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CPAs and Sales Tax - A Curious Conundrum

Posted by Doug Starr on Tue, Jan 04, 2011 @ 08:55 AM

question

It's rare that I attend a meeting of business executives without hearing a "humorous" sales tax horror story from one of them.  Usually they're trying to emphasize the ridiculous nature of the hoops they have to jump through to achieve compliance, but they generally don't have to embellish the stories to get the attention of colleagues around them.  I always ask them what they did to solve the issue, and generally they respond with "I called my CPA and dumped the problem on them."  Now they've got my full attention...and an interest in how the story ends.

Admittedly, the best endings for these stories occur when the problems are caught early enough.  The worst endings occur when the problems drag out because it was handed to a CPA that was unfamiliar with the shortest path to resolution.  Many great CPAs will tell you that they are not necessarily the best tax accountants available to solve your sales tax problem - they just don't run into enough of these problems to stay informed on how to best resolve the issues. But CPAs also want to do the best they can to serve the needs of their clients.  That's the definition of a conundrum.

CPAs do have some resources available to them - sales tax consultants that love to solve confusing sales tax problems, and sales tax websites that give insight into methods for quick resolution.  While we at TaxConnex think we might provide the best of both worlds (please see www.taxconnex.com) for CPAs, there are also state and local websites, sales tax blogs/forums, research products, and whitepapers that can be used to quickly frame the problem and move down the path to resolution.

We've had a number of client success stories that started with a call, to us, from a CPA who wanted to stay out of the critical path of providing sales tax help.  Just last month a CPA called us and described a situation where their client had potential nexus in a number of states where they were not collecting sales tax - because no sales tax consultant was involved, the company had used income tax nexus rules as their guiding light.  Once the sales tax nexus was determined, the client needed quick damage control in one of the states.  In just a few short days, we were able to get the issue with the state remediated, help the client figure out how to begin collecting sales tax, and will start reporting the new collections in Q1 of 2011.  Horror story averted.

My wife has a great family doctor that she believes saves her a number of sick days each year.  But, when she needs some quick help with a bad knee, that doctor knows to refer her to the orthopedist...right now.  We appreciate the family doctor even more for knowing when to get us to the expert help and solve the problem quickly.  That's a good lesson for all of us CPAs!

Topics: sales tax nexus, sales tax compliance, sales tax consultants, compliance, CPA