M&A negotiations and sales tax liability
It’s a common scenario: A company has decided to sell, then due diligence turns up a $2 million...
Today’s health and economic climates have changed the way we look at business activities. Many businesses have had difficulties due to mandated closures. While many states are in the process of reopening, it remains possible that more changes will occur.
Understandably, sales tax may be the last thing on your mind right now. The problem is that neglecting your responsibilities can lead to legal trouble. No one knows what the new normal will be, but sales tax compliance remains one of the top issues for businesses engaged in selling taxable services or products.
Changes in your business’s staffing, operations, and ownership can result in different sales tax implications. Your sales tax provider needs to be on top of these changes in order to get you the help you need.
You may have noticed that your sales tax compliance service is not fulfilling all of your needs at this time. If your tax compliance service is not doing its job, your exposure to serious consequences could be severe.
TaxConnex has put together a list of seven reasons you may want to change sales tax compliance providers in this shifting economic climate.
If you have subscribed to a software platform to help you with your sales tax compliance, you may have to spend extra time making sure that you get everything right.
For example, software without personal support is unlikely to catch changes in filing deadlines. Many states have extended these deadlines to reduce the burden on companies, but some have not made any alterations, however, the majority of these extensions have passed. Similarly, changes in filing frequencies cannot be addressed by software-only options.
States generally use electronic notices to let companies know that they need to file their sales taxes. These are posted in the online e-file sites of the various states. If you are using an automated software, you may have to log into each state’s e-file site separately to retrieve these electronic notices. It is possible that you will miss notices, meaning that your company may run afoul of the law. When you receive a notice for sales or use tax, you must respond right away.
When you are having difficulty with your automated sales tax provider, you will want to be able to connect with someone right away to get the problem fixed. Too many automated sales tax solutions handle requests in an impersonal “trouble ticket” system where the only form of communication is via email.
While some problems can be solved by email, it is better to have a knowledgeable person to walk you through the answers to your questions and make sure that you fully understand all of their implications. When you work with TaxConnex, your problems will be handled by a qualified person, with phone and email support available.
Every client should be able to contact a reliable person when they need help with sales tax filing issues. Constant changes can be irritating for the client since they will have to explain their circumstances to the new tax provider every time.
Clients should know which people are accountable for their issues. This can be challenging in cases where the tax compliance company is disorganized or outsources too much to other providers.
Frequently, automated sales tax compliance providers require the use of a third-party provider for payment processing. This means that the blame for a problem can be passed down the chain. This can be a dangerous situation for a company that needs to have its sales tax properly handled. Clients should carefully consider whether two levels of outsourcing make sense to them.
When there are too many people involved in the preparation of your sales tax filing, you could create a situation where crucial information falls through the cracks. Complex chains of command and work split across departments can cause confusion and delay in response to your questions. Companies may not be able to get to the bottom of problems. There could be IT issues, compliance problems, or worse.
When sales tax issues have gone too far, states and local jurisdictions may contact your CEO or other C-level executives directly, in some cases even contacting them at home. The individuals contacted are often the officers who were listed on the original sales tax application. These are the responsible parties we have referenced in other documents. This can be a severe problem for your executives, as in some cases, they will be personally legally responsible for the tax compliance company’s failure in this area.
Your C-level executives will need to be reassured that these problems are being taken care of and that they will not happen again. Having a personal representative at your sales tax compliance company will go a long way toward smoothing things over.
Many sales tax outsourcing providers manage their “return preparers” workload based on how many returns they file. This means that your return preparer is likely overworked and has little to no time to answer any questions you may have. They have barely enough time to file the returns by the due date, and catch their breath before the compliance cycle starts over again.
When you have experienced the issues outlined above, it is understandable that you will lose confidence in your sales tax compliance provider. Once you reach this point, you know that your service provider is not capable of handling your company’s business any longer.
When you are looking for a new sales tax filing and compliance provider, you will want to take a close look at their capabilities. If your sales tax provider is mainly concerned with providing software that can calculate the tax on an invoice, they may not be able to handle complex compliance issues. On the other hand, if you are working with an accounting firm, they may be distracted with other work as sales tax compliance is generally not an area in which accounting firms specialize.
TaxConnex is able to provide a sales tax compliance service that takes the burden off of your company. Using our expert advice, you will be able to handle all of the changes in sales tax law and accurately fulfill your obligations.
Now that you have evaluated whether you need to make a change, download our eBook to understand the process. Our eBook will help you decide what kind of sales tax compliance provider is right for you.
If you need further assistance or need to speak with an expert, please give us a call at 877-893-5304 to speak with a knowledgeable sales tax expert or fill out the form on the right side of this page.