The Sales Tax People Podcast
Sales tax has been breaking businesses since before the internet existed. The Sales Tax People have been fixing that since 1992.
With 35,000+ projects completed, $100.5 million in sales tax saved, and experience across 13,000+ states and jurisdictions, we've seen it all — and we talk about it every week.
The Sales Tax People Podcast is your front-row seat to real conversations with the people who live and breathe sales tax. Danny Wright, Jason Parr, and Paul Johnson go roundtable on new legislation, industry know-how, and the kind of stories that only come from three decades in the trenches. Plus, we sit down with business owners and entrepreneurs to hear their journeys — and the moments where getting sales tax right changed everything.
No textbooks. No panic. Just the people who've done this 35,000 times, breaking it down for you.
The Sales Tax People Podcast
Is Your Sales Tax Software ACTUALLY Working?
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Or Has It Been Filing $0 Returns Without You Knowing?
In this episode of The Sales Tax People Podcast, Jason Parr, Danny Wright, and Paul J break down exactly why "set it and forget it" is the most dangerous approach to sales tax compliance management. You'll learn how broken software connectors, misconfigured tax codes, and a lack of ongoing oversight can silently compound into massive liabilities — and why even the best automation tools require expert human collaboration to keep your business protected.
📚 Related Resources:
→ Limitations of Sales Tax Software: https://sales.tax/expert-articles/limitations-of-sales-tax-software/
→ Common Sales Tax Mistakes: https://sales.tax/expert-articles/sales-tax-mistakes/
→ Best Sales Tax Software: https://sales.tax/expert-articles/best-sales-tax-software/
→ Power of Outsourced Sales Tax Compliance: https://sales.tax/expert-articles/power-of-outsourced-sales-tax-compliance/
→ Common Sales Tax Audit Mistakes: https://sales.tax/expert-articles/common-sales-tax-audit-mistakes/
→ What Is Economic Nexus?: https://sales.tax/expert-articles/what-is-economic-nexus/
→ Sales Tax for SaaS Companies: https://sales.tax/expert-articles/sales-tax-for-saas-companies/
🎧 Related Episode — Sales Tax Peace of Mind: https://www.youtube.com/watch?v=Al1Mr8Or-84&list=PL7A8ewX5HdTLMsdEmFrIotm3IqPQn8yKO
📖 See how Coburn's Supply Company reduced a $1M+ tax liability to just over $100K: https://sales.tax/client-stories/coburns/
📖 Learn how Acima achieved compliance across 240+ jurisdictions: https://sales.tax/client-stories/acima/
– Introduction & studio update
SPEAKER_04You're listening to the Sales Tax People Podcast.
SPEAKER_00On today's episode, we're talking about what happens when your sales tax software breaks when no one's watching. Zero dollar returns filings for months, connectors between your e-commerce platform and your sales tax tool just silently disconnecting. And by the time somebody catches it, you're staring down back taxes, penalties, and audit exposure across multiple states. And then we get into what actually works. Why the best approach isn't software or human expertise, it's both. Layering real oversight on top of automation so that when something breaks, when a law changes, when you cross an excess threshold you didn't even know about, somebody's actually paying attention. Enjoy.
SPEAKER_03Something came up uh recently, as you know, every almost every time we have a conversation, the three of us, uh, I'd say on a lot of our podcast episodes, one of the uh par-isms that has become a sales tax people ism is around the concept of set and forget it. Right. There's a couple different ways we say it say it, but generally it's if you set and forget it, you will probably regret it. Um, or you will regret it, right? Sometimes it's more of a bold statement of as an absolute, you will you will regret it at some point if you set it and forget it. Um I want to talk a little bit today about why that is. Like, what are some of the specific reasons that we encourage people to not set it and forget it? Um, what are some of the specific issues that we see when someone does set it and forget it?
