerce businesses, which often have limited resources and personnel to dedicate to this task.
Zamp aims to alleviate this burden by providing an integrated solution that allows businesses to calculate and aggregate sales tax across multiple sales channels while monitoring and communicating when a seller needs to make a filing. By automating the sales tax compliance process, Zamp enables businesses to save time and reduce the risk of errors or non-compliance.
The Founding Team and Investors
Bhadange and his co-founders, Edward Lando and Clete Werts, have a deep understanding of the sales tax industry. Bhadange and Lando are both with pre-seed investment firm Pareto Holdings, while Werts and other team members were first employees of Stripe-acquired TaxJar and Vista-acquired Avalara, as well as former state auditors, sales tax experts, and research specialists.
Zamp joins a growing list of companies that are providing innovative solutions to the complex challenge of sales tax compliance. With its experienced founding team and integrated platform, Zamp is poised to make a significant impact in this space.
The Rise of Sales Tax Automation
The growth of e-commerce has created an unprecedented demand for sales tax automation solutions. As businesses continue to expand their online presence, they must navigate the increasingly complex web of state and local sales tax laws.
Zamp’s end-to-end platform is designed to meet this growing need by providing a comprehensive solution that streamlines the sales tax compliance process. By automating tasks such as nexus monitoring, product categorization, and rooftop-level tax calculation, Zamp enables businesses to save time and reduce the risk of errors or non-compliance.
Conclusion
The sales tax landscape is becoming increasingly complex, with over 12,000 taxable districts across the United States. E-commerce businesses must navigate this complex web of laws and regulations to remain compliant, but the burden can be significant.
Zamp’s end-to-end platform provides a comprehensive solution to this challenge by automating the sales tax compliance process. With its experienced founding team and integrated platform, Zamp is poised to make a significant impact in this space, providing businesses with a much-needed solution to the growing challenge of sales tax compliance.
