Moderated by Srishti, Digital Transformation Consultant at Hyperbots
Srishti: Hello, everyone! My name is Shrishi Rajvir, and I am a digital transformation consultant at Hyperbots today. I’m delighted to have Claudia Mahia as my guest. Thank you so much for your time, Claudia.
Claudia Mejia: Hello, Tristi! Nice to meet you.
Srishti: Nice to meet you as well. A little bit about Claudia for our viewers. She is the managing director at Ikigai Edge, and today we will be discussing Delaware sales and use tax compliance. So let’s begin. To start off with, Claudia, we can start with the basics for our viewers. Could you provide an overview of Delaware’s approach to sales and use tax? And how does it differ from other states?
Claudia Mejia: Okay. So Delaware does not impose state tax, which is really good for those who are buying goods within the state. Basically, anybody who sells vehicles, or computer hardware support, doesn’t have to charge sales tax. However, they have another type of compliance which is basically the gross receipt tax, and it is calculated based on the monthly revenue that the company has. It is based on gross revenue without deduction. So that’s a compliance that they need to follow.
Srishti: But that’s a relief for the companies who are working over there, right? Since Delaware does not have a sales tax, are there still compliance requirements that businesses need to manage?
Claudia Mejia: Yes. That’s why they have the compliance to file for the taxes for the gross revenue. They have to make sure they calculate those revenues right by product, by industry, by following the relevant regulations.
Srishti: That makes sense. Do you have any examples to explain how that would work?
Claudia Mejia: Basically, if, say, medical devices or computer hardware retailers sold the products within the state, they would calculate the gross revenue on those products and then pay the rate that the state has set up for those particular products. That’s how it’s done. The important thing is to ensure that you have those standards well placed and that you follow the rates within the state. This ensures compliance with regulations and avoids penalties, which nobody wants to pay.
Srishti: That’s true, and that’s very interesting. How often does Delaware’s gross receipts tax rate change, and how can businesses stay updated on these requirements?
Claudia Mejia: Usually, it’s relatively stable. However, if the state needs extra money to pay for certain things, they might change it. It may change by industry, so the rates for retail might differ from those for services. The Delaware Division of Revenue sets up these rates. Businesses should follow their publications and, ideally, use software that integrates the tax rates automatically.
Srishti: Understood. What are some primary resources available to businesses to stay informed about gross receipts tax requirements in Delaware?
Claudia Mejia: The Delaware Division of Revenue produces all the tax rates, guidelines, regulations, and changes. They provide regular publications and alerts. Third-party software solutions also help by integrating these rates directly into business operations, ensuring compliance.
Srishti: That’s really helpful. Can you specify the challenges businesses face when managing compliance with Delaware’s gross receipts tax? If you could share examples, that would be helpful.
Claudia Mejia: While it’s good that you only need to calculate the gross receipts tax, businesses still face challenges. For example, if you ship a product out of state, you need to collect sales tax, so there are dual activities to manage. For gross receipts tax, calculations need to be precise, categorized by industry and product, and based on gross revenue without deductions. Ensuring diligence in this process is critical to avoid penalties.
Srishti: Understood. Given your experience, how do you think artificial intelligence can help businesses manage gross receipts tax compliance more efficiently in Delaware?
Claudia Mejia: AI can simplify compliance by automating revenue tracking by industry and product, applying the correct rate in real-time, and automating reporting and filing systems. With AI, businesses can see their revenue growth, liability, and more through dashboards, enabling real-time decision-making and reducing manual work.
Srishti: That sounds interesting. How can AI support companies during audits for gross receipts tax compliance in Delaware?
Claudia Mejia: The key during audits is having the right documentation. AI enables fast retrieval of detailed records and detects errors by analyzing transaction histories. This speeds up the audit process and ensures compliance. Companies like Hyperbots provide software that not only tracks revenue but also ensures compliance with auditors and documentation retrieval.
Srishti: That’s really helpful. What do you see as the future role of AI in handling Delaware’s gross receipts tax compliance?
Claudia Mejia: Beyond transactions, AI can enable predictive analytics, helping businesses forecast revenue, account for seasonality, and manage cash flow effectively. Real-time compliance through dashboards and alerts will further streamline operations. With systems like Hyperbots, businesses can focus on growth rather than compliance headaches.
Srishti: That’s so true. Thank you so much for sharing these insights with our viewers. This brings us to the end of the discussion for today. Thank you so much, Claudia, for joining us, and a big thanks to our viewers for staying connected. Goodbye and have a great day!
Claudia Mejia: Thank you, you too.