– The "set it and forget it" problem defined
SPEAKER_03And you know what? I'm just gonna roll with this first because I just finished recording actually a podcast in the studio with one of our clients that happens to be here in St. George. And I was able to have them here, and we had a discussion and really cool people, like super cool story that it'll be uh uh release as an episode here soon, and and the company is beautiful brows and lashes. Um, they also have the domain lashliftstore.com. And when we started working with them a few years ago, it was absolutely the biggest pain point that they had um in around set and forget it, right? They had they had connected a sales tax software um to their Shopify store. And I mentioned actually in our conversation we just had today, sometimes it's worse for companies once they start asking questions, once they have an advisor like this company did that was uh a C they are a CPA firm and they're super sharp and they were smart enough to start asking questions around you know sales tax and what needs to be done for this company, and then connected them with uh the sales tax software. And one of the biggest issues that companies face is exactly what this company faced. And there's actually two that I'll pinpoint. One is that there just was not support, right? Meaning they start getting registered in in states, um, they start getting uh set up with returns in these states and and and those begin to be filed. And the problem is that you don't have someone seeing all the details or even like a high-level like dashboard view of some of the most important details. So you don't have the oversight there of first of all seeing if there are things are being done correctly, and you don't have the
– Real client story: Shopify connector breaks, zero-dollar filings go unnoticed
SPEAKER_03support there when things are not done correctly or things break, or there's issues, or there's errors, and they don't have the support around that. And then for this particular company, when the software piece, the technology itself, disconnected, and what happened specifically is the connector to Shopify broke, and so then the data was not flowing from Shopify into the software dashboard. So then when returns were being filed, there wasn't anyone filing the returns that had enough awareness or enough focus on the fact that, you know, you would you have a company that went from filing and reporting tax to then zero dollars across the board on all their returns, which was about 13 or so states. And it's like, oh crap, now there's zero dollar returns. And there's no one like looking at it with again enough awareness and enough, you could say, intention to ask start asking questions of like, hold on, why isn't there any tax? Why isn't there any revenue? So the two, you know, summarizing that, the two big things. They're just not support, there aren't the people there asking questions when things break or when uh you know things are brought up with the state or they're not brought up. And then the technology piece, you gotta make sure that it is working properly.
SPEAKER_02Yeah, it's a hundred percent. One of the one of the biggest situations you have on set it and forget it is um errors aren't necessarily exposed month to month, right? If there's no oversight. So to your point, one item is oversight, visibility into what the system is doing, the decisions that it's making. Uh another issue would be original setup. Right? If you're gonna set and forget something, you better hope it was set up right in the beginning. So it's one thing for it to be set up right. To your point, you could be collecting tax and not remitting it. You could be collecting tax in a jurisdiction where you're not registered. You could be registered but not collecting tax when you should be. You could be registered collecting tax and still not remitting it based on the reporting and the information that you get out. Really significant without oversight. But I think um ultimately if you did set it up right, you
– Why errors compound without oversight
SPEAKER_02you are registered in the right jurisdictions, you're collecting tax on the right items at the right rate in those jurisdictions based on the system. The other things that can come up is just uh any change. It's gonna be rare that you find someone in the market who hasn't seen something change in the market in the last month, the last quarter, the last year. So if there's no review of your set it arrangement, then um nobody's gonna go back and make any changes, then it can become um well, what for lack of a better term, superseded very quickly, right? Your original setup can become obsolete because you've added new products, so you have new SKUs, um, which aren't being mapped properly. Um maybe you've dropped SKUs. Um maybe you've entered additional jurisdictions. Maybe uh your system is set up to track when you're approaching economic nexus in a specific jurisdiction, but uh you're not aware of it. And so what can happen is any one of these issues can go on and on for months, for years.
