Sales tax in New York state

Find out interesting insights with John Silverstein, VP of FP&A, XR Extreme Reach

Moderated by Kate, Financial Technology Consultant at Hyperbots

Don’t want to watch a video? Read the interview transcript below.

Kate: Hello, everyone! Good morning. My name is Kate, and I’m a financial technology advisor here at Hyperbots. Today, I’m thrilled to have John with me. Hey, John, how are you doing today?

John Silverstein: Great, thanks for having me again.

Kate: Thank you for joining us. So, a little bit about John—he’s the Vice President of Finance Process and Accounting at XR Extreme Reach. Today, John and I will be discussing the nuances of New York State’s sales tax system and how businesses can keep up with the complexities of compliance. Let’s get started. So, coming to the first question, can you provide an overview of New York State sales tax rules, particularly regarding which goods and services are taxable, and which are exempt?

John Silverstein: Yeah, in New York State most things are taxable for personal goods, including electronics, clothing above $110, and home goods. Essential items, however, are not, such as unprepared foods. Prescription medications are exempt. Services are generally exempt, though there are exceptions to that as well. For example, admission to entertainment events and some repair services are taxable. Utilities, like electricity, are taxed differently across jurisdictions.

Kate: Understood. So how does New York State’s sales tax rate vary across different jurisdictions?

John Silverstein: Yeah. New York sales tax has a base tax rate of 4%. However, local jurisdictions add additional rates, which leads to significant variation across the state. For example, New York City has a combined rate of 8.875%, while other areas, such as Nassau County, have rates around 8.625%. These local adjustments mean that companies across the state with a presence need to be especially diligent in tracking local rates and what they would have to charge if they were in multiple jurisdictions.

Kate: I agree. So how frequently do these sales tax rates change in New York State, and what factors contribute to these changes?

John Silverstein: Yeah, so the sales tax rates in New York can change every quarter. That’s often—many other states only make annual adjustments, or it’s not as frequent. However, New York allows for changes every quarter, especially when local governments adjust the rates to meet revenue needs or when special district taxes are implemented. The State Department of Taxation and Finance oversees these updates, but the local jurisdictions have flexibility in setting their own rates, especially in the urban areas where there’s higher demand for public services.

Kate: That does make a lot of sense. Moving on, what are some of the biggest challenges for businesses trying to keep up with these fluctuating sales tax rates?

John Silverstein: The biggest challenge is the complexity created by having over 70 counties, cities, and school districts with all their own tax rates. Companies with multiple New York locations or an e-commerce presence have to continually monitor and apply these changes accurately. This can quickly become a manual and error-prone process, particularly for businesses processing a large number of transactions. And the key point there, too—it’s not just your presence in retail, it’s also e-commerce, where you’re selling in customer locations.

Kate: Wow! That sounds like quite a task. So where do companies find reliable information on New York State sales tax rates and any recent changes?

John Silverstein: Yeah, similar to most states, the New York State Department of Taxation is the primary source for sales tax rates and regular updates. It also has a sales tax web file tool with a downloadable list of the tax rates by jurisdiction.

There are other resources, too, that include tax compliance platforms like Hyperbots and Avalara’s AvaTax. They automate these tax calculations and track the updates across jurisdictions in real-time.

Kate: I understand. Could you maybe give an example of how a business might use these resources to stay compliant?

John Silverstein: Sure. Suppose a retail company operates across New York and sells both online and in-store products. Hyperbots and Avalara can automatically apply the correct sales tax rates for each sale, whether it’s in Manhattan or Buffalo. These tools continuously sync with the state’s databases, so if New York City adjusts its rates, the tools automatically reflect that change, minimizing your risk of under- or over-collecting sales tax.

Kate: That’s insightful. The next question: How can AI help companies stay updated and compliant with sales tax regulations, especially given the variability in New York’s local rates?

