Sales Tax Resource Group

States protect their interest in the sales and use tax, why don’t companies protect theirs??

admin — Mon, 23 Aug 2010 23:26:51 +0000

Let’s face it, were it not for the threat of an audit, many taxpayers would simply insert a column of zeros down the right side of the sales and use tax return, send it in, and not worry about whether the amount of tax was correct or not. For this reason, states audit their taxpayers to protect the state’s interest in the sales and use tax. So, why don’t more companies make more of an effort to protect their own interest in the tax they report to the state?

One tool available to companies to protect that interest is the reverse audit. A reverse audit essentially looks at the tax that the company pays to vendors, or directly to the state through use tax accruals or through audit liabilities, to determine if the amount of the tax is overstated.

A reverse audit can either be done in-house by the company’s tax or accounting staff or, if the tax department is overburdened or lacks the technical expertise, it can be done by an outside consulting firm specializing in this service. The important point is that sales and use tax paid to vendors or the state be reviewed for overpayments.

Fortunately, the California State Board of Equalization has stated recently that refund claims will not be affected by the state’s budget crisis. That is, the state will continue to process refund claims regardless that there is no money in the budget to do so. This is good news for taxpayers experiencing the cash crunch of the century.

Many refund opportunities arise when services are bundled with sales of tangible personal property, such as installation charges, maintenance agreements, computer software, construction contracts, and even technology transfer agreements.

Also, some companies fail to take advantage of available exemptions, or take too narrow a focus when assessing the application of the exemption to their industry. For instance, a telecommunications provider might be missing out on exemptions by simply looking to telecommunications exemptions in their state and not pursuing related manufacturing exemptions.

Other opportunities arise when an out-of-state vendor charges tax to their customer based on the vendor’s home state rules, rather than on the customer’s home state rules. Computer hardware and software installation charges, for instance, are taxable in Texas but not in California. If the Texas vendor is not fully versed in the taxability of installation charges in California, those exempt charges could be taxed on the vendor’s invoice.

Another area that can pave the way for a refund opportunity is when the exemption for an item is based on the use of the item, rather than the nature. For instance, oxygen gas used in an industrial capacity may be taxable, while the same gas used in a medical capacity may be exempt.

With sales and use tax rates in many states approaching 10%, protecting the company’s interest in the sales and use tax paid can make a substantial difference in the company’s bottom line.

Current and Upcoming Sales and Use Tax Amnesty Programs

admin — Fri, 13 Aug 2010 18:22:12 +0000

Due to the recession and budget issues, several states are turning to amnesty programs to rake in some extra cash.

Tax Amnesty programs provide comprehensive tax relief. Typically an amnesty has a very short window of opportunity, and the goal is to collect as much back taxes as possible in a very short period of time, usually two or three months. Generally, the state will waive penalties if you file returns and pay your taxes during the amnesty period and sometimes will waive interest, as well. In addition, the state will often impose larger than normal penalties if you fail to take action during the amnesty period. Through an amnesty program you can file late returns, revise returns to report additional income or improper deductions, and pay off an outstanding balance in full.

Amnesty programs give those who owe back taxes a chance to pay off their debt without all the interest and penalties that normally apply, but keep in mind, if you accidentally overpay the tax under an amnesty program, you may not be allowed to file a claim for refund to get the tax back!

The following is a snapshot of current and upcoming state sales and use tax amnesty programs for 2010. These programs may also include provisions for other types of state taxes administered by the state, such as income, payroll, etc.

Florida
Application Period: July 1, 2010 through September 30, 2010
Waiver: All penalties and a portion of the interest

Illinois
Application Period: October 1, 2010 through November 8, 2010
Waiver: All penalties and interest

Kansas
Application Period: September 1, 2010 through October 15^,2010
Waiver: All penalties and interest

Maine
Application Period: September 1, 2010 through November 30, 2010
Waiver: 95% of penalties and 95% of interest under certain circumstances

Nevada
Application Period: July 1, 2010 through October 1, 2010
Waiver: All penalties and interest

New Mexico
Application Period: June 7, 2010 through September 30, 2010
Waiver: All penalties and interest

If you would like to take advantage of any of these amnesty programs, or if you have other questions related to state sales and use taxes, please contact our office by email or by calling (714) 377-2600.

Huge Tax Error Costs Suffolk County Sales Tax Revenue

admin — Thu, 22 Jul 2010 23:14:38 +0000

A huge clerical error resulted in a major budget hit to Suffolk County, NY when a small business owner, in remitting tax on out-of-state Internet purchases, reported owing $10 million, when he meant to report only $1,000.

The remedy to the situation should not have been a big deal, but the Department of Taxation and Finance didn’t catch the error until after the tax had already been credited to the county.

A $10 million tax figure would translate to $116 million in purchases by one small business! It’s funny, as long as you don’t work for either the NY State Department of Taxation and Finance or the Suffolk County Finance Department.

via Huge Tax Error Costs Suffolk County Sales Tax Revenue.

