Our Services
Nexus Review
What is nexus? Sales tax nexus is the connection between a seller and state that requires the seller to register with that state to collect and remit sales or use tax. This connection has traditionally been measured by your physical activity in a state however this level of activity is now also measured by your economic activity (economic nexus) in a state.
These economic nexus statutes vary from state to state but generally impose a registration and collection requirement on a seller when the seller exceeds dollar thresholds for sales and/or number of sales transactions within a specified period of time.
Our process starts with a review of your business operations, addressing both physical and economic elements to help you determine where you have sales tax nexus. Once we identify your nexus states, the next step is to determine the taxability of your products and/or services in these states.
Taxability
Other than nexus, another important consideration for your sales tax compliance is knowing the taxability of your products and/or services. You want to accurately collect and remit sales and use taxes otherwise you will have unhappy customers or even worse, have unreported taxable sales assessed in an audit.
Perhaps you just sell tangible property which is taxable everywhere however what you sell can impact the application of tax. For instance, clothing is generally taxable but is exempt in some states if the article costs more than a certain amount. Clothing is also exempt in some states during a sales tax holiday.
In addition to your primary product or service, ancillary services such as shipping, handling, installation or training may also be taxable. It gets even more complex if you are selling digital goods or if your product is electronically delivered or remotely accessed. We will work with you to review all revenue streams and determine the product classification of what you are selling and the associated application of tax.
Audit Defense and Support
It is undeniable that audits are no fun. Audits can take a lot of time, energy and resources and they can cost you money if you do not understand the law, audit procedures or your rights.
That is where we come in. We can help you at any stage of the audit; before it starts, during, or even after it has been assessed. In some situations, we can even help if the audit has concluded and you have already paid the assessment. The level of our involvement is up to you.
Before an audit starts, we review your business operations and sales tax compliance processes to identify areas of concern for both underpayments and overpayments. We then try to quantify the potential exposure prior to the beginning of an audit.
During an audit, we can either work behind the scenes or be your point of contact with the auditor. We review questioned items, research the application of tax, gather supporting documentation, develop arguments and positions, and work with the auditor to resolve gray area items.
After an audit is completed, we can represent you at informal and formal hearings and provide you with recommendations to address deficiencies identified during the audit.
Tax Recovery
Tax recovery, reverse audit, accounts payable review; these are all terms used to describe the process of identifying and recovering overpayments of sales and use tax on your purchases. We have done this for many clients and helped recover millions of dollars in refunds or credits.
Our process starts with a review of your business operations and sales tax compliance process. Based on this review, we identify areas or transactions of interest, review applicable documentation, verify our findings and discuss with you the opportunity. If you agree to proceed, we file refund claims with the appropriate party (vendor or state), submit supporting documentation and manage the entire process. At the conclusion of the project, we will provide you with recommendations to avoid overpayments going forward.
Tax recovery projects are performed on a success fee basis, so you only pay if you receive a refund.
Voluntary Disclosures
Voluntary disclosure programs are offered by states and some local governments to entice unregistered taxpayers to come forward and disclose unreported tax liabilities by offering the following incentives:
- Anonymous application
- Reduced period for reporting back taxes (lookback period)
- Full or partial waiver of late filing and payment penalties
- Full or partial waiver of interest due on unreported taxes
A voluntary disclosure is most used when a taxpayer failed to register and timely remit tax on sales or purchases. While the terms of a voluntary disclosure agreement is typically preset, it has been our experience that states can be flexible, so let me advocate on your behalf to see if I can obtain better terms for you.
Other services
Due Diligence
If you are buying or selling a business, we can perform a sales tax due diligence review to identify potential liabilities. If such liabilities exist, we will provide you with options to address and reduce those liabilities thereby reducing the amount put in escrow.
Registration
We can help you register for sales and use tax in the states where you have nexus and make taxable sales. Registering in a state in a timely manner allows you to begin collecting and remitting tax. We charge a fixed fee per registration
