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Interview: Executive Director Ellen O’Sullivan and Avalara’s Scott Peterson Discuss 2022 Tax Changes

Moore North America is dedicated to helping you thrive in a changing world – and businesses today need more help than ever to thrive. Compliance with ever-evolving economic nexus, marketplace facilitator and local sales tax laws are just a few of the complexities businesses face.  

Scott Peterson, Vice President of US Tax Policy at Avalara, is no stranger to tax legislation. He started his career as the principal tax analyst for the South Dakota legislature, writing tax laws. Peterson has dedicated his career to making sales tax compliance more streamlined. In his current role, he leads Avalara’s effort to be the first name in sales tax automation. 30,000+ customers choose Avalara for tax compliance tools scaled to their needs. Avalara also has solutions purpose-built for accounting service providers. The Avalara for Accountants compliance suite helps accounting professionals of all sizes grow their service offerings with sales tax prep and filing, transfer pricing, tax research, business license management and more. 

The Executive Director of Moore North America, Ellen O’Sullivan, recently sat down with Peterson to discuss key developments in business and tax compliance. To watch the full interview click the video above. To read the Avalara 2022 Tax Changes Report click here.

Interview summary: 

South Dakota v. Wayfair Inc. 

Despite two previous decisions ruling that states did not have the right to collect sales tax from out-of-state businesses, the Supreme Court changed course with its South Dakota v. Wayfair Inc. decision. This new ruling, decided in 2018, declared that states should have the right to collect sales tax from businesses based on the amount of sales they make inside that state. 

“The Wayfair decision has accentuated the differences that still exist [between states],” says Peterson, “and Louisiana is a great example of a state with greater than average complexity.” Each of Louisiana’s 64 parishes has the constitutional right to administer their own sales tax. Although they have made efforts in recent years to streamline sales tax filing, rates and rules still vary by jurisdiction. Alabama, Alaska, and Colorado have similar structures.  

Marketplace Facilitator Laws 

Marketplaces are companies that have created the capacity for other people to sell goods and services through them, frequently never physically owning the goods sold. “For 10 years, states have been trying to find the right connection that marketplaces would have with them that they could force marketplaces to collect [sales tax],” explains Peterson, “and the Wayfair decision gave them carte blanche – perfect legal authority – to deem marketplaces to be the seller.”  

Due to this change, marketplaces have all the rights and obligations that any other retailer in the state has: get a license, figure out what’s taxable and when to charge the local rates, file a return, and make a payment. 45 states have now adopted marketplace facilitator laws.  

Food Delivery 

Sales tax on food delivery businesses changed with the popularization of food delivery marketplaces like UberEats and DoorDash. For years, states ignored the fact that a local business might be delivering to areas outside of the jurisdiction that they were collecting sales tax. Since food delivery marketplaces were required to pay the local sales tax where they delivered, they began to question why they were required to pay this sales tax and their local competitors were not.  

“It created this massive reevaluation of how states had treated those transactions before,” says Peterson. “The Wayfair decision tied to the rapid evolution of the delivery business plus the pandemic created a near tax disaster for everybody inside that business – including the states.”  

Online Shopping 

Online retailers must navigate a web of complexity that simply doesn’t exist for brick-and-mortar businesses. “We’re watching six states this year that are making changes that impact the way we [at Avalara] do tax compliance for our customers. Any business that’s doing business in those states must keep track of the same thing,” Peterson explains.  

There is no question that sales tax complexity has made being a retailer today painful. While automation might be able to assist businesses today, great accounting advice is the most important tool businesses need to thrive in our changing world.  


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Article by Keri-Ann Moore