John Silverstein: AI can give you some peace of mind in this because it can have a significant role in tracking, updating, and implementing these sales tax rates. With AI-powered tools like Hyperbots, companies can monitor the Department of Taxation and Finance for updates. They can receive alerts when rate changes are detected. The AI system can even apply the correct tax rates based on customer zip codes, which ensures accurate compliance across New York’s many jurisdictions, not just at the state level.

Kate: That makes a lot of sense. So we have reached almost the end of our discussion today. The last question for today: Are there any specific AI tools or features you’d recommend for managing sales tax compliance in New York?

John Silverstein: Yeah. Hyperbots and Avalara’s AvaTax are both excellent choices. There are, of course, other tools out there. Real-time rate calculations and tracking are critical. You need to invest in these so you’re not trying to do it manually, where you run the risk of errors. It’s generally not worth it, particularly if you have any sort of volume in these jurisdictions. These platforms integrate with ERP systems, so it’s automatic. You can file your taxes and reports directly.

So you don’t have to deal with the administrative burden of hiring people to manage it. AI can also track and calculate rates and help companies focus on their operations instead of worrying about which rate should be applied to the invoice.

Kate: I couldn’t agree more with you, John, on this. Thank you so much, John, for sharing these valuable insights into managing New York’s sales tax requirements and how AI is transforming the compliance landscape. Thank you so much for joining us today.

John Silverstein: No problem. Have a great day.

Kate: Have a great day.

Sales tax in California state

Find out interesting insights with Jon Naseath, COO/Founder Cantu Capital, Inc

Moderated by Kate, Financial Technology Consultant at Hyperbots

Don’t want to watch a video? Read the interview transcript below.

Kate: Hello, everyone! My name is Kate, and I’m a financial technology advisor here at Hyperbots. Today, I’m thrilled to have Jon Naseath with me. Hey, Jon, how are you doing?

Jon Naseath: Hey, Kate, doing good. How are you doing today?

Kate: I’m doing wonderful. So Jon is the COO at Cantu Capital, Inc. Today, Jon and I will be discussing the complexities of California sales tax regulations and how companies can stay compliant. Let’s dive right in. Coming to the first question, Jon, can you provide an overview of California sales tax rules, particularly on which goods and services are taxable, and which are exempt?

Jon Naseath: Sure, and I’ll just start by saying that California is a fun place to do business. There are always lots of different regulatory considerations, and the more the government tries to help, in many ways, it just becomes more complicated for accounting. A lot of times, that turns into more money, anyway. So I’ll get off my soapbox. But sure, California sales tax rules are complex. One main example is that most tangible goods are taxable, like electronics, clothing, and vehicles—your normal physical products. However, essential items like groceries and prescription medicines are exempt. They’ve wanted to make it so that people can buy the food they need and have kind of an influenced benefit on those versus other things. Like many jurisdictions, California uses tax policy to try to influence behavior. Prepared foods at restaurants are taxable, but unprepared foods are not. You’ve probably seen this where a restaurant asks if you’re eating in or taking it out; different tax rules can apply. It gets pretty complicated. Services are not typically taxed unless they involve creating or modifying a tangible good. For example, repairs on appliances are taxed because they involve a tangible outcome. It’s a bit complicated, but California isn’t unique. I’ve done business in places like China and India, where we faced similar complexities. Brazil, as everyone knows, is a particularly challenging place for taxes. Just the concept of having multiple layers of local, state, and federal regulations makes it tricky. Today, we’ll pick on California, but if any California regulators are listening, it’s not personal!

Kate: Understood. Moving on, how does California’s sales tax rate vary across different jurisdictions?

Jon Naseath: California has a base sales tax rate of 7.25%, but local cities, counties, or districts add additional rates on top of that. It can fluctuate a lot based on where you’re living. For example, Los Angeles and Santa Monica have a combined rate of 10.25%, while more rural areas like Lassen County only apply the state minimum tax. I’m from California—my dad was from Lassen County. I grew up in San Diego, and we always joked that anything north of San Diego was “Northern California.” Regional differences are significant. For instance, gasoline taxes are piled on heavily in California, which makes a big difference in overall costs.

