When State Auditors Head out of State

Posted by Ashley Lemus on Tue, Jun 20, 2017 @ 11:52 AM

Auditors are on the move.

While most businesses expect (i.e., dread) to be audited by their home department of revenue, it often comes as a surprise to learn that state tax authorities routinely send auditors to, or hire auditors from, other states to capture unreported sales and use tax revenue.

Some states go so far as to have remote offices.

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For example, the Texas Comptroller has audit offices in Los Angeles, New York City, and Tulsa, Oklahoma. California has field audit offices in Chicago, New York, and Houston. There are Missouri Department of Revenue offices near Chicago, Dallas, and New York, while the Florida Department of Revenue has offices in Atlanta, Chicago, Dallas, Houston, Los Angeles, New York, and Pittsburg. The Utah State Tax Commission doesn’t specify where all it has sales and use tax auditors but notes that they “spend a majority of their time at taxpayers’ offices looking at detailed sales and purchase transactions” and “travel to locations all over the United States to perform their work.”

 

Field auditors employed by the Washington State Department of Revenue may audit businesses in multiple states. The Department divides the country into several sections: an Out-of-State North District (Eastern Iowa, Illinois, Indiana, Michigan, Minnesota, Ohio, Western Pennsylvania, and Wisconsin), an Out-of-State South District, and so on. Field audit offices develop and implement audit programs to optimize accurate tax reporting and payment by businesses located throughout the target area.

 

What do auditors in other states do?

Auditors frequently examine sales by companies that are headquartered in other states but have nexus (a connection strong enough to trigger a tax collection obligation) in the auditor’s home state. Yet a company doesn’t have to be registered with a state to be targeted by that state’s audit division. While many audits are selected by a random sampling of registered businesses, auditors knock on the doors of unregistered businesses whenever evidence suggests that they may owe the state tax revenue. This is true both in-state and out.

 

Many states have increased audits since the Great Recession, hiring new auditors as needed. New Mexico’s Audit and Compliance Division has added approximately 62 FTE employees since economy plummeted. And in 2015, the Wisconsin Department of Revenue announced that it needed 102 additional auditors and 11 additional agents to help uncover what was estimated to be approximately $80 million in unpaid tax revenue. Many of the new hires are focusing on businesses based in other states.

 

States work together

In addition to sending auditors to other states, state tax administrators frequently work together. Regional information-sharing agreements between states, such as the following, can greatly help facilitate audits:

  • NESTOA, North Eastern States Tax Officials Association (Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont)
  • SEATA, Southeastern Association of Tax Administrators (Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, and West Virginia)
  • MSATA, Midwestern States Association of Tax Administrators (Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, Oklahoma, South Dakota, Wisconsin)
  • WSATA, Western States Association of Tax Administrators (Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Texas, Utah, Washington, and Wyoming)

 

There are other sorts of information-sharing agreements as well. New Mexico shares information with — and receives information from — three tribal governments. And the Multistate Tax Commission Joint Audit Program for member states “provides obvious economies of scale to the states” and “relieves the taxpayer of the burden on multiple ongoing audits.”

 

Oklahoma to base auditors in other states

Oklahoma doesn’t currently base auditors in other states. Like Utah, it sends auditors to various out-of-state locations as needed, and between 2014 and 2017, it conducted more than 460 audits of remotely based businesses. But a recently enacted law will soon enable the Tax Commission to develop a stronger presence out of state.

 

HB 1427 authorizes the Oklahoma Tax Commission to create and maintain an Out-of-State Tax Collections Enforcement Division. It enables the Commission to “employ full-time, unclassified, out-of-state tax auditors or full-time-equivalent contracted auditors” to enhance the following:

  • “Sales and use tax collections related to sales or transactions involving residents of Oklahoma and out-of-state vendors with a nexus to the State of Oklahoma”
  • “Collections of any other unpaid taxes owed the State of Oklahoma by out-of-state individuals, firms, and corporations”

 

The Tax Commission may audit any individual or business it believes may owe tax revenue to Oklahoma. The law takes effect November 1, 2017.

 

How would your business fare during an audit?

Get your free copy of the Sales and Use Tax Audits Uncovered report to learn more about audit triggers, how to avoid them, and how to protect your business against unnecessary tax compliance risk.

