Economic Nexus Since the Wayfair Decision: Frequently Asked Questions About Sales and Use Taxes (Part 4)

The South Dakota v. Wayfair, Inc., decision and economic nexus laws have changed the landscape for taxpayers who sell tangible personal property or provide services that are subject to sales and use taxes. This new landscape has increased the administrative burden on taxpayers and their filing and reporting requirements. 

Weaver’s four-part series of frequently asked questions will help you understand this new sales tax landscape and how it may impact your company. 

Part 4: Sales Tax Compliance and the Audit

I have never been audited for sales tax. That means I’m probably safe, right?

Unfortunately, no. Taxing jurisdictions across the country are increasing the frequency and volume of sales tax audits, which increases your chances of being selected. Taxing jurisdictions can assess tax, interest and penalties in a sales tax audit, so we recommend doing your best to be in compliance before you get an audit notice.

What should we look at when evaluating our internal sales tax compliance?

Here are just a few examples of the questions you should be asking:  

1. Are we registered and filing sales tax returns in all the jurisdictions we need to be?
2. Are the sales tax rates we pay and charge to customers correct?
3. Are we underpaying or overpaying sales tax on expense, inventory or asset purchases?
4. Do we have all the exemption and resale certificates for our exempt customers?

Weaver is happy to assist with a compliance evaluation to help you identify potential sales tax issues, underpayments and overpayments, then evaluate their relative risks and importance.

How often should we review our internal processes for sales tax to make sure we stay in compliance?

We recommend evaluating internal sales tax processes several times a year. Frequent checkups help to identify potential issues, such as whether sales tax returns are being timely filed, exemption and resale certificates are being collected from customers, and you are registered for sales tax in the correct jurisdictions.

What are the advantages of outsourcing sales tax compliance and expertise to a third party?

Internal accounting staff are usually focused on getting sales tax returns filed on time and completing daily responsibilities — leaving little time to seek out potential tax savings or tax planning opportunities. Outsourcing the sales tax compliance function can free your staff to focus on more important “value-add” work. Such outsourcing is particularly valuable if your company has recently acquired another company, has a hiring freeze, or just doesn’t have the time, knowledge and resources to stay in compliance.

Read more from our “Frequently Asked Questions” series: 

• Part 1: Is My Company Affected by New Economic Nexus Laws?
• Part 2: My Company Meets Sales Tax Thresholds in New States. What Now?
• Part 3: Sales Tax Compliance Automation Systems and Tools 

If you would like to discuss your situation and learn how Weaver can help you, click below to schedule a complimentary consultation with our team.