Use Case StudyReal-Time Sales Tax Collection
Cangea can disrupt the way that tax is collected globally. By leveraging the Cangea multi-layer payment protocol, collecting sales tax could, conceivably, shift entirely to a real-time transaction basis.
Does it still make sense for tax authorities to collect tax as they always have done in the past?
Cangea has emerged at a time when many players in the tax space are debating whether the current tax system – designed for the days when physical goods were traded, bought and sold – is still fit for purpose in the modern, digital era. The rise of the “sharing economy”, digital business and new business models have caused many people to think again about the tax system.
Some of the biggest compliance challenges facing taxpayers are not found with income taxes, but rather with sales tax. Properly computing, collecting and remitting sales tax in the 45 states that levy such a tax is often highly burdensome and draining on a business’s resources. After income and property taxes, sales tax is the third largest source of state revenue. The taxing authority’s main agenda is to ensure compliance and collect the proper amount of taxes efficiently and cost effectively.
Current Sales Tax Problems
Business owners collect sales taxes from customers as they’re supposed to, but they may not set the money aside, and after meeting payroll and paying vendors, sometimes they come up short.
False Reporting and Sales Tax Evasion
False reporting and sales tax evasion are issue that are amplified in many cash laden industries.
Locked Up Funds
Businesses typically pay their sales tax quarterly, or monthly, depending on the volume of their sales. This delay in payment results in locked up funds, sitting useless, that could other wise be out to use.
Slow Sales Tax Lifecycle
In a traditional retail transaction, the sales tax funds do not reach its final destination for up to 180 days. This leads to settlement risk, counter-party exposure, false reporting, sales tax evasion, and locked up funds that could otherwise be put to use.
The Cangea Solution:
Cangea can be used to create Sales Tax Payment Contracts that specify the local, state, and excise tax rates. The smart contract is integrated with the businesses point-of-sale systems so that when a consumer makes a purchase at this business, the Cangea Smart Contract is referenced, splitting the payment and sending the correct amount of sales tax revenue directly to the taxing authorities in real-time. All data can be shared between the business and taxing authority, ensuring transparency and sales tax compliance.
Collect Sales Tax in Real-Time
Collect and remit sales tax to the taxing authorities in real-time, at the time of sale.
Real-Time Auditing Capability
Real-time insight into all financial transactions and sales tax payments from all participating businesses.
Eliminate Settlement Risk and Tax Evasion
Eliminate settlement risk and possibility of sales tax evasion by colleting sales tax in real-time.
Faster Funding For State Entities
Auto-disburse sales tax proceeds to the different State Departments for immediate use.
Instant Sales-Tax Lifecycle
The Cangea platform is able to facilitate the real-time collection and allocation of taxes at multiple levels, including municipal, county, state, and federal.
Download the Full White Paper
In Cangea – Using Blockchain to Improve the Tax System, you will learn more about our project, mission, and how Cangea is disrupting the way we collect sales tax..