States Are Looking for Unregistered / Unpaid Sales Tax . . . Are You at Risk?

With New Years Day comes New Years Resolutions, some of which we keep, some of which we don’t, and some of which we fail to make because we aren’t even aware that one is needed.  The same holds true for your business.  Often times, “We Don’t Know What We Don’t Know”.  It’s my calling to educate companies about this, with regard to multistate sales tax, nexus and ways to minimize audit risk for your company.  Because with this New Year, state auditors are looking for your company as you read this.

The new client often asks, “Why are they auditing us?”  This leads to a discussion about the company’s taxable presence – or nexus – in the state.

Right now, state legislatures are busy trying to pass the budget for the year, and one of the best ways to fill budget gaps is to send the tax auditors out looking for more money. We are seeing a record volume of state tax audit activity, particularly regarding sales and use taxes, as these are the “low hanging fruit” for state auditors.  Evolving nexus standards and taxation of services, cloud computing and Internet commerce continue to provide areas to educate practitioners and industry regarding questions they must be asking.

At this time of year, your auditors are busy reviewing and reconciling last year’s activity.  This makes it the ideal time to consider ... where you have multistate nexus and obligations ... and what you can do.

This time of year, I typically field numerous calls from taxpayers seeking representation for a sales tax audit – often from a state in which they are not registered.  The new client often asks, “Why are they auditing us?”  This leads to a discussion about the company’s taxable presence – or nexus – in the state.  This discussion typically sheds light on the fact that the company is unaware of where it has nexus and what are its multistate sales tax responsibilities.  And this typically leads to a full-blown multistate nexus study and exposure analysis – a Multistate Sales Tax Compliance Process Review.  During a Multistate Sales Tax Compliance Process Review, we identify those jurisdictions in which nexus exists, both currently and historically. We also quantify the historical exposure, enabling us to make informed decisions regarding your contingent liabilities and prospective compliance requirements.  The recommendations in the delivered report provide the stepping stones to resolve and enhance the Company’s sales & use tax compliance responsibilities in various jurisdictions. 

At this time of year, your auditors are busy reviewing and reconciling last year’s activity.  This makes it the ideal time to consider:

1. where you have multistate nexus and obligations,
2. where is there historical risk with regard to sales and purchases,
3. what you can do to resolve that risk and
4. what you can do to automate sales tax solutions to manage the obligations and minimize risk for your business.

Do you know if you’re at risk?  Are you unsure?  It’s time to ask these questions.  Time for that New Years Resolution to engage a Multistate Tax Expert to answer these questions for you.