– Original setup accuracy vs. ongoing changes
SPEAKER_02Um if if there's no oversight and identification of any errors in the current setup, you you may be doing something wrong, either over-collecting, over-remitting, under collecting, under-remitting across the board. And that that's gonna have implications or ramifications for your customers, um, for the state, and likely result in penalties and interest or additional tax out of your pocket. It's it's worst when you are registered, you're not collecting, but you have a responsibility to collect. That's that's the worst case scenario. But just like it is being registered, collecting tax, over-collecting tax because of the mapping of the tax codes and the taxability that's being applied. Um, because you're gonna have some potentially mad customers. A lot of people used to say, just overcollect, just collect 10% on everything, and we're covered. Well, then um there there started being class action lawsuits by customers for being overtaxed in certain jurisdictions. So the key to sales tax is getting it right, obviously. That's what's going to control um or mitigate risks associated with being an agent for the state. And more and more states can require you to be an agent for them and collect their tax. And so figuring that out takes more than just automation. There's incredible automation tools, but along with it comes proper oversight and expert use of those. My favorite analogy is
– Over-collecting tax and class action lawsuit risks
SPEAKER_02AI. I mean, you could have AI write you a paper for your class. Don't do that, young ones, don't do that. But you could, and you could not read it, right? You could set the parameters, tell it what you need, and say, give it to me. Listen, I'm so busy as a young person on social media that I don't even have time to read what AI wrote. I'm just gonna turn it in. And when I turn it in, I have no idea what was in it. So if I'm questioned on that, or even worse, if it's outrageous, if AI was hallucinating while it was writing on my subject material, um I'm gonna get a bad grade. I'm likely gonna get a terrible grade, in fact. It's just the oversight. It's just someone being involved in reviewing what's happening, reviewing the settings, reviewing the transactions, reviewing the result, and reviewing the output. It's just you you need that um expertise on top of any automation that you've put in place. It can be a good thing.
SPEAKER_03The different variables and aspects of the setup in determining like how you need
– AI analogy: why automation still needs human review
SPEAKER_03to be set up with the state, determining how that relates to your setup as a company, and just the overall, like what does compliance mean for you? And then there's the setup of the software itself and making sure you have the right tax codes assigned to your SKUs or your items. And that's a big one that I see almost daily. I could point to a new conversation or a conversation with, say, like a new prospect that's brought to us where they're you know using Avalera. And I did air quotes because they sign a contract. Um, and this isn't a bash on Avalera, right? It's it's it's very much tied to set and forget it. And what I'm alluding to is these are companies that very much needed Avalera, and they need the software and they need the automation that Avalera provides. The problem is
– Software setup challenges: tax codes, SKUs, and default settings
SPEAKER_03no one actually ever set up Avalera, right? The technical side, and it's not so much the technical side of the setup, it's more so specific to the sales tax piece. And again, making sure that you have tax codes assigned to your different categories and your different products that will actually generate the correct taxability, right? And the correct tax rates. Because so often I see someone's Avalara account where they haven't even touched that, which means they haven't even pulled in any of their items into the Avalara dashboard. And it's like, what are you paying for? Right. It's it's literally worthless at that point because all it's gonna do is just tax. Well, I shouldn't say it's worthless because it's then going to default to just taxing it everywhere. And at least at that point, you're getting the you know, correct tax rates for the most part, right, based on your customer's address. So, which, you know, highlighting those two points of just how the software operates and what it actually is, you know, where it's most valuable is those two things. One is the taxability. It's going to determine, you know, based on the way you set up, when it is set up correctly, it's going to either tax it or exempt it, or even tax it as at a reduced rate. And then when that's set up correctly and you do have products or services that are taxable for your customers, the second piece, of course, is then charging the correct rate.
SPEAKER_02100%.
SPEAKER_01It's interesting when you when you talk about setting up the products and the services, how you want to get that right. I mean, that's super, super crucial and important. One of the uh recent problems that I've run into with a current client is helping them understand, hey, the tax you collected or what you call tax collected actually wasn't tax, it was a processing fee. But how it's put on the invoice is it's marked as a taxes and fees on the invoice. And so what they're doing is they're in Indiana, for example, instead of charging the flat 7%, they're now charging 9%. And it's just being collected and then it's being remitted. But in this specific instance, they're not even certain that it all got remitted. So when you talk about this, this whole having people involved, whether it's internal people, external experts and consulting firms or whatever it may be, a software company, whatever it may be, you've got to have people involved that understand what's going into it. To Parr's point, if you're just gonna ask AI to write you a letter or a
– Signing up for Avalara but never completing the setup
SPEAKER_01paper and then you're gonna turn that in, oh, bless it. But if you get somebody who prompts AI with the proper things, and then they could help correct grammar errors and different things, and there's a lot of value there, but in that particular instance with this client, it's yeah, the the the sales tax rate is 7%, but what you're charging is nine percent. Yeah, and then and nobody pays attention to it for the last two years, and then they end up over-emitting tax or end up in a in a heap of a mess.
