CereTax CEO Warns Businesses About Hidden Sales Tax Risks from Tariff Changes
Tariff policy changes create unexpected sales tax compliance risks for businesses by altering product pricing and taxability calculations, requiring modern automation solutions to avoid penalties and audit exposure.
Mike Sanders, CEO and co-founder of CereTax, warns that tariff changes present significant hidden compliance risks for businesses by fundamentally altering sales tax calculations. Many companies mistakenly view tariffs as purely a customs concern, but Sanders emphasizes that tariffs often increase sales tax collected because they raise the selling price of goods. The complexity arises from how tariffs are itemized or bundled, which can impact sales tax calculations differently across jurisdictions.
Rapid tariff changes can break compliance overnight, creating mismatches between customs data and sales tax records. Sanders notes that if Harmonized System codes or product taxability rules aren't updated instantly, businesses risk undercharging tax or collecting incorrectly, both of which can trigger audits or penalties. This risk is particularly acute for companies operating in complex industries such as construction, manufacturing, telecommunications, and deregulated energy, where existing legacy tax solutions often have limitations due to their scope, age, or lack of support.
Technology plays a crucial role in managing these compliance challenges. Sanders explains that automation turns tariff chaos into compliance control, with modern systems like CereTax using AI and automation to update in real time and deliver accurate tax calculations. These systems provide businesses with full audit visibility and the agility needed when tariffs shift rapidly. Visit CereTax at https://www.ceretax.com for more information on modern tax automation solutions.
Looking ahead, Sanders identifies several global trade trends that will test sales tax systems' flexibility over the next 3-5 years. Trade is becoming greener and more regulated, with emerging tariffs and digital trade agreements requiring sophisticated compliance capabilities. States may also revise taxable categories in response to global trade shifts, creating additional complexity for businesses operating across multiple jurisdictions.
For CFOs, Sanders offers critical advice: treat tariffs as a trigger event for reviewing sales tax automations. The real return on investment in compliance comes from control, clarity, and confidence rather than simply avoiding fines. Outdated tax processes waste time and obscure critical data, while winning companies invest in infrastructure that delivers these three elements. Companies that stay ahead will be those that can model tariff impacts, adjust taxability rules instantly, and execute with confidence when trade policies change.