Kate: I see. How frequently do these sales tax rates change, and what triggers these changes?

Jon Naseath: They change too often! Anytime regulators see an opportunity to generate more revenue, they might introduce a new tax or adjust an existing one. It’s tricky to know when these changes go into effect, as they might be announced far in advance. These changes usually occur quarterly or annually, often aligning with the fiscal year. In urban areas, local governments frequently adjust taxes to fund projects. Around the New Year, for instance, there’s always a cycle of news announcing new laws and taxes coming into effect. It’s a common theme—localities are always looking for new revenue streams.

Kate: That’s an interesting point. What challenges do businesses face in keeping up with these changing sales tax rates?

Jon Naseath: Managing taxes in a jurisdiction with frequent changes is tough. If you’re operating in hundreds of local jurisdictions, each with independent and aggressive tax rules, staying compliant can be a nightmare. Manually tracking these changes is nearly impossible, especially for businesses with high transaction volumes across multiple areas. Mistakes can be costly. If your processes aren’t up to date, you risk audits, penalties, and underpayment issues. However, if you can demonstrate solid processes and systems, regulators are usually more lenient, even if there’s a discrepancy.

Kate: Makes sense. Where can companies find reliable information on California sales tax rates and updates?

Jon Naseath: The California Department of Tax and Fee Administration (CDTFA) is the primary source for current sales tax rates and regulations. They provide a city and county tax rate lookup tool, updated quarterly. Beyond that, tax compliance platforms like Hyperbots or Avalara’s AvaTax can help businesses automate the process and ensure compliance in real-time.

Kate: That’s helpful. Can you provide an example of how a business might use these resources to stay compliant?

Jon Naseath: Sure. Let’s say a retail company operates in multiple California cities like Carlsbad, San Francisco, and Lassen County. They could use Hyperbots or Avalara to automatically apply the correct tax rates for each location. These tools are consistently updated, so the company doesn’t need to manually verify rates every quarter. If a new tax rate is applied to a specific zip code, the tool adjusts transactions in real-time and feeds accurate data into the ERP system. This reduces the risk of under or over-collecting taxes and simplifies compliance.

Kate: That’s a fantastic example. How can AI help businesses manage these complexities, especially in a state like California with high tax variability?

Jon Naseath: AI excels at processing large volumes of data, updating tax rates in real-time, and ensuring accurate application across transactions. Tools like Hyperbots leverage AI to track updates from CDTFA, notify teams of changes, and calculate rates based on zip codes and product types. AI reduces manual intervention, minimizing errors and allowing businesses to focus on strategic goals rather than administrative burdens.

Kate: That’s impressive. Finally, are there any specific AI tools or features you’d recommend for managing sales tax compliance?

Jon Naseath: I’d recommend Hyperbots and Avalara’s AvaTax. They’re both excellent at handling tax rate calculations and compliance across multiple jurisdictions. These tools use AI to integrate seamlessly into business processes, ensuring that sales tax rates are applied accurately and up-to-date in real-time.

Kate: Thank you so much, Jon. This has been a very enlightening discussion.

Pennsylvania’s sales tax system

Find out interesting insights with John Silverstein,VP of FP&A, XR Extreme Reach

Moderated by Kate, Financial Technology Consultant at Hyperbots

Don’t want to watch a video? Read the interview transcript below.

Kate: Hello, everyone! Good morning. My name is Kate, and I’m a financial technology advisor here at Hyperbots. Today, I’m thrilled to have John with me. Hey, John, how are you doing today?

John Silverstein: Great, thanks for having me.

Kate: Thank you for joining us. A little bit about John—he’s the Vice President of Finance Processes and Accounting at XR Extreme Reach. Today we will be discussing Pennsylvania’s sales tax system. So let’s jump right in. Coming to the first question, is the fundamental question: what makes Pennsylvania’s sales tax system unique, and how does it impact businesses operating in the state?