SPEAKER_03Yeah, if that company were to be audited, there'd be some some trouble there. And that's a great point to bring up of how often the these sales tax processes and uh call it like sales tax consulting and and doing some research informs the way a company even like sells or invoices you know their different products and services, because it can absolutely affect uh taxability. It can affect you know how an auditor would look at it, right? And ultimately affect, you know, both whether or not your your customers are overpaying tax, which we never want to do to our customers, and then it can affect, you know, if you're in some cases, unfortunately, you know, we run into companies that are under undercollecting. Right. And yeah, it's just it would be a mess in an audit and it would be financially painful.
SPEAKER_01Yeah. It reminds me of a of a current client, it is a con uh construction contractor. They're uh uh contractor based in Arizona, and as contractors, you're you're responsible and liable to pay tax certain goods and materials um that you use in the construction or in the fulfillment of what you're doing, whether that be building
– How invoicing and labeling directly impact taxability
SPEAKER_01a house or moving dirt or whatever it may be. As a con as a contractor, uh you have to understand both on the purchase side is what I'm buying subject to sales tax to me. Do I have to self-assess or emit use tax on it? Do I have to pay sales tax to the vendor that I'm purchasing it from? Or can I purchase it for resale and collect the sales tax from the customer? And at what rate it's due and at what amount it's taxable? I mean, it's just completely
– Contractor tax complexity: Arizona vs. Texas
SPEAKER_01different. And when you move over to Texas, for example, where Jason is, it's like now you're dealing with completely different legislation, how contractors are treated, and whether they're retailers or consumers, and so regardless of the industry, whether you're in hospitality, you're in a service industry, you're an e-commerce company, you're a contractor, you're maybe you're a cleaning company, you're in the service professional services industry, maybe you're in a consulting space like we are. It's so, so important as you're selling these products and services to understand whether you're responsible to collect tax, whether you're responsible to pay tax, and whether or not you're responsible and liable uh to collect it and to remit it to the jurisdictions which it's due.
SPEAKER_02So it's hard to know all that. It truly is. Even as experts in the field, having been involved for 30 years, we we don't know. You you could you can't just name a list of states and issues or laws or whatever, and we're like, yeah, this one, this one, this one, this one. Yeah, you you can't know it all, which is why we say that um these automation solutions are key, right? Right. They're they're collecting tax in the right place at the right rate. It's brilliant, but there's a setup involved. So you don't have to know, but you but but the setup is important. Sometimes uh a client will reach out and they need a deep dive on some tax research, could be a specific issue, whatever the case may be. And uh, and then they want that issue across multiple states, and we're like, you know, we could spend $30,000 doing a deep dive research project. The problem is um it we it would be good for you on the day you receive it. Yeah, it's super valuable today. Because the laws change, situations change, it fact patterns change, um, and so you spend a lot of money
– Why even experts can't know every state's rules
SPEAKER_02to get the right answer on a Tuesday last week. Um, but the answers actually could be different Tuesday this week. Yeah, that's a real problem. The automation solutions, the research is is uh baked in. So, and when there are changes, uh the the taxability within those systems change, which which is great. And the rates are rooftop, right? You can't get more accurate than the rate sitting on top of your rooftop. I'm surprised that they're published on rooftops the way they are, but people are able to get rooftop rates on top of your house right now. You have no idea. Look at those rates up there on top of your house right now. There is a rate that's being published. Your rooftop rate. It's incredible.
SPEAKER_01In some instances, rooftops may have two rates. Easy now. Easy now. Careful.
SPEAKER_02That's confusing.
SPEAKER_03You should check that before you buy your next house.
SPEAKER_02But the point here is the day you set up your SKUs and your taxability codes, that day it's accurate. But a week from now, a month from now, when you've added more products, more services, when things have changed within the organization.
