It’s great to be a high roller when you are visiting your favorite Las Vegas hot spot. But it’s not quite as rewarding when your entire business is at stake. Without even knowing it, that is the kind of high stakes gamble that many business owners are making when they fail to take adequate care addressing their sales and use tax liabilities.
Sales tax might seem like penny stakes, but it takes just one audit to elevate your sales tax costs from small change to a massive investment. As more state and local authorities seek to address revenue shortfalls, they are increasingly turning to sales and use tax as a source of funds. Sales tax audits are easy to administer and have a high rate of success for government authorities. From a company’s perspective, these audits add to the cost of doing business in a number of different ways:
- While sales tax is designed to be a pass-through tax paid by the consumer and remitted by the seller, audit assessments are paid out of the seller’s profits. You can’t go back to your customer and collect the missed amount.
- A company under audit exposes its clients and vendors to an audit as well. The resulting damage to relationships can be hard to repair.
- Audits cover multiple years, so a single error can have a big impact.
- Staff time is redirected to audit activities rather than more profitable pursuits.
- Assessments and non-deductible penalties can quickly add up.
There is no reason for today’s businesses to treat sales tax management as a game of chance. Sales tax management no longer has to be a choice between inadequate sales tax management and a heavy investment in staff. With the help of the right solution, companies can take control of their sales and use tax calculations, collections and remittance without either breaking the bank or incurring unnecessary risk.
Read more about improving your odds at the sales tax audit table with a solution that integrates seamlessly with Microsoft Dynamics.