I just saw a survey sent to state revenue officials regarding sales tax nexus. I've also seen one that involves enforcement of drop-ship rules. There are others around.
I'm not going to discuss the survey results - I'll leave that to the publishers. The point is that, when it comes to some topics, we have to figure out how the state is going to enforce the law based on surveys! Really?
My admittedly naive philosophy is that the laws should be written in some official place. They should be in statutes, regulations, bulletins and court cases. These are things that someone can look up. They shouldn't have to be compiled by a publisher doing a survey.
I'm not blaming the publishers. I'm blaming the states for coming up with nutty positions about gray areas based on stupid and complex laws that they created. The publishers are just trying to provide us with some useful information. I get that. However, I can see some problems.
Let's say that you take a position, based on the latest survey done by Joe's Sales Tax Consultants and Tattoo Parlor. The survey measured the amount of time you must have a service person in a state before you have nexus. It mentions Frank Derp as the source of the information for that state, and says that you would need a repairer in the state 10 days in order to have nexus. Therefore you've carefully managed your visits to the state so that you're only there 9 days.
When you get audited, the auditor says you have nexus. "But wait!" you splutter, "we kept it to 9 days and this survey (which you triumphantly slam on the desk) says it's 10 days."
There are at least three unpleasant ways this can go for you:
1. The auditor says, "I don't care what some survey says. I talked with my boss and he said you've got nexus. So that's it."
2. The auditor says, "Oh yeah, that answer was given by Frank Derp. I heard about that. When the survey came in, they brought it up at the staff meeting. Nobody wanted to fill it out, so Frank got stuck with it because he was sick that day. We all laughed when we saw the answers he gave. He was high on Dayquil."
3. The auditor says, "Oh yeah, that answer was given by Frank Derp. He was an idiot. He got fired a month after that survey came out."
This is the problem with surveys. They're not official. I agree they're necessary to be able to get some feel for the squishy enforcement positions of the state. But if it's a gray area that requires a survey because the official laws aren't specific enough, proceed carefully. Because the only laws that really count are the official ones. And if it's gray enough to have to do a survey, how can you be sure the auditor will stick to the survey and not use his own, or his supervisor's judgement?
Your option, if the auditor sticks to his guns, is to fight it...which is going to cost you money. And do you really think, if you wind up fighting this all the way to court, that the judge is going to pay much attention to what Frank Derp said?
The Sales Tax Guy
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