NEW YORK — Tax compliance is a hefty load to carry, according to a recent study by PricewaterhouseCoopers LLP.
PwC conducted the survey, which was commissioned by the Joint Cost of Collection Study, a partnership between business and government, and found that a retailer’s sales tax burden “averages more than 3 percent of sales tax collected, a $6.8 billion annual cost to retailers at 2003 sales tax levels.”
PwC said the study “quantifies the burden that all retailers, especially smaller companies, face when complying with requirements to collect state and local sales taxes on customers’ purchases.”
The study revealed that small retailers, firms with annual sales between $150,000 and $1 million, deal with three “sales tax compliance cost categories,” which include return preparation and related costs, documentation of tax-exempt sales and employee training.
For retailers with sales between $1 million and $10 million, debit-credit card fees ranked high on the list of cost compliance while companies with sales above $10 million listed “unrecovered sales tax paid due to bad debts” as the top cost category.
Joe Huddleston, executive director of the Multistate Tax Commission and co-chair of the JCCS steering committee, said in a statement that the survey “marks a significant first step in determining how much it costs retailers to comply with state and local sales tax laws and regulations.”
Huddleston said, “More work is needed to make definitive statements about which elements of state and local sales tax laws are truly the most burdensome to retailers.”
Wayne Zakrzewski, vice president, associate general counsel-tax at J.C.Penney and co-chair of the JCCS steering committee, said, “Both business and government can have confidence in this data as an indicator of the burden sales tax administration places on retailers.”
The JCCS is part of the Streamlined Sales Tax Project, which is in the midst of a broader survey aimed at determining “what costs retailers incur for the collection of sales and use taxes.”