I was doing an
on-site seminar earlier this week, and one of the things that came up, that I thought would be worth mentioning here, is that
things change. The problem is that we make decisions about sales and use taxes (along with everything else) and then move on. A few years pass and things have changed. But those decisions are still in place. And if someone asks about it, you say, "Oh, we decided about that years ago."
Have you reevaluated the situation to see if the sales tax situation has changed?
Here are just a few things that immediately spring to mind where you might make a decision, and see the situation change, resulting in a serious error down the road.
Nexus
A couple of years ago, you decided the the presence you had in a state did not mean you had nexus. You were even right! But then, over the years, you have more sales people visit the state, you start renting equipment in the state, do some seminars, send your own trucks into the state, or some court cases are decided which result in you now having nexus.
And then, there are the new states you're in that you haven't even considered.
Taxable services
You've determined that the services you offer aren't taxable in the states where you sell. But are you subscribing to a tax newsletter to make sure that the state doesn't make those services taxable? States are constantly looking for ways to expand their tax base and adding taxable services is one of the ways. If you're not staying up to date, you're in for a surprise.
Occasional sales of equipment
In the past, you've occasionally sold the odd piece of equipment. Those were occasional sales in most states. But your business has grown and now you're an equipment dealer.
I just wrote an article about this last week.
The moral? Periodically you should take a big picture look at your past sales tax decisions and see if anything needs updating. Don't assume that the decision you made a couple of years ago is still good.
The Sales Tax Guy
http://salestaxguy.blogspot.com
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disclaimer - this is for education only. Research these issues thoroughly before making decisions. Remember: there are details we haven't discussed, and every state is different.
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I get this a lot as the reason why people are doing it a certain way. Please stop it! See this article. And this one. And this one too. And this entire topic.
The best place to start is with your CPA. And if they're not comfortable with anything beyond filling out the return, then a big CPA firm. Here's one article on this and a whole lot more.
Here are some answers to the age old question of "when does my nexus go away?" My favorite is one full reporting period after whatever physical presence you had disappears. But there are more conservative options.
If you've got problems, you need to use a sales and use tax expert who is up to his or her elbows in local issues. More here. And we have many related articles here.
