TaxConnex Sales Tax Blog

When Should You Register with State and Local Taxing Authorities?

Posted by Brian Greer on Wed, Oct 26, 2016 @ 02:10 PM

We get this question alot! So we decided to re-run this informative blog from April 2016.

“It depends.”it_depends-1

This single question could fill volumes to get to the proper answer. The simple answer is if you have sales tax nexus in a state, then you should register with the Department of Revenue for a sales tax id number and begin collecting and remitting sales tax.

However, there are several other questions you should answer first:

  1. When did you first establish sales tax nexus in the jurisdiction? (You may be required to remit prior period returns including tax due from these prior periods.)
  1. Are your products/services taxable in the jurisdiction(s) where you have sales tax nexus? (Your products/services may not be taxable. Should you still register? Statutorily – yes. Practically – maybe not.)
  1. Are your customers taxable – are they government entities, non-profits, or otherwise exempt businesses? (If they are you need to be sure you have the appropriate exemption certificates.)
  1. How much tax exposure do you have from prior periods? (Depending on the materiality of the prior period liabilities, a Voluntary Disclosure Agreement could be beneficial.)
  1. Did your customers already self-assess and remit use tax? (This may get you “off the hook” at least partially but I don’t recommend this as your compliance strategy long-term.)


Something I’ve discovered over the years is that there is hardly ever a “Yes” or “No” answer when it comes to sales tax.

There are always questions that lead to more questions. The decision tree is very complex and can vary based on the risk tolerance of the business. One business may have the same set of facts but due to their risk-tolerance they may make a completely different decision regarding sales tax compliance than another business.

Sales tax is about balancing risk and cost.

How much does it cost to be 100% compliant? Is it worth it to be 100% compliant? I’m not suggesting anyone do anything illegal. But the nuances and levels of complexities across jurisdictions make it practically impossible to be 100% compliant – even if you want to be.

While we may want sales tax to be simple and to have simple answers to simple questions, it’s just not reality. For now, we’ll answer questions with questions. And we’ll continue to throw out the most famous words of every sales tax consultant ...

“It depends”.



Topics: sales and use tax, sales tax registrations

District of Columbia Sales Taxes– Out with the Old…In with the New!

Posted by Noelle Ard on Thu, Oct 20, 2016 @ 02:03 PM

DC-477904-edited.jpgI know your first thought was the Presidential election right?  No, silly, this isn’t a political rant, this is all about the new Sales and Transaction Taxes website!

The District of Columbia has announced a major upgrade that will coincidently coincide with the November election. will become the official Office of Tax & Revenue (OTR) reporting and remittance portal.  The upgrade will begin in November 2016 and will offer the benefits of the current system, along with additional functionality and ease. 

The intial release will only support specific business taxes (not sales and use) and will offer companies a one stop shop to handle the reporting and remittances for various withholding, payroll, franchise, and corporate taxes. 

Sales and Use tax will migrate from the eTSC portal to in Fall 2017, allowing sales and use tax enthusiasts and compliance guru’s another year to remain optimistic that we weren’t forgotten.  Sales tax always seems to play second fiddle and never ever gets to be first…ever!

In anticipation of the migration to the new website, the District of Columbia has announced the following service that will be temporaily unavaialble via their website that does impact sales and use tax:

Services Temporarily Unavailable – October 24 through October 31, 2016

FR-500 Combined Business Tax Registration Application: Taxpayers will no longer be able to complete the online business registration using eTSC.  During this transition period, taxpayers who wish to register a new business, must complete the paper form FR-500 available at Beginning November 1, all business tax registrations must be completed online at

So while we won’t get the opportunity to utilize the new website for sales and use tax filings until next year, we will get to try it out for new business registrations starting in a few weeks! 

Need Help with  Sales Tax Registrations?


Topics: sales tax, Washinton DC

Some Not So New and Exciting Things About Sales Tax

Posted by Robert Dumas on Tue, Oct 18, 2016 @ 02:00 PM

This is a reposting of blog from June 2016.  Oldie but goodie.


