Diese Präsentation wurde erfolgreich gemeldet.
Die SlideShare-Präsentation wird heruntergeladen. ×

Sales Use Tax Opportunities and Traps Affecting Your Business

Anzeige
Anzeige
Anzeige
Anzeige
Anzeige
Anzeige
Anzeige
Anzeige
Anzeige
Anzeige
Anzeige
Anzeige
Wird geladen in …3
×

Hier ansehen

1 von 40 Anzeige

Sales Use Tax Opportunities and Traps Affecting Your Business

Herunterladen, um offline zu lesen

Join us to discuss new developments regarding how the Wayfair decision has affected businesses and the related sales tax compliance requirements. The team will also discuss opportunities such as common exemptions to identify potential refunds, potential audit triggers, and other sales tax trends including collections, remittance, and software solutions.

Join us to discuss new developments regarding how the Wayfair decision has affected businesses and the related sales tax compliance requirements. The team will also discuss opportunities such as common exemptions to identify potential refunds, potential audit triggers, and other sales tax trends including collections, remittance, and software solutions.

Anzeige
Anzeige

Weitere Verwandte Inhalte

Weitere von Withum (20)

Anzeige

Sales Use Tax Opportunities and Traps Affecting Your Business

  1. 1. 1 2022 WithumSmith+Brown, PC Sales/Use Tax Opportunities and Traps Affecting Your Business December 8, 2022
  2. 2. 2 2022 WithumSmith+Brown, PC Meet Your Speakers Jim Bartek, CPA State and Local Tax Partner Practice Leader jbartek@withum.com (973) 204 5523 Courtney Easterday, MSA State and Local Tax Manager ceasterday@withum.com (646) 604-4153 Bonnie Susmano, JD, MBA State and Local Tax Manager bsusmano@withum.com (917) 538 8337
  3. 3. 3 2022 WithumSmith+Brown, PC Table of Contents Why is Sales Tax so important? How has Wayfair impacted businesses? The Compliance Burden Other Considerations Questions
  4. 4. 4 2022 WithumSmith+Brown, PC Why is Sales Tax so important?
  5. 5. 5 2022 WithumSmith+Brown, PC
  6. 6. 6 2022 WithumSmith+Brown, PC
  7. 7. 7 2022 WithumSmith+Brown, PC
  8. 8. 8 2022 WithumSmith+Brown, PC 0 WithumSmith+Brown, PC | BE IN A POSITION OF S S M TRENGTH
  9. 9. 9 2022 WithumSmith+Brown, PC Polling Question #1
  10. 10. 10 2022 WithumSmith+Brown, PC WithumSmith+Brown, PC | BE IN A POSITION OF S S M TRENGTH *As of July 2020
  11. 11. 11 2022 WithumSmith+Brown, PC 0 WithumSmith+Brown, PC | BE IN A POSITION OF S S M TRENGTH New York State News from the Comptroller-DiNapoli: 2020-21 Tax Revenues $3 Billion Over Projections April 15, 2021
  12. 12. 12 2022 WithumSmith+Brown, PC New York State New York 2022 Financial Condition Report for Fiscal Year Ended March 31, 2022
  13. 13. 13 2022 WithumSmith+Brown, PC New York State New York 2022 Financial Condition Report for Fiscal Year Ended March 31, 2022
  14. 14. 14 2022 WithumSmith+Brown, PC New York State New York 2022 Financial Condition Report for Fiscal Year Ended March 31, 2022
  15. 15. 15 2022 WithumSmith+Brown, PC New Jersey NJ Senate Budget and Appropriations Committee Hearing May 12, 2022
  16. 16. 16 2022 WithumSmith+Brown, PC New Jersey
  17. 17. 17 2022 WithumSmith+Brown, PC Polling Question #2
  18. 18. 18 2022 WithumSmith+Brown, PC How has Wayfair impacted businesses?
  19. 19. 19 2022 WithumSmith+Brown, PC  Nexus is defined as contact with a state that is sufficient to establish a connection allowing the state to impose a tax  Requires the seller to possibly register, collect, and remit sales tax on sales made within the state  Requires a business to possibly file an income, gross receipts, and/or net worth tax return.  Types of nexus include:  Physical Nexus  Economic Nexus  Attributional Nexus  Click – Through Nexus  Affiliate Nexus What is Nexus?
