Why Your Product Classification Could Be Costing You Thousands 🚨

Expanding your business, but sales tax keeping you up at night? Time for peace of mind. ✅

Dive into this month’s updates and discover how the right approach to accuracy can transform complex tax compliance into a “set it and forget it” advantage. Plus, we’ll also answer a question from you.

Your tax accuracy insights await below. 👇

SALES TAX NEWS

1️⃣ Illinois is offering remote sellers a significant break with its new Amnesty Program, which covers sales from January 2021 through June 2026. Qualifying businesses will be allowed to report and remit Retailers’ Occupation Tax (ROT) at a simplified single rate (9% for non-food, 1.75% for food) instead of the normal expected state and local rates. The amnesty filing period runs from August 1 to October 31, 2026.

2️⃣ The Streamlined Sales Tax Governing Board just clarified how tariffs should be taxed in SST states, with different rules depending on who's importing. When importers resell products, the tariff costs passed on to customers are part of the taxable sales price. However, when consumers import directly and pay the tariffs themselves, those tariff costs aren't subject to sales tax. The guidance applies broadly, though states may have specific variations.

3️⃣ California eliminated sales tax bad debt deductions for lenders and retailer affiliates starting January 1, 2025, under Senate Bill 167. Lenders have one last chance to claim deductions for accounts written off before 2025, but must file within three years of the write-off date. They must also report any recoveries of previously claimed bad debts, either actual or estimated using historical data.

4️⃣ New Alabama legislation separates state and local sales tax exemptions, requiring municipalities to formally adopt exemptions through resolutions and notify the state by July 1 for September 1 implementation. Existing local exemptions that don't meet the new standards will expire September 1, 2025, unless localities comply with the notification requirements by July 1, 2025.

5️⃣ A Colorado State Appeals Court ruled that Netflix streaming services qualify as "tangible personal property" and are subject to sales tax, overturning a lower court decision. The court relied on a 1933 definition of "corporeal property," which includes anything perceptible to the senses, not just things that can be touched, in applying Colorado's 1935 sales tax law to modern digital services. This ruling reinforces that the delivery method doesn't impact taxability and highlights the importance of understanding how tax authorities define key terms.

6️⃣ Washington State is offering a temporary Voluntary Disclosure Program (VDP) for businesses with unreported investment income subject to Business and Occupation (B&O) tax, running in two ten-month phases from July 2025 to April 30, 2026, and July 1, 2026 to April 30, 2027. The VDP will enable qualifying businesses to report revenue without incurring accrued penalties. Companies can report back taxes without penalties or interest for up to four years, though the lookback period is unlimited if they collected but didn’t remit sales tax.

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THE EXPERT ADVANTAGE: HOW TAX ACCURACY BECOMES YOUR SECRET WEAPON 🚀

Want to scale your business across multiple states, but worried about sales tax compliance? You're not alone. 

The difference between confident expansion and expensive tax mistakes often comes down to understanding the fundamentals of accurate product classification and jurisdiction mapping.

But what does it really mean to have tax compliance that actually supports growth? 

True tax accuracy isn't just about calculating rates—it's about: 

•  Expert-driven product classification 

• Geographic precision that accounts for the "Swiss cheese" patterns of overlapping tax jurisdictions 

• Systems that suggest genuine compliance readiness, not just the ability to collect taxes

As a growing business, DIY tax compliance can quickly transform promising expansion into an operational nightmare. 

You're not just facing incorrect rates, but the hidden complexities of product categorization, boundary mapping, and regulatory updates that most "tax solutions" never mention. While barbecue sauce is straightforward to classify, your SaaS product presents multiple classification possibilities—each carrying different implications across 47 jurisdictions.

The biggest tax compliance myth? That it's simple and automated. 

Successful tax accuracy is actually a complex interplay of legal expertise and technology, with regulations constantly changing. What worked yesterday might not work tomorrow, and the systems that support a single-state business won't sustain multi-state operations.

The stakes are high. Some businesses discover classification errors only during state audits, facing penalties and resource drains that pull focus from actual business growth.

Ready to scale your business with the confidence that comes from accurate tax compliance? Learn how our expert-driven tax accuracy can take sales tax off your plate for good here →

PARTNER SPOTLIGHT: FULL SEND

Full Send is a specialized accounting, finance, and data consulting firm that transforms how small businesses manage their financial operations for sustainable growth. Their team of accounting and data experts provides comprehensive outsourced accounting, fractional CFO services, and strategic data consulting to give business owners the financial clarity and operational insights they need to scale confidently and efficiently.

Ready to unlock your business's growth potential? Get in touch or reply to this email for a direct intro to their team.

YOUR QUESTIONS, ANSWERED!

Manny (Question): How often should I file my returns?

A: Most states will assign you a monthly, quarterly, or annual filing frequency. The more sales volume you have in a state, the more often that state will want you to file a sales tax return.

Thanks for reading along.

I’ll be back next month with more sales tax shenanigans.

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Until next time’s 🗑 …

Rohit & the Zamp team