SPEAKER_01When Washington decides to change its mind on what's taxable. Oh no, now
– How automation handles rate and taxability changes
SPEAKER_01we're gonna tax these services. Oh, oh, you are now, okay.
SPEAKER_02That setup that you made that you said, oh, peace of mind. I'm just gonna forget about this. That setup was good on day one. That setup may not be good on day four hundred and twelve or day eighty-two. So it just requires uh some oversight. Now, we say it all the time. Uh there's a motto in relation to Montana. Do you guys know the Montana motto? The last best place. That's the motto. That was the last state
– "Rooftop rates" explained
SPEAKER_02in 50 states that I visited. Um, my my son and daughter-in-law took my wife and I on a little tour of the west side of Montana, where he spent quite a bit of time in his younger years. And um, it was really fun. But what was really cool about it was it was the last state that I visited, and their motto is the last best place. Um super cool. No, why do I bring that up? That is a great question. You you know, you may ask You led me down this
– Why your day-one setup becomes obsolete
SPEAKER_02path. Why do you bring that up? Do you ask that? Parr, why why do you bring this up, bro? Why, why, why? Listen, we don't want to be your last best opinion. We want to be your first, second opinion. So when it comes to your setup and your situation, just think Montana, think the sales tax people. Uh the last best place. I like that motto for the sales tax people because once you land here, you're likely to stay here. Um, but also we want you to be the first. We we want to be your first second opinion.
SPEAKER_03One of the things about how we operate too, even when even if you think we're gonna be the last best opinion that you get, we we don't allow that to happen internally because of the collaboration. Um, I've been thinking multiple. Multiple times uh uh with different during during this episode, during this conversation, right, as we've talked about some of these things, part of what makes
– "We want to be your first second opinion"
SPEAKER_03the approach with you know, see these service-based companies like ours nowadays that are better than ever is it's it's a fractional approach where you're more integrated than ever with the team, right? Or the companies and clients that you're serving, that we're serving in particular. And when you have a team that's been formed over at this point three plus decades with us, it's constant collaboration to where there's constant opinions and ideas and expertise and experience being brought to the table, to where, like, even as something, you know, sometimes seemingly simple conversations that we're having around Nexus and taxability with our clients, like it's a constant with us to say, hey, Paul, I know you're busy, but you know, here's this, you know, spreadsheet, right, with information. What are your thoughts on these particular points? And we collaborate and we learn and we grow. And it's a constant, you know, second and third and fourth opinion that's being brought to the table. So it's it's never a final opinion when it comes to working with a team like ours. Yeah. Shameless plug for the sales tax people. There you go. That's a good call out. It's a good call.
SPEAKER_01And it's it's that way because, in my opinion, there's there's, from my perspective, there's multiple ways in which you can view or take a position on a specific item that may be a little bit gray. I mean, it's not always black and white. Landscaping services are subject to tax here, they're not subject to tax here. Sure, that's black and white. When I sell a microphone, it's gonna be subject to tax. That's black and white. But when I provide a service, well, is it a data processing service? Is it an information service? Is it a software as a service? Is it a digital subscription? What exactly is it that we're talking about? And so from a business perspective, you can take the position that, hey, what I'm offering meets this definition per our interpretation and how we apply that. Under audit, the state may come in and take a completely different position. And then that's when you go back and forth. And depending on how much back and forth, you know, maybe it goes up to a hearing, maybe it goes all the way up to the Supreme Court. Uh South Dakota felt like Wayfair established economic nexus, and even though that wasn't a thing, well, I'm gonna take you all the
– The power of fractional, collaborative advisory teams
SPEAKER_01way to court. So you pay a lot of money and legal fees to do that. But under audit, you have to understand that a state may take a different position. And so now you're just hedging your bets, right? You're playing what I call audit roulette, you're spinning that wheel, I'm gonna put it all on black. And here's my argument, and here's how I'm gonna defend that. And so when you collaborate on what the legislation says on the taxability of our product or service that we're providing in the state, all of the key decision makers should be and ought to be aligned on how it's how it's taxed or what their position is on how it's treated and what definitions it falls under. And so, yes, landscaping services may be subject to tax, but what if you were to tweak that and instead of providing landscaping services, now you're providing design services for landscape. Well, are we now talking about landscape or are we talking about consulting and design services? And so truly understanding that and then collaborating, okay, what's the pros, what's the cons if we take this position over this position? And then how material is it? Well, if we're doing $10 million and we get it wrong, we want to make sure that we get it right. So anyway, there's lots of lots of ways to go about it, but until you have a collaborative decision, you're not gonna be able to get the peace of mind, in my opinion. From my perspective, you're not gonna be able to get the peace of mind on how to manage it, how to deal with it, how to address it and set it up, and then to keep tracking and monitoring it as you're as you continue.
