TaxConnex

TaxConnex

No matter how many states you're in or how often regulations change. It’s only possible because of our proprietary platform and network of sales tax experts. Sales tax is more complicated than ever, especially in a post-Wayfair world. Yet the providers who claim to simplify sales tax often still leave the hardest parts – and the liability – up to you. When you work with TaxConnex, it’s all on us. This means you get all the know-how, all the backup, and none of the risk. That’s why everyone from big corporations and accounting firms to the latest online boutique all turn to TaxConnex. Now it’s all on us.™

Recent posts by TaxConnex

3 min read

5 Steps to Put Your Business on the Right Track to Maintain Sales Tax Compliance

By TaxConnex on Thu, Sep 24, 2020 @ 11:00 AM

It has been two years since the US Supreme Court passed the Wayfair decision which paved the way for states to enact economic nexus rules. At this point, the majority of finance professionals understand the need to maintain sales & use tax compliance. Most businesses have some type of process in place although it may not be comprehensive enough. What do you do when you discover you are out of compliance in some states? Or you acquire a business that has done very little to manage sales and use tax compliance?

In this blog, we’ll outline 5 steps that will put you on the right track to have your business prepped to maintain compliance.

1. Complete a Nexus Review

Nexus is determined by a physical presence OR economic presence within a state or jurisdiction. Nexus can be an evolving issue for many businesses. As your team and business grows, you could also be expanding your nexus footprint. Having a complete nexus review to understand your current footprint is key to starting the process towards compliance. You must also understand that this is not a one-time project. It is important to monitor nexus thresholds throughout the year to be sure you have not triggered nexus in new states.

2. Understand your exposure

Sales tax is meant to be a pass-through tax and thus one that should have minimal impact on a company’s bottom line. But, if you fail to collect and remit the applicable sales tax, under audit a jurisdiction will assess the tax due + a penalty + interest. This then becomes a bottom line hit to your business unless you can recoup from your customers.

If your business has previously established nexus and has not been collecting sales tax, you must determine your prior period exposure. The analysis of prior period exposure should encompass all periods where the company had nexus and taxable sales but wasn’t in compliance. For many states there is a 7-year look back period that needs to be addressed.

To gain an estimate of your liability/risk, you can use our free calculator tool, but to get the most accurate answer it is best to talk to a sales tax expert.

3. Understand if a VDA is right for your business.

A Voluntary Disclosure Agreement (VDA) is a legal means for taxpayers to self-report back taxes owed for income, sales, property, and other tax types. In exchange for voluntarily reporting the tax due, states generally grant a waiver of penalty and a limited look-back period (generally three to four years). VDAs can be effective tools to mitigate prior period sales tax exposure, but aren’t necessarily the best option for everyone.

Do your research and determine if a VDA is the best option before moving forward with the next step.

4. Register with a state to begin collecting and remitting sales tax.

Before you start collecting and remitting sales tax you need to register with the applicable jurisdictions. Through this registration process, the jurisdiction grants a license to collect the sales tax on their behalf. Registering to collect and remit sales tax generally requires submitting basic business contact information (though this can vary state to state) including a list of corporate officers, their social security numbers, and phone numbers.

5. Set up your process to collect, file and remit sales & use tax in your registered states.

This last step is really made up of several other steps. Maintaining a sales tax compliance process isn’t a one and done project. Whether you manage the process in-house, work with a technology vendor or outsource completely, there are many decisions and pieces to the process that need to be understood.

How will you calculate sales tax? Who will manage monitoring your nexus footprint? Who will maintain your tax calendar and monitor mail for notices? Talking to a CPA or working with an outsourced sales tax compliance provider can alleviate the burden considerably when managing this on-going process.

Keep reading more about how to setup and maintain your sales & use tax compliance in our eBook – Sales Tax Compliance: Your Need-to-Know Guide.

If you’re looking for some help along the way, contact TaxConnex We have a team of experts to help you navigate the many pitfalls of sales tax compliance.