 Download My Free Sales & Use  Tax Audits Uncovered Report!

 

Tags: Avalara, Sales Tax

Webinar Alert: Doing Business in Streamlined Sales Tax States

Posted by Ashley Lemus on Wed, Jun 14, 2017 @ 09:59 AM

 Nearly half the country has its own rules when it comes to sales tax. Do you know what this means to your business?

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SST states have their own sales tax rules. Do you know which states these are? More importantly, do you know what their rules mean to the way you manage your sales taxes? We’ve got the best source of information on hand. Sales tax expert, Scott Peterson, used to work for SST Governing Board and has helped many companies navigate these rules.

 

In this complimentary webinar he’ll provide tips on how to best manage your sales tax compliance as well as share:

  • Which 24 states participate
  • What specific rules SST states impose
  • Top tips for selling into these locations

 

 

 Doing Business in Streamlined Sales Tax States

 

 Date: Thursday, June 22nd    

Time: 2:00PM ET / 11:00AM PT

Reserve Your Seat Now

 

Avalara is an industry leader in all things sales & use tax. To learn more about how Avalara, partnered with Klear Systems, can benefit your organization, please contact us today!

I Want to Learn More!

 

Tags: Avalara, Webinar, Accounting & Finance, Sales Tax

6 Trickiest Sales Tax States Webinar

Posted by Ashley Lemus on Tue, May 30, 2017 @ 10:55 AM

You probably already know that somes states are more complicated to do business in than others. But do you know why?

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They have more tax rules and exemptions and a host of policies that might seem wacky compared to the rest of the country.

 

Hear from a tax expert from our partners at Avalara as he explains what makes these states unique and why you need to pay special attention to them.

 

Sales tax guru Scott Peterson will explain:
  • Which states made the list…and why
  • Strategies for doing business in them
  • How to navigate complicated sales tax laws

 

 Register today for: 6 Trickiest Sales Tax States

Date: Wednesday, June 7th  

Time: 2:00PM ET / 11:00AM PT

Reserve Your Seat Now

 

Avalara is an industry leader in Sales Tax Compliance. To learn more about how Avalara, partnered with Klear Systems, Inc. can help benefit your organization, please contact us today!

I Want to Learn More!

 

Tags: Avalara, Webinar, Sales Tax

Webinar Alert: Sales Tax on Services - What, Why, and Where?

Posted by Ashley Lemus on Thu, May 18, 2017 @ 11:56 AM

With the dramatic increase of sales of services over tangible goods, cash-strapped states are looking for more creates ways to get their share of revenue.

Thus, resulting in an increase of states legislating for businesses to be charged sales tax on services.

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Knowing what gets taxed and what goes tax free is half the battle.

That's why understanding which states have taken the approach of taxing more services is important to understand and a major topic of this webinar.

Our partners at Avalara are hosting sales tax guru, Scott Peterson, to break down new rules and demystify issues that many companies struggle with:
  • The multiple methods states use to tax services
  • The different ways that states tax services
  • Which states that have increased their tax bases

 

We hope you’ll join us at the presentation “Sales Tax on Services” to discover the what, where, and why of sales tax on services!

 

Sales Tax on Services

Date: Tuesday, May 23rd  

Time: 2:00PM ET / 11:00AM PT

Reserve Your Seat Now!

  

Tags: Avalara, Webinar, Sales Tax

Growth Activities That Can Be Life (and Tax) Changing

Posted by Ashley Lemus on Mon, May 15, 2017 @ 11:43 AM

Growth isn’t a one-size-fits-all approach.

In fact, companies expend a great deal of energy and resources deciding which pursuits will move the needle the furthest toward achieving specific goals, and where to prioritize their time and investment.

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Oftentimes sales and use tax gets left out of this equation, especially when it doesn’t appear to directly correlate to the task at hand. Certain growth activities, like adding new locations, products, or sales channels, instinctively signal a need to alter sales and use tax compliance practices. With others like financing rounds, acquisitions, or technology platform changes, tax implications aren’t as obvious and therefore are more likely to be overlooked. Yet these are often the situations where compliance strategies can have the greatest and most lasting impact.  