Do eBay sellers comply with state sales taxes?

admin — Thu, 15 Jul 2010 18:08:38 +0000

According to a July 13, 2010 Forbes article, Georgia State University economics professors found that only 18% of sellers on eBay bothered to collect sales tax even on sales to buyers within their own states. Their study was published in the National Tax Journal and also found that compliance increased significantly with larger sellers; however, even fairly large sellers were found not collecting sales tax on their taxable sales.

States such as California are continuing efforts to hold online sellers responsible for collecting sales tax; however, is it time for online auctioneers, such as eBay and Priceline.com, to be required to collect sales tax on their customers’ taxable sales in the same way that brick-and-mortar auctioneers are?

States protect their interest in the sales and use tax, why don’t companies protect theirs??

admin — Tue, 13 Jul 2010 16:17:52 +0000

With sales and use tax rates in many states approaching 10%, protecting the company’s interest in the sales and use tax paid can make a substantial difference in the company’s bottom line.

Welcome to the Sales Tax Resource Blog!

admin — Tue, 13 Jul 2010 04:55:44 +0000

Welcome to our blog! This is where we will post items of interest for our clients and friends. Keep an eye out for newsletters, press releases and a variety of useful information here!

Blog

admin — Tue, 18 May 2010 14:21:19 +0000

Company Profile

admin — Thu, 06 May 2010 18:45:39 +0000

Sales Tax Resource Group (“STRG”) is a sales tax consulting firm specializing in multi-state sales and use tax issues, and business incentives and credits.

In addition to providing sales and use tax audit representation services and refund/credit studies, STRG performs nexus reviews, taxability and exposure studies, and provides training, general consulting and specialized transaction analysis, along with a variety of other services. In addition to serving individual companies, we partner with small to regional CPA firms, enrolled agents, and other professional service firms to allow them to provide their clients with the highest quality consulting services. We do not provide general accounting or tax services and will not compete with CPAs for other services. STRG has a wealth of sales tax consulting experience and resources enabling us to handle most projects regardless of size or complexity.

Graham Hoad, President, CEO
Graham formed STRG in early 1999. As a former sales tax auditor with the California State Board of Equalization, and as a Multi-state Tax Consultant with a “Big 4″ accounting firm, he was involved in many audits both as an auditor and a consultant. He also created significant tax saving and cash generating strategies for many types of clients.

Graham is a Certified Member-Sales Tax of the Institute for Professionals in Taxation (IPT). He is enrolled to practice before the IRS, and holds a Bachelors Degree in Accounting from California State University, Long Beach. Graham also sits on the board of directors of the Sunset Beach Santitary District.

Brian Nisenholtz, Vice President, CFO
Brian became a partner at STRG in early 2000 and is the company’s Director of Operations. Brian brings to the firm experience as a former California Sales Tax Auditor and a Multi-state Tax Consultant with a “Big 4″ accounting firm. In addition, Brian served as a Sales and Excise Tax Supervisor for a large petroleum marketer and refiner for several years. He is a member of the Institute for Professionals in Taxation (IPT), has passed the California CPA exam, and is enrolled to practice before the IRS. Brian holds a Bachelors Degree in Business Administration with an emphasis in Accounting from the University of Pacific.

Stan Pincura, Senior Manager
Stan joined STRG as a Senior Manager in Feburary 2008. Prior to STRG, Stan was a Multi-state Tax Manager with a “Big 4″ accounting firm where his experience includes reverse sales and use tax audits, transactional analysis and planning, audit representation and appeals, and settlement negotiations. Stan’s experience also includes seventeen years with the California State Board of Equalization in its audit division. Stan received a B.S. in Accounting from San Diego State University, and is a licensed CPA in California.

Royd Baik, Manager
Royd joined STRG as a Staff Tax Consultant in mid-2006. Before joining STRG, Royd worked as a certified tax preparer for four years. He holds a Bachelors Degree in Economics from the University of California, Davis, and is fluent in Korean. Since joining STRG, Royd has gained experience in multistate voluntary disclosures, reverse audits, audit representation, and many other multistate sales and use tax issues. He is currently pursuing his CPA certification.

John Ashrafian, Senior Consultant
John has worked with Sales Tax Resource Group as a consultant since May 2009. He is a former sales tax auditor with the California State Board of Equalization. He also worked as a Senior Tax Analyst for Directv. He has a Bachelors Degree in Accounting from California State University of Los Angeles, and a Masters in Business Administration from the University of Southern California.

Jane Lapham, Staff Consultant
Jane joined STRG in 2003 as a Paraprofessional and was later promoted to Staff Consultant. She is a graduate of California State University, Dominguez Hills with a Bachelors Degree in English: Language and Linguistics. Her STRG experience includes work on bad debt credit studies and reverse audits. She currently attends California State University, Long Beach where she is working towards a Masters Degree in Linguistics.

Brian Stan Royd Breanna Graham