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Topics: sales tax nexus sales tax compliance
4 min read

Taxes in the Telecom World: Misconceptions and Advice

By TaxConnex on Tue, Sep 22, 2020 @ 11:00 AM

This article was written for the Atlanta Business Chronicle Leadership Trust. To see the original post, click here

Taxes are an integral part of the telecom world. Taxes, fees and government surcharges on telecommunications services increased from 19.1% to 21.7% in 2019 (even as average monthly bills for consumers actually dropped).

In talking with countless telecommunications service providers about their various tax and regulatory requirements, there are some recurring themes I hear that can be troubling. These recurring issues tend to pop up with new VoIP service providers. Perhaps they’ve been in business for years previously — and they may have even had various sales tax obligations historically — but they are now offering VoIP services that expose them to a completely different set of tax and regulatory obligations.

The misconceptions I hear include:

1. VoIP is delivered over the internet and is, therefore, tax-free.

This is not true. The confusion lies with the sometimes controversial Internet Tax Freedom Act (ITFA), passed in 1998. ITFA does prohibit federal, state and local governments from taxing internet access and from imposing discriminatory internet-only taxes. There were a few states that were “grandfathered” and were allowed to charge tax on internet access; these grandfathered rules have been revoked as of July 1, 2020.

ITFA has no application to the taxability of telecommunications services. Understanding that VoIP is not tax-free, each state (and in some situations, each local jurisdiction) is able to decide whether VoIP is taxable or not. For example, California at the state level does not tax VoIP, but various cities in California apply a local utility users tax to VoIP.

2. I’m not a telecommunications service provider; I’m a reseller.

When I hear this, I believe the prospect is considering the major carriers as the service provider. If you are sending an invoice to your customer for telecommunications service, however, and the customer believes and recognizes that you are providing the service, then you may be considered a telecommunications service provider. As a telecommunications service provider, you are responsible for collecting and remitting the applicable taxes and regulatory fees.

3. I don’t have nexus, so I don’t need to collect and remit any taxes.

This comment often comes from someone experienced in the standard world of sales tax. Generally, as related to sales tax, nexus needs to be established before a company is obligated to adhere to the jurisdiction’s sales tax rules. Nexus has historically been thought of as a physical presence, but within the last two years (ever since the Supreme Court’s now-famous Wayfair decision), it has been expanded to include the idea of economic presence. If you are providing a telecom service, you could easily look to a customer in another state and conclude that you don’t have nexus in that other state and therefore are not responsible for collecting and remitting the taxes.

As a telecom service provider, however, you are using infrastructure within a state to deliver your service. This infrastructure includes cell towers, fiber, switches and so on. You may not own this infrastructure, but if it were not present, you could not deliver your service. States have concluded that the use of this infrastructure creates attributional nexus and therefore gives you the responsibility to collect the applicable taxes. Wherever you have customers, you must collect the taxes.

4. My service provider handles all of my taxes for me.

While there is an element of truth to this, it is not an effective strategy. The main factor to consider is that by providing VoIP service, you are now considered a telecom service provider. And as a service provider, you have direct responsibilities related to taxes and regulatory fees. Your upstream carrier may be charging you these various taxes and fees, but that does not relieve your responsibility.

Topics: telecom tax taxability
3 min read

State Benefiting from Economic Nexus During the Pandemic

By TaxConnex on Thu, Sep 17, 2020 @ 11:00 AM

States are still reeling in sales tax deficits brought on by the economic downturn during the pandemic, but the addition of economic nexus has appeared to have somewhat alleviated the deficits. States are starting to see an increase in online sales tax collections as more and more people remain online for work and shopping. 

Topics: sales tax south dakota vs. wayfair
8 min read

6 (Not So) Simple Steps to Sales Tax Compliance

By TaxConnex on Tue, Sep 15, 2020 @ 11:00 AM

Sales tax is complicated. Many sales tax companies will tell you it’s simple with their solution, but when you take a look at all that goes in to compliance – you will understand that no technology can fully automate or manage sales tax without a good bit of project management from your side 

Topics: sales tax compliance sales tax
3 min read

COVID Surcharges and Sales Tax

By TaxConnex on Thu, Sep 10, 2020 @ 11:00 AM

Lost sales, expenses for cleaning, more time and money for employee protection and training are just some of the reasons for businesses to claim they now have to charge extra to pay for responding to the pandemic (aka, “COVID surcharges”). In many places and for many industries these charges have become commonplace.