Sometimes it’s difficult to find something  new and exciting about sales tax and sales tax bored_baby.jpgcompliance to share.  (Can you imagine not having anything exciting to say about sales tax?)  

So…I have decided to share with you some of the “not so new and exciting things” (although extremely important) we have learned about sales tax and sales tax compliance in the 20+ years we have been in this business:


  • Sales tax is the ugly step child of all tax disciplines (no offense to any step children intended)
  • Sales tax is not as sexy as income tax (only a CPA could think income tax is sexy)
  • You never want to spend the money necessary to be 100% right with sales tax, but you always want to spend as much money as necessary not to be 100% wrong (read it again and it will make more sense)

  • Everyone thinks they know a lot more about sales tax than they really do (just because it is on the internet does not mean it is true)
  • Sales tax nexus is the most misunderstood sales tax concept (nexus is not just direct physical contact)
  • No one thinks about sales tax until a major issue surfaces (crisis management is rarely a good strategic approach for sales tax)
  • Sales tax compliance adds no value but can create tremendous financial risk if ignored or mismanaged (have you heard of penalties and interest?)
  • Sales tax compliance is not ‘rocket science’ but don’t let anyone tell you it is easy (regardless of what a salesperson may tell you…there is no ‘easy’ button)
  • People can experience a tremendous amount of pain, discomfort and risk with a sales tax compliance outsource solution and remain unwilling to make a change (dysfunction is the new normal for some people)


Sometimes bullet points and humor are best.  I understand humor is relative, but remember, I’m a CPA.


Topics: sales tax nexus, sales tax

3 Components of Sales Tax Compliance You Haven't Considered

Posted by Robert Dumas on Thu, Oct 13, 2016 @ 10:56 AM

I get the opportunity to talk to many businesses and CPA firms about our sales tax outsourcing services at TaxConnex.  When most of the people we talk to refer to sales tax compliance, they are thinking about tax return preparation only.   They never consider the other components of compliance. 


This blog is going to highlight three of these ancillary components of sales tax compliance:



1. Filing, Mailing & Remittance    

Once a sales tax return is prepared, it must get filed and paid.  Filing can include mailing or electronic filing.   If you mail a return, it must be signed, copied or imaged for future reference, stuffed in an enveloped, metered and delivered to the post office for certification of mailing.  If you electronically file a return, it must be entered manually or uploaded into a unique jurisdiction web-site.  Regardless of the filing method, a payment is generally required and can be a check, an ACH debit or an ACH credit.  All of these remittance, mailing and filing activities require human action, processes, controls and related costs.


2. Jurisdiction Correspondence    

Once a business is registered with a state and local jurisdiction, it can expect multiple pieces of recurring mail from each jurisdiction.  This correspondence includes notifications of law and tax rate changes, blank tax forms, account changes and notices regarding previous filed tax returns.  Though 90% or more of this correspondence is not relevant, there is a small percentage of this mail that requires action. 

Many times, the action required is time critical so any delay in responding creates risk with the jurisdiction.  Unfortunately, a person with some level of knowledge (as opposed to a technology), must review each article of mail as quickly as possible to separate the irrelevant from the time critical and to get the mail into the proper hands.  This too requires human action, processes, controls and related costs. 


3. Audit Workpapers   

Once a tax return is filed, there must be some form of documentation to support the reported tax liabilities in case the tax return is audited in the future.  Ideally, this documentation provides an easy trail from the core business transactions – for example, customer invoices or vendor invoices - to the lines on the tax returns.   The documentation should also include proof of exemptions, if applicable, and support for bad debt write-offs and other adjustments.   The cost of accumulating this information can be extensive if it is gathered after the original tax return preparers are gone and the data is stored in archives.


Just last week I ran into a situation where a company was using another firm to prepare paper based returns.  The company then had to login to the e-file site to file and pay and/or cut checks and send the return and check to the jurisdiction.  It’s not an efficient process to have multiple parties involved in the preparation, filing, and payment of the sales tax returns. 

