Sales tax is more complicated than ever and unless your business is 100% compliant with all sales tax laws, you are at risk of incurring penalties and interest in the event of a state audit. The sales tax experts at
Risky Practice #1: Accidentally Creating Nexus
Most companies understand the idea of physical nexus as it relates to sales and use tax; you have a physical business location in a state, you collect and remit sales taxes there. Easy, right? Maybe in the past. Nexus creating activities have expanded beyond simply leasing or owning personal or real property within a state. And the hitch for multi-state businesses is that different states define nexus creating activities differently and those definitions are constantly changing.
Risky Practice #2: Determining Tax Rates Using ZIP Codes
Many businesses rely on ZIP codes to determine sales tax rates. However, ZIP codes are unreliable at best for determining the correct sales tax rate. ZIP codes were established by the postal system as a method for delivering mail and do not always match up to jurisdictional lines used by the city, county and state to determine a given tax rate.
Risky Practice #3: Ignoring Consumer Use Tax
Companies that collect and remit sales tax but don’t also file consumer use tax could be putting themselves on an auditors' watch list. Consumer use tax is one of the most common areas in which miscalculated and unpaid tax is found in audits. By definition, use tax is a tax on the use of tangible personal property not otherwise subject to sales tax. Unlike sales tax, the remittance responsibility rests with the buyer.
Join our webinar on Tuesday, June 25th at 11AM PT/2PM ET for more information on these risky practices and for the full list of