One of the biggest issues with sales tax is that a business won’t realize it has a problem until it’s too late. Generally, a business doesn’t realize it has an obligation to either collect sales tax or self-assess use tax on purchases until the government knocks on the door.
The other big issue is exactly the opposite: What do you do if you know you have a sales tax problem? Obviously, the answer is to get help. Did you know that we can advise you with complete privacy? And you are entitled to attorney client privilege on our work, either through your own attorney by signing a “Kovel” letter or through our partner, Jennifer Koo, Esq.
One approach could be to request a Voluntary Disclosure Agreement (“VDA”). Most states offer a VDA whereby you proactively contact the state, explain the situation, and then remit any tax owed; sometimes you must file back returns and sometimes you simply remit the tax. The benefits of this approach usually include a limited look-back period, an abatement of most or all penalties and most importantly, limiting any criminal liability. Again, each state that offers a VDA has its own rules, but a VDA is the best way to ensure compliance with the taxing authority.
If you believe you have a sales tax problem but need clarification, many states have a program where you can submit your question (sometimes anonymously) and get written guidance regarding the taxability of a transaction. Assuming you adequately describe a situation, this guidance can often be relied upon, but it is important to read all the rules of these programs to determine whether the guidance is binding.
The worst sales tax problem you can have would be a collection of sales tax that was not remitted. In this situation, it is imperative that a business act immediately, before the district attorney contacts you!
These are just a few of the ways you can address a sales tax problem when you are aware of it. If you are aware of a sales tax problem and want to determine the best approach for you and your business, contact Sales Tax Defense LLC! We can help you remedy the situation in the best way possible!
We run a lot of success stories about how much money we saved clients, or how much we got them as a refund. But today I wanted to discuss another measure of success.
I’m proud to announce that my 13-year-old daughter, Jessica, was elected to be the Treasurer of the Candlewood Middle School Junior National Honor Society. She is a great student, hardworking, and terrific at math. Perhaps it’s been all the years that she has heard me talk about accounting and sales tax that led her to this point, or perhaps its her natural talents. But I would pose the question, what could be more exciting than sales tax, especially to a 13-year-old girl?