Be sure to factor in all of the relevant processes, costs, and risks when evaluating whether to outsource and to whom.


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Topics: sales tax compliance, sales tax, sales tax outsourcing

7 Warning Signs You Should Break Up with Your Sales Tax Outsourcing Provider

Posted by Brian Greer on Tue, Oct 11, 2016 @ 02:29 PM

  1. You spend too much time overseeing and reviewing the work of the service provider

  2. You see an increase in the notice activity

  3. There’s no reliable point of contact with the service provider

  4. There’s no accountability on behalf of the service provider

  5. A “C”-level executive is contacted by a jurisdiction with bad news

  6. General lack of responsiveness to questions

  7. You’ve lost confidence in the service provide

    If you are experiencing any of these symptoms it may be time to reevaluate your outsourcing relationship.  With TaxConnex’s sales tax outsourcing service, you receive an off-premise sales tax employee.  Rather than just providing return preparation services (like our competitors), we're available to address questions as they pop up in the business - including nexus questions, taxability issues, exemptions, and audits. Our responsiveness to client questions is universally recognized by our clients.

     "TaxConnex has a different approach, from the onset we could see that working with TaxConnex was going to be a different experience than we have had in the past.  TaxConnex Team Members involved themselves in our business to get a true understanding of the nuances of our industry.  They provided a key contact who feels like an extension of our staff.   Their response time to questions and requests have exceeded our expectations. Great Company to work with."  

    Linda C., Creatacor

    To learn more about the TaxConnex Difference and Evaluating the Different Sales Tax Outsourcing options download our FREE white paper now.

    Is this the right relationship for you?   Evaluate The Different Sales Tax Outsourcing Options

Topics: sales tax, sales tax outsourcing

EYE ON Massachusetts Sales Taxes

Posted by Jeff Meigs on Thu, Oct 06, 2016 @ 02:00 PM

eye_on_massachusetts.pngThe Massachusetts sales and use tax is imposed on taxable retail sales and the use of tangible personal property and designated services. The statewide general tax rate is 6.25%. There are no local sales or use taxes imposed in Massachusetts.   

Massachusetts was one of the first states to implement a more secure online account management and filing system for sales and use taxes. 

  • The security measures require each computer to be recognized by the Massachusetts online system before access to the account can be granted – meaning that if your compliance person is out sick when the sales tax return is due, it isn’t as easy as having another employee login to your account and file the return. 
  • The computer has to first be registered with the state using a separate set of security credentials.  While this security measure has all the right intentions, it adds a layer of seemingly unnecessary controls. 
  • Other states have adopted or are planning to adopt similar measures. 

As you might expect, tea is not subject to Massachusetts sales and use tax (except when prepared for immediate consumption).

american_tea_co.jpgSo your next tea party doesn’t have to be themed “taxation without representation”.  Boston baked beans are also exempt, while a Boston cream doughnut would be taxable (unless prepackaged and sold for off-premise consumption in units of six or more).  I can’t think of any state or city without associating it with food. 

With a relatively low sales and use tax rate and no local taxes, Massachusetts is an attractive state for sales and use tax purposes.  Their taxpayer customer service is usually professional and courteous as well.  

  Stay tuned for more of Jeff's EYE ON series as he blogs aboout sales and use tax State by State.



Topics: sales tax, Massachusetts

How To Qualify For Telecommunications Tax Exemptions

Posted by Brian Greer on Tue, Oct 04, 2016 @ 11:07 AM



TaxConnex works with a lot of telecommunications service providers that are new to the business.  Many are existing MSP’s (Managed Service Providers) or IT management companies that would like to expand their service offering and become “stickier” with their clients.  They may have infrastructure in place to support the sales tax requirements of their existing business, but the telecommunications service presents a different set of issues. 

One of these issues is related to establishing the ability to purchase telecommunications services from their carriers on an exempt basis under the premise that they will be reselling the service.

Telecommunications services is one of the most highly taxed and regulated industries in the country.  In addition to the standard sales tax in some states, there could be separate communications services taxes, utility users taxes, 911 fees, and various state and federal regulatory compliance obligations. 