Topics: sales tax compliance sales tax
4 min read

Recent State Sales Tax Developments

By TaxConnex on Tue, Sep 08, 2020 @ 11:00 AM

A review of what’s been happening and updates states have made in sales & use tax so far in 2020.

Topics: sales tax sales tax news
1 min read

Instacart Sued For Not Charging Sales Taxes

By TaxConnex on Thu, Sep 03, 2020 @ 11:00 AM

The District of Columbia attorney general is suing grocery-delivery service Instacart for failing to pay hundreds of thousands of dollars in District sales tax.

Topics: sales tax sales tax news
1 min read

No Hike in Wyoming’s Sales and Use Taxes For Now

By TaxConnex on Tue, Sep 01, 2020 @ 11:00 AM

Wyoming lawmakers have declined to move forward with two bills to increase and broaden the state’s sales and use taxes, news outlets said.

Topics: sales tax sales tax news
7 min read

Address the Mess: Looking into the Complexities of Sales Tax

By TaxConnex on Thu, Aug 27, 2020 @ 11:00 AM

When it comes to sales tax, most businesses fit into one of three categories:

Topics: sales tax compliance sales tax
3 min read

2020 Sales Tax Updates

By TaxConnex on Tue, Aug 25, 2020 @ 11:00 AM

It’s been quite the year as many businesses and lives have been put on hold. But one thing that hasn’t stopped is the need to collect and remit sales tax. Even in the midst of a pandemic, sales tax updates have continued to happen. In this blog, we will take a look at some of the major sales tax developments that have happened so far in 2020.

Topics: sales tax compliance sales tax
3 min read

Taking a Look at the Exemption Certificate

By TaxConnex on Thu, Aug 20, 2020 @ 11:00 AM

A key document of sales & use tax is the exemption certificate.

Topics: sales tax compliance sales tax
3 min read

The ABCs of Sales Tax

By TaxConnex on Tue, Aug 18, 2020 @ 11:00 AM

Sales tax nexus is the basis for all your sales tax decisions. Without nexus, you have no further obligation to a state. If you do have sales tax nexus, then you need to dig a bit deeper and understand if your products and/or services are taxable. If they are, and you have nexus within a state that charges sales tax, in most instances you should register and start collecting sales tax. Simple right? Not so much.

Topics: sales tax compliance sales tax
15 min read

How Personnel Decisions Now Affect Your Nexus Later

By TaxConnex on Thu, Aug 13, 2020 @ 11:00 AM

The pandemic has changed the business world. But for how long? And what might happen to sales and use tax obligations when what were supposed to be temporary business-continuation measures harden into just the new way of working and doing business? 

 

Topics: sales tax nexus sales tax
3 min read

Is a VDA Right for Your Business?

By TaxConnex on Tue, Aug 11, 2020 @ 11:00 AM

Is a Voluntary Disclosure Agreement right for you? Voluntary Disclosure Agreements (VDAs) can be an effective tool in mitigating prior period sales tax exposure, however it may not always be the best solution.

Topics: sales tax VDA
1 min read

6 Easy Steps to Switching Your Sales Tax Compliance Provider

By TaxConnex on Thu, Aug 06, 2020 @ 11:00 AM

Is your outsourced sales tax compliance vendor making your life easier? It's a simple question, and if your answer is anything but yes, it may be time for a change. Sales tax compliance comes with a lot of complexity and liability. You shouldn’t be paying someone to do it for you but still managing the brunt of the headaches.

Topics: sales tax compliance sales tax
3 min read

Is Nexus Greener on the Other Side? Sales Tax in the U.S. vs Europe

By TaxConnex on Tue, Aug 04, 2020 @ 11:00 AM

Ever-changing thresholds, intensifying audits, some 12,000 taxing jurisdictions: No online business needs to be told how complex America’s sales tax burden can be.

Topics: sales tax nexus sales tax