Texas' amnestry program begins tomorrow, June 12, 2012. The amnestry program covers sales tax, franchise tax, and other state and local taxes or fees administered by the Comptroller's office, except Public Utility Commission gross receipts assessments. The program looks to waive both penalties and interest.
I haven't seen too many amnesty programs recently. Anyone else familiar with other currently running amnesty programs that include sales tax?
Small and medium sized businesses are forced to be thoughtful and frugal about staffing as they work to make a buck in this economy. So...not many of them are clamoring to staff a sales and use tax group to ensure they pay everything they possibly could to a State or Local Jurisdiction. Instead, they do what they can do, with whomever is available, to make decisions about sales tax collections and then get the monthly returns out the door. What goes unattended are things like understanding their nexus, determining the true taxability of products/services, automating their processes, managing exemption certificates, taking advantage of amnesty/Voluntary Disclosures (if needed), and gracefully navigating audits. The question is, if these things are tablestakes in managing sales tax, why aren't companies motivated to invest in them? The answer is simple - it's because of who's minding the sales tax shop.
You see, a small business that is growing finds out what their sales tax obligations are - they don't generally plan for them. The burden of handling the responsibilities they just found out then shifts to someone who wasn't hired for that unplanned responsibility. As the burden and responsibility grows, that person who inherited sales tax does what they have to do and what they know how to do - get the returns they've always filed out the door. So the person minding the shop is someone who knows very little about the discipline of sales tax. It's kind of like having a mail clerk eventually ending up with the responsibility for responding to investor questions. It all started with the mail, and he's good at opening it...right?
What invariably ends up happening at a growing small business is that sales tax gets slightly out of kilter. An assessment rocks your world, an auditor wears you out, notices get your goat, or an oversight results in some financial (over even criminal) liability. It's the common cycle, because your accounting clerk doesn't know how to side step sales tax landmines any better than the mail clerk knows how to keep investors happy.
The real issue is that most growing businesses don't even have an understanding of what kind of liability or trouble they are creating by ignoring sales tax. It's a silent killer, and it shows up infrequently enough that you feel safe...until it does show up. The other impediment is that even a wildly successful small business can't afford to hire someone with sales tax "insider knowledge". There's just not enough for them to do to justify their salary. You feel confident in letting the mail clerk mind the shop. Until the auditor shows up. Or the assessment rolls in. Or the shop gets closed.
So think about these as alternatives. Buy just enough time every month from a sales tax professional to keep you compliant and in the know. If he's worth his salt, he's quick, knows where the landmines are, and can save you more than he costs. Or hire a sales tax person who can also be taught to handle other tasks competently. Think of it this way - it's like having an Investor Relations manager who really likes to open and distribute mail, in contrast with a mail clerk who is good at sorting mail, but dreads communicating with investors.
You'll get a much better outcome if you're intentional about getting the sales tax help you need! One call to an expert like TaxConnex could get the right person minding the shop.