One of the primary regulatory obligations is contributing to the USF (Universal Service Fund). 

Since the service providers are in the middle of the supply chain – purchasing service from an upstream carrier and reselling the service to their customers – there’s an opportunity to exempt these purchases from taxes and fees for resale purposes. 

However, the standard sales tax resale exemption is not sufficient to achieve the exemption.

This is primarily because the service provider needs to exempt different taxes – not just sales tax.  They may need to exempt communications services tax, utility users tax, 911 fees, USF contributions – each potentially requiring a unique form to be completed and sent to the upstream carrier.

Many of the state and local taxes and fees (911 charges) can be exempted as soon as a service provider provides a valid tax ID number for the tax type being exempted in the state where the service is being provided. 

Exempting the regulatory charges and the USF fee can be more challenging.  

  • The USF has a de minimis category whereby a service provider is not required to contribute directly to the fund but rather the upstream carrier charges the fee and reports directly to USAC. 
  • Once the USF contributions of the service provider exceed $10,000 in a 12-month period, then the service provider must contribute directly to the fund via USAC. 
  • In return, the service provider can now apply for a USF exemption with the carrier. 
  • The carrier is only allowed to exempt the USF fee if the service provider provides proof that they are a direct contributor to the fund.

Due to the number of tax types and regulatory obligations, most large carriers will issue an exemption package to their resellers for completion. 

This can be a 40-50 page or longer document requesting different forms to be completed noting different tax and FCC filer id numbers.  That paperwork can be overwhelming but is worth the effort to complete and/or the cost to hire an outside firm to help.  With tax rates on telecommunications services as high as 13% in some states and with the USF contribution factor ranging between 15% and 17%, there is a significant savings opportunity.


VoIP Tax.  Telecom Tax.

Topics: telecommunications tax

Arizona Teases TPT Simplicity…. AGAIN

Posted by Noelle Ard on Thu, Sep 29, 2016 @ 10:06 AM

I believe it was about this same time last year where I could barely contain my excitement…Arizona (AZ) was FINALLY going to roll out their “simplified” return filing process for all locals which would reduce the number of local level returns that would need to be filed, as everything would then be reported and remitted to the state and distributed accordingly.  Then something happened…. or maybe something didn’t happen, regardless, AZ pulled back on their yearlong commitment of making 2016 a more “simplified” filing year, and halted the “TPT Simplicity Project.”

Fast forward to this week, I received an email alert notifying me that TPT Simplification is drawing near, and effective with the January 2017 liability (due February 2017), TPT Simplification will be up and running and ALL locals will be reported and remitted to the State of Arizona via the Transaction Privilege Tax Return. 

So I quickly logged onto the AZ DOR website to check it out! (  The suspense was killing me – could it be?  Like a kid on Christmas morning peeking around the corner to see what Santa left, I clicked on the “What’s New” link with excitement and also a bit of “it’s too good to be true” anxiety.  There it was…


Beginning with your January 2017 TPT return filed in February 2017 TPT return, the Arizona Department of Revenue will be the single point of administration and collection of state, county and municipal transaction privilege tax.

Taxpayers will be able to file and pay for all jurisdictions to the department. This means if you currently report to a self-collecting city (i.e. non-program city), your last return to that city will be your December 2016 return filed in January 2017.

Like Will Ferrell in the blockbuster ELF, I shouted (to myself) SANTA’s COMING!!!!  Arizona haself-2.jpg committed (again) to launching the streamlined reporting and remittance system and I feel like this is it – this could be the real thing this time! 

If you haven’t subscribed to the AZ DOR’s emails, I would recommend it – it gives you all of the details of what’s going on within the AZ DOR without you having to go and “search” for it.  Simply navigate to and enter your email address.



Topics: sales tax, Arizona

Here’s What You Can Expect from the Other Guys

Posted by Brian Greer on Tue, Sep 27, 2016 @ 10:25 AM


I’m always surprised (maybe frustrated is a better word) when a business decides to use a different sales tax compliance outsourcing firm.  I take it personally and believe that maybe I didn’t understand their issues well enough to articulate exactly how TaxConnex will benefit them. 