  20. 20. 20 2022 WithumSmith+Brown, PC The Wayfair Decision: Wayfair vs. South Dakota  On June 21, 2018, the U.S. Supreme Court, in a 5-4 decision, ruled in favor of the state of South Dakota when it reversed the decades long physical presence requirement of Quill and ruled that the economic sales nexus requirements of the South Dakota law were Constitutional  The Court concluded that “…the physical presence rule of Quill is unsound and incorrect and the Court’s decisions in Quill...should be and now are overruled.”  In overruling the decades long physical presence requirement of Quill with respect to both domestic companies and foreign companies.  U.S. Supreme Court Justice Kennedy noted: Quill is flawed on its own terms.  First, the physical presence rule is not a necessary interpretation of the requirement that a state tax must be “applied to an activity with a substantial nexus with the taxing state”.  Second, Quill created rather than solves market distortions.  And third, Quill imposes the sort of arbitrary formalistic distinction that the Court’s modern Commerce Clause precedents disavow. South Dakota v. Wayfair, Inc., 585 U.S(2018)
  21. 21. 21 2022 WithumSmith+Brown, PC The Wayfair Decision: Wayfair vs. South Dakota  When Quill was decided:  In 1992, less than 2% of Americans had Internet access; today the number is about 90%  In 1992, mail-order sales in the United States totaled $180B; in 2021 e- commerce retail sales alone were estimated at $870B (increase of 14.2% over 2020 and 50.5% over 2019)  In 2021, e-commerce represented 13.2% of retail sales in the U.S.  In 1992, States were losing between $694M and $3B per year as the result of the physical presence rule; the estimated range in 2018 was between $8B to $33B
  22. 22. 22 2022 WithumSmith+Brown, PC At a Glance… All states, plus D.C., have passed sales tax economic nexus standards Beginning January 1, 2023, Missouri will become the last states to adopt economic nexus laws ($100,000 threshold) Five states don’t have a sales tax An increasing number of services are becoming subject to sales tax Although a taxpayer’s revenue stream may not be taxable in their home state, their sales into other states may be subject to sales taxes
  23. 23. 23 2022 WithumSmith+Brown, PC Marketplace Facilitators  The term “Marketplace Facilitator” refers to companies that contract with third-party “Marketplace Sellers” to promote their sale of physical property, digital goods, and services to consumers through an online shopping portal maintained by the marketplace. (e.g., Amazon, Ebay and Etsy)  Facilitators often handle the transfer of money between the buyer and the seller, and sometimes may also help arrange for delivery  When considering these activities, it becomes clear why state tax revenue departments want to hold marketplace facilitators responsible for the collection and remittance of sales tax  In performing these services for customers, Marketplace Facilitators come to know:  what’s being sold,  where the item is being delivered, and  the price being paid  Essentially, all the data necessary for an accurate sale tax calculation
  24. 24. 24 2022 WithumSmith+Brown, PC Marketplace Facilitators Complexities  Remote sellers who sell through marketplaces and their own websites face more challenges  Remote sellers are still obligated to collect sales tax on sales through their own websites  Inventory in warehouses can result in physical nexus  Marketplace facilitators may provide options to collect on your own if the state allows for this option which can create unexpected exposure  Maintaining records of sales in each state for both marketplace and e-commerce sales becomes more complex  The definition of “marketplace facilitator” may differ from state to state WithumSmith+Brown, PC | BE IN A POSITION OF S S M TRENGTH
