This year, if you ship to all available states, you will need to submit a total of 556 state reports—70 of these in January alone. On top of monthly shipping and tax reports, quarterly and annual reports come due in January to significantly increase your reporting workload in the first month of the year.
The amount of data required, in addition to the overall quantity of reports due, can present a daunting challenge for even the most organized compliance professionals. For example, some states require annual direct shipper returns, which require detailed listings of each invoice shipped over the entire year and can be 15 pages or longer— depending on shipment volume.
Help set yourself up to breeze through the hectic January reporting period with these three simple, but important, steps:
Step 1: Review 2010 changes in state reporting requirements
As simple as it sounds, the first thing you want to do is to take some time to make sure you understand reporting requirements for each state that you ship to. Of the 38 states that allow direct shipping, some states require monthly, quarterly or annual reports, while others do not. And as more states are moving towards electronic filing, you are responsible for knowing if you must file electronically and the correct process to do so.
If you ship to Washington state, you can opt to e-file if you pay less than $4800 in taxes each year. If your taxes exceed $4800 annually, however, you are required to use e-file and e-pay to file monthly reports. Wisconsin, Ohio, and California and offer e-filing. If you plan to file any reports electronically, check the states’ websites to set up your online account and to review acceptable file formats and payment requirements.
Iowa opened for direct shipping as a permit state in July 2010. Wineries that ship to Iowa are now required to have a direct-shipping license and to report excise tax monthly.
If you are uncertain about any reporting requirements, now is the time to contact the states with your questions. The closer we get to year-end reporting season, the harder it will be to get your questions answered in a timely manner as the states get inundated with calls.
Step 2: Familiarize yourself with your reports
After you know which reports you need to submit, take some time to review them and to know what each report entails; not all direct shipping or tax reports are alike. Do you know which monthly, quarterly and annual state reports require you submit purchaser and/or recipient date of birth, carrier information, or tracking numbers?
Do you know which reports are based on payment date versus actual ship date? This concept itself can be confusing if you are unfamiliar with accounting methods. For example, direct shipping reports often ask you to report the invoice date, or purchase date, of the order, but you are required to include orders based on the date when the order actually shipped (the date that it was picked up by the common carrier).
Review your reports carefully to make sure you understand what each one requires.
Step 3: Gather all required data
Once you know what each report requires, you are all set to start organizing your data. Start early to have everything in place before January, and you will save yourself the headache and hassle of trying to find this information in the midst of the year-end reporting frenzy.
Date of birth: Wisconsin and Maui County require direct shippers to report both purchaser and recipient date of birth on direct shipping reports.
Label: The New York Wine Manufacturer’s Report includes a field for the TTB ID for each wine product shipped into the state. This is a unique ID assigned by the Alcohol and Tobacco Tax and Trade Bureau when you register for a Certificate of Label Approval.
Carrier/tracking information: Virginia and New York require that you specify the common carrier for all orders shipped to their residents, and Missouri’s Form 12 and Form 40 Direct Shipper Annual Report and Tax Computation require tracking numbers for all shipped orders. If you do not currently have your tracking numbers, contact your shipping department or fulfillment provider to get this information lined up.
Summary reports: Michigan and Hawaii’s annual sales reports and North Carolina’s quarterly sales and excise reports are summary reports on which you will need to list the amount of tax you paid in prior months.
Going through the three above steps will help eliminate unnecessary hassle and headache from your year-end reporting workload and can help make your reporting workflows more efficient overall when completed on an ongoing basis.
If you are a ShipCompliant user, these steps will be automatically completed for you, eliminating 90% of your year-end reporting workload! If you already have a ShipCompliant account, register for the December 16th Year-End Reporting webinar to learn detailed information, specific account settings and steps you can implement to further streamline your year-end reporting.