John Silverstein: Pennsylvania is unique in that it allows jurisdictions to have different tax rates. Pennsylvania has a 6% statewide sales tax rate. For example, Philadelphia has a total tax rate of 8%, which can add complexity for businesses in multiple cities or counties within Pennsylvania. This means companies need to track not just at the state level but also the local taxes in metropolitan areas.

Kate: That’s an interesting point. Are there notable goods or services that are exempt from sales tax in Pennsylvania?

John Silverstein: Many goods and services are exempt. Clothing and footwear are exempt from sales tax across the state. Prescription drugs and certain medical devices are also exempt. However, digital products like ebooks or music are taxable in Pennsylvania, which surprises some businesses. It varies, so we must continue to review tax regulations by jurisdiction.

Kate: Yeah, I understand. Could you explain some of the challenges businesses face in keeping track of these exemptions and tax rates, especially if they operate in multiple locations?

John Silverstein: The biggest challenge is understanding exemptions. For example, food is generally exempt from sales tax, but prepared foods like takeout, restaurant meals, and some frozen meals are taxable. With multiple local jurisdictions applying different rates, businesses often struggle to stay compliant. In cities like Philadelphia, the tax rate could be 8%, while rural areas might only have a 6% rate. It varies by municipality.

Kate: I see. That brings us to the frequency of tax rate changes. How often do sales tax rates or exemptions change, and how do businesses stay updated?

John Silverstein: Sales tax rates in Pennsylvania don’t change frequently, but municipalities can adjust their rates more often. Philadelphia occasionally revises its local taxes. Companies must constantly monitor the State’s Department of Revenue and local tax authorities for updates. For example, if there is a rate change in Philadelphia, businesses need to adjust their systems immediately.

Kate: I understand. How does AI help businesses stay compliant with these frequently changing tax laws?

John Silverstein: AI can automate tax calculations and updates to tax tables, ensuring compliance with changes or adjustments. For example, if there’s a tax exemption update in Philadelphia, AI ensures the correct rate is applied based on the customer’s location. It also tracks regulation changes, notifying businesses of updates. AI can automatically apply new rates to transactions, eliminating the need for manual updates.

Kate: That’s very insightful. Could you provide an example where AI has helped streamline sales tax compliance for a company?

John Silverstein: One example is a retail business operating in both Philadelphia and Pittsburgh. The company had to track two different local tax rates—8% in Philadelphia and 7% in Pittsburgh. With an AI-powered sales tax system, the company no longer needed to manually calculate taxes for each transaction. AI automatically applied the correct rates for each location and adjusted for any tax rule changes.

Kate: Impressive. Now, with all the different rules in Pennsylvania, how can a business ensure it remains compliant, especially when it comes to exemptions?

John Silverstein: Keeping accurate records is key. AI can help identify exempt products, such as food versus prepared meals, ensuring proper application of exemptions. AI can also detect misclassifications in product categories, ensuring businesses don’t miss applicable exemptions. Additionally, AI helps keep item lists clean and updated with exemption status changes, such as during tax holidays for back-to-school items.

Kate: I totally agree with you, John. We’ve almost reached the end of our discussion today. Last question: what advice would you offer to businesses struggling to navigate Pennsylvania’s complex sales tax rules?

John Silverstein: My advice is to invest in a sales tax automation solution that incorporates AI. This reduces manual errors and helps businesses stay compliant. Relying solely on standard tax tables from software like QuickBooks may not account for jurisdiction-specific rates and changes. Staying informed through the Pennsylvania Department of Revenue’s website and using AI tools to monitor changes can significantly improve efficiency.

Kate: Very insightful. Thank you so much, John, for joining us and sharing your valuable insights today. It’s been a pleasure.

John Silverstein: No problem. Thanks for having me again.

Kate: Thank you.