SPEAKER_02Yeah, that's a great call out. A great call out. A quick example, uh, so I don't belabor the example, um, is New York. Um New York taxes security services. So if you order a security guard or have other security services, um, physical security services, then you owe tax on that. It seems like an odd one to tax, but uh, real quick, the IT industry got caught up in this in the sense that cybersecurity uh was deemed a security service by New York. And the the way that was determined was in the audit of an IT managed services company. It's not like it was published so that you could recognize that or understand that. Um it was an interpretation from an audit scenario, and so you start to argue back and forth, it it goes to court, and uh ultimately it's just uh definition, right? You're providing what are you doing? You're helping uh make sure the network is secure. Yes. Okay, security service. We would like the millions of dollars in uncollected tax out of your pocket with penalty
– New York's cybersecurity-as-a-security-service ruling
SPEAKER_02and interest. It's just case law helps because you run into cases like that, and that helps you collaborate and understand what what the best approach is. One thing that I'll say here on any of this is we always take the conservative approach. Right? If if if it's how should you tax or um what you should do, you you should try to follow the law as closely as possible, meaning you should tax it if it could fall within that umbrella, or unless you could specifically identify an exemption that that's clear. Um, but if you're in an audit scenario, um then you argue as strong as you can for the possible exception or situation. Um if if you're in a situation where you're trying to identify refunds that might be coming back to a company or to a client, then you're you're gonna be strong in your position to try to claim or find those exemptions. But in your responsibility to collect tax on your sales and services, you don't want to take that aggressive audit or refund style approach. You you want to you definitely want to try to comply with the law. Gratefully, in most situations, with with the um improvement of automation solutions and taxability that's built into those solutions, it's better and better and better. You're not having to make some of those decisions,
– Conservative vs. aggressive positioning on taxability
SPEAKER_02which could be really significant. But when they're big uh ticket dollar items, you you definitely want to spend a little bit of time making sure that you have it right. 100%.
SPEAKER_03Yeah, there's certain categories like tax categories and businesses that fall into those categories, and then all the nuances and you know differentiating factors of some of these businesses and the way they operate and how they sell and what they sell, that where there's just no getting around you know, this complexity, right? And these questions that need to be asked, and ultimately decisions that need to be made that are, you know, kind of in that gray area, you could say. And this ties right into what you were saying, Par of like the conservative route is often the best one because one thing that is super clear from case law is that the states are really good at finding ways to say what you do it it lands in a certain category, and so you owe me tax and penalties and interest.
SPEAKER_02Well, exactly. As Paul always says, uh state sales tax law does not make sense.
SPEAKER_01Yeah, sales tax is ruthless. It doesn't always make sense, it makes dollars 100%.
SPEAKER_02I'm not sure that came through.
SPEAKER_01No, your audio cut out.
SPEAKER_02I thought it was I got a call right when I
– Navigating gray areas and state audit interpretations
SPEAKER_02was right in the punchline, you know.
SPEAKER_03Right. Some sometimes we let those words slip that need to be bleeped out.
SPEAKER_02Well, watch this episode when we when we uh dub out par cussing again.
SPEAKER_04Thanks for hanging out with us on the Sales Tax People podcast. If you want to talk about sales tax, or maybe you have an experience that goes along with something we talked about today, or maybe you just want to hear about how Paul's day is going, make sure you send us an email to podcast at sales dot tax, or you can text us at nine four nine three five five five zero nine eight. See y'all again soon.