  25. 25. 25 2022 WithumSmith+Brown, PC Polling Question #3
  26. 26. 26 2022 WithumSmith+Brown, PC The Compliance Burden
  27. 27. 27 2022 WithumSmith+Brown, PC Determine Where Nexus Exists Identify pre-Wayfair physical nexus Assess post-Wayfair physical and economic nexus Evaluate income tax and other potential taxes Review nexus footprint periodically Stay up to date regarding changes in nexus thresholds
  28. 28. 28 2022 WithumSmith+Brown, PC Analyze Potential Exposures  Review taxability of different revenue streams  Determine tax base (e.g., shipping, mandatory/optional contracts, etc.)  Examine bundled transactions and mixed transactions  State interpretations of taxable services can be broad and complex  Obtaining formal guidance from states can take awhile
  29. 29. 29 2022 WithumSmith+Brown, PC Analyze Potential Exposures  Contacting customers to identify potential exemptions can be time consuming  Identify potential use-based exemptions  Determine if sales tax was erroneously paid to vendors  Consider income tax and other tax exposures
  30. 30. 30 2022 WithumSmith+Brown, PC Automation  Review and consider technology needs  ERP system limitations on invoicing  Integrating sales data  Automation  Improves accuracy and efficiency of sales tax decisions  Over 7,500 sales tax rates  Exemption certificate management
  31. 31. 31 2022 WithumSmith+Brown, PC Sales and Use Tax Compliance Who is going to handle this new function? Establish an efficient process Consider “use tax” Timely file all returns and remittances Electronic return filing Notice management Consider outsourcing
  32. 32. 32 2022 WithumSmith+Brown, PC Common Issues  Tax product mapping  Improper nexus analysis using software  Data management  Exemption certificate management  Incorrect tax rates collected  Other issues
  33. 33. 33 2022 WithumSmith+Brown, PC Audit Triggers  A significant percentage of exempt sales  Large changes (either increase or decrease) in sales tax  Late returns filings  Incorrect math  Nexus but no registration  Not filing and remitting Use Tax
  34. 34. 34 2022 WithumSmith+Brown, PC Additional Audit Triggers Current vendor audit Current customer audit “Whistleblowers” Resale certificates Drop in taxable sales Requesting a refund Industry type Luck of the draw Not found in the state system
  35. 35. 35 2022 WithumSmith+Brown, PC Other Audit Trends Nexus questionnaires Audit personnel Use of technology Sampling methodology Immense pressure to close audits Reconciling to financials Jeopardy assessments Negotiations
  36. 36. 36 2022 WithumSmith+Brown, PC Polling Question #4
  37. 37. 37 2022 WithumSmith+Brown, PC Other Considerations
  38. 38. 38 2022 WithumSmith+Brown, PC Are there any savings opportunities?  Perform a “refund review” in conjunction with an audit or independently  Check sales tax paid to vendor  Items sold for resale  Services sold for resale  Specific exemptions (e.g., manufacturing, research & development)  Sourcing of services  Use tax accrual review  Immediate and future cash savings for refunds identified  Credit against an audit payment (e.g., cash, interest, penalty)  Contact vendors to provide proof of exemption
  39. 39. 39 2022 WithumSmith+Brown, PC Emerging Trends Sales Tax Expansion to Services Digital Goods/Services/Advertising Taxes Intangibles (NFT) Sourcing Gross Receipts Taxes (e.g., OR CAT) Financial Transaction Taxes Excise Taxes on Gas/Nicotine/Cannabis “Exporting” the Tax Burden Unclaimed Property
  40. 40. 40 2022 WithumSmith+Brown, PC Questions? Jim Bartek, CPA State and Local Tax Partner Practice Leader jbartek@withum.com (973) 204 5523 Courtney Easterday, MSA State and Local Tax Manager ceasterday@withum.com (646) 604-4153 Bonnie Susmano, JD, MBA State and Local Tax Manager bsusmano@withum.com (917) 538 8337

×