Understanding Nexus and the Potential Risks
What is nexus? That tax term is now more important than ever after the recent Supreme Court case (Wayfair Vs. North Dakota) that invalidated the Quill decision from the 1980’s that held that a company had to have a “physical presence” in a state for the state to be able to force them to collect sales/use tax. That long held rule was turned on its head in June 2018 when the Supreme Court decided that a company no longer needs a physical presence to be required to register and collect that states sales/use tax. Many states are adopting the threshold of $200,000 of sales a year or 200 transactions, which does not take long to reach for many medium sized companies now.
How GFTC Can Help
Our team of experts at GFTC will analyze your business footprint in all of the states and determine if you have met the new registration and collection threshold, and if you have, we will assist you in registering for sales/use tax in the required states, and develop a plan to collect and remit the sales tax.
Voluntary Disclosure and Registration
An offshoot of the nexus research sometimes finds that a company should have been registered and collecting and remitting sales/use tax in a given state or locality, but has not. They now have an open audit exposure, and depending on the size and structure of the company, may have to recognize this known tax liability in their financial statements, or even restate them. That is not a fun conversation to have with the CFO or VP of Finance.
After the nexus research has determined that a company should have been registered in a state or locality, the potential liability could be sizeable. We go to the state or locality on your behalf and negotiate for the best possible outcome for your company to minimize and penalties and interest that could be assessed and limiting the lookback period for filing back returns.
Sales/Use tax is one of the most complicated areas of multi-state taxes. Each of the 45 states and the District of Columbia have a myriad of complicated tax laws, regulations, rules, interpretations and case findings that make determining what is taxable and exempt in a state quite a burden.
We use state of the art software to research and develop tax matrices showing the taxable and exempt products and services in each state to assure your company is complying with these complicated laws.