Unfortunately, companies often purchase sales tax compliance outsourcing based almost solely on price.  They don’t see the risk of a poorly managed process.  It’s eye opening to talk with a business that is outsourced to a competitor and to hear their struggles.  I wish the first time buyers could hear some of the struggles. 

Here’s a compilation of what I’ve heard over the years from businesses that are frustrated with their sales tax compliance outsourcing vendor and what you can expect to encounter with the “other guy”:

  • Symptom: Our calls and emails are not responded to. All I need is acknowledgement that they received my question.
  • Cause: Sales tax compliance is not their core business.  The vendor might be a software company or a consulting/CPA firm.  They are not focused on sales tax compliance outsourcing.  Ask them what percentage of their revenues are tied to the service you are buying.

  • Symptom: I have to approve everything the vendor is doing.  I have to approve changes to the calendar.  I have to approve every return that is filed.  It takes too much time. 
  • Cause: On the surface this feels like the vendor is providing control to the client.  The reality is that the vendor is pushing the decision – AND THE LIABILITY AND RISK – back to the client.  Wait until there’s a problem to see where the blame falls.  It’s with the client who approved everything.


  • Symptom: There are so many notices that we have monthly calls just to review the notices and determine actions to resolve each notice.
  • Cause: The vendor is so busy during the first half of the month that they can’t pay attention to notices and resolve them in a timely fashion.  Their process is designed to manage notices (and often times poorly) rather than to prevent notices.


  • Symptom: I have a new point of contact every 3-6 months.
  • Cause: Sales tax outsourcing is not important to the vendor – it’s an ancillary service that is either staffed with clerks who frequently turnover or competent professionals that quickly move into other areas of the business.  Regardless, the result is more time training the new point of contact and errors while the new person is learning the process.


  • Symptom: I spend an excessive amount of time overseeing the outsourcing relationship and reviewing the process.
  • Cause: There have been numerous errors and/or notices that result in a lack of confidence in the monthly process requiring excessive oversight to make sure the job is completed properly.


Most of these symptoms relate back to the fact that sales tax compliance outsourcing is generally not the core business of most firms.  They are often software businesses attempting to provide a service.  (BTW – providing sales tax compliance outsourcing is a service.)  Or a consulting firm that provides literally a hundred different services of which sales tax compliance outsourcing is just one of them. 

TaxConnex is focused specifically on sales tax compliance outsourcing with well over 90% of our revenue attached to it.  It is our focus.  It is our core business.  If you’re tired of the “other guy” – give us a call.

The TaxConnex Difference


Topics: sales tax, sales tax outsourcing

Frustrated with Your Sales Tax Audit?

Posted by Brian Greer on Thu, Sep 22, 2016 @ 11:23 AM

Sales Tax Audit Assessments - How to Avoid An Uphill Battle


Recently, I’ve had several discussions with companies about a sales tax audit assessment they’ve received.  They come to me in an attempt to negotiate a settlement with the state.  The problem is that they were clearly at fault and are now struggling with the reality of paying the back taxes, penalties, and interest. 

There’s typically not much I can do in this situation unless they are willing to pursue an offer in compromise which requires the tax payer to share their financial details with the state…essentially proving that the full payment of the assessment will put them out of business.  The angle is that the state is better off accepting some percentage of payment on the initial assessment while keeping the company in business long-term…ideally yielding a bigger financial gain long-term.

Voluntary Disclosure Agreements White Paper

I always wish they would have reached out prior to the sales tax audit and been proactive in addressing their sales tax issues.  There are many more options available to a taxpayer when you’re ahead of the curve. 

How do you make sure sales tax receives the attention it should in your business and avoid an audit?  Download our Top Tips to Avoid Sales Tax Audit Assessments to learn how.

  Learn More... Download Our Tips to Survive a Sales Tax Audit


Topics: sales tax, sales tax audit, audit