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So many small/mid-sized businesses are strapped for cash in today's frustrated economy.  This makes the notion of meeting all your obligations, while remaining fully tax compliant, all that much more challenging.  Lest we forget, the businesses we all know as "taxing authorities" are wrestling with the same challenges.  Revenue is tighter and expenses are giving them little breathing room.  Unfortunately, smaller businesses end up in their cross hairs much more frequently in times like these.

So what's a company to do?  The cost of having complete sales and use tax compliance can sometimes push a company into the precipice.  It seems overwhelming...illogical...even unfair at times.  This problem of sales tax compliance needs to be approached like any other financial dilemma or hardship - do the very best you can and let strong business ethics be your guiding light.

I don't know about you, but when I feel financial strain, I always look to remove whatever small piece of it I can...immediately.  If it's a small obligation that I can just get into "the rear view mirror," I'll get that taken care of first.  It always makes the next biggest issue that much easier in the short term.  So why not tackle mounting sales tax compliance issues in the same manner?  Here's where this logic leads you:

  • Pick an issue/payment that you know you can handle, right now, and take care of right now;
  • Once that issue is out of the way, apply those freed up funds or resources to solving the next issue that you can most quickly solve...and start making progress on that one, soon;
  • Once you've overcome these smaller obstacles, the larger ones seem much less intimidating.  Over time, you have incremental resources to apply to those and get them scheduled to be "off your chest." 
  • The most diffcult issues might require deeper spade work - Voluntary Disclosure, Nexus research, Sales Tax Amnesty Pursuit - but you can get inexpensive sales tax consulting help for that.

Look, each of us wants to be compliant and up to date with all that we owe any jurisdiction.  It may take some uncomfortable effort to keep up with it, but that's much better than the scrutiny, audit defense, or penalties and interest which accompany a deep dive into our compliance efforts.  The only thing that makes this deep dive more tolerable is knowing that some of the compliance issues are off the table because of your diligent efforts to be up-to-date.

Finally, just like you, an auditor is much more tolerant of a company that is trying.  Doing nothing to handle historic compliance issues is a bad statement.  Doing something, whatever you can, is a great character statement for your business.  And if "doing something" even seems too hard, consider the alternatives.  Those won't be up to you, eventually.

Doug Starr

Written by Doug Starr