 

Below is a brief glimpse of how sales and use tax compliance can come into play for 3 business growth activities that can be life (and tax) changing: financing events, M&A, and technology platform integration projects.  

 

Download 3 Business Growth Activities  That Can Be Life (and tax) Changing

 

Here’s what you should be aware of when going through these processes:  

 

Financing events

For any financing event, public or private, investors look closely not only at how you plan to grow the business, but also how you are managing it now. Poor sales tax management practices or unfavorable audit outcomes can impact valuation, jeopardize funding, or even nullify deals. High visibility events like funding rounds and IPOs can also bring your business to the attention of state auditors looking to draw in more tax dollars.

 

Mergers and acquisitions

The meshing together of people, assets, systems, and processes is no simple feat. So, it’s not surprising that business integration issues following M&A transactions are one of the biggest things keeping company execs up at night.  Between due diligence, integration, accounting/financial reporting, and post-acquisition compliance, who has time for the minutia of sales tax? It can be easy to overlook tax obligations or liabilities, which can raise red flags with investors early in the process, or with auditors later.

 

Technology platform changes, consolidations or upgrades

During change events, it’s good practice to evaluate your financial systems and fill any gaps with new solutions or functionality that can advance your growth objectives. For example, tax automation software that unites critical transaction data from disparate systems and processes can alleviate compliance issues during post-merger integrations, reducing audit risk and avoiding delays in closing the books.

 

Download the complete whitepaper for further insights from industry leaders.

 

Download 3 Business Growth Activities  That Can Be Life (and tax) Changing

 
 

Avalara is an industry leader in Sales and Use Tax Compliance.

We would love to speak with you about how Avalara and Klear Systems can benefit your organization.

Give us a call at (949) 681-8135,
email us at info@klearsystems.com
or complete the form below and we’ll reach out to you.

I Want to Learn More!

 

Tags: Avalara, Sales Tax, Business Growth

3 Ways Growing Companies Prepare for Sales Tax Compliance

Posted by Ashley Lemus on Fri, Apr 21, 2017 @ 11:38 AM

Growth can lead to unexpected complications, especially when it comes to sales tax compliance.

 

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That's why we're providing this complimentary prerecorded webinar to help your small business prepare!

 

Teach Me How to Prepare For Sales Tax Compliance!

 

Learn which business changes often trigger a change in sales tax compliance processes, what you can do to be sure your business isn’t at risk of non-compliance, and if automation makes sense for your company.

Join us to learn the following:

  1. How you can ensure sales tax compliance as you prepare for growth
  2. Key areas of concern for growing companies
  3. How automation can get you growth-ready

 

 Avalara is an industry leader in Sales Tax compliance!

 

Teach Me How to Prepare For Sales Tax Compliance!

 

To learn more about how
Avalara, partnered with Klear Systems, Inc., can help benefityour organization,
please contact us today!

 

Give us a call at (949) 681-8135 or
email us at info@klearsystems.com

 

Tags: Avalara, Webinar, Sales Tax

Free Sales Tax Assessment Tool! Compliments of Avalara

Posted by Ashley Lemus on Tue, Apr 18, 2017 @ 03:55 PM

One such area that is complex for a lot of businesses is sales tax.

 

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That's because, as your business grows, the higher the chances are that your business will be subject to more state compliance requirements!

This 5-minute survey from Avalara, a Sales and Use Tax Compliance industry leader, is an excellent starting point for the conversation on sales tax risk, registration, sales tax research, and sales tax compliance automation.

This survey does have every answer about sales tax but will put into perspective which questions need to be asked next and with which states to focus.

 

After answering four questions, you'll receive a summary which includes:

-   States in which your organization may have risk by not collecting sales tax

-   Follow up questions to consider before registering with a state

-   Questions to ask to determine if a technology solution such as Avalara’s may add efficiency to your compliance process

  

Upon completion of this quick survey,
your SMB will be well on its way to sales tax compliance!

 Let's Figure Out My Sales Tax!

 

Tags: Accounting & Finance, Sales Tax

Don't Be Fooled by Nexus Rules

Posted by Ashley Lemus on Fri, Apr 14, 2017 @ 10:22 AM

April 1st is commonly known as April Fool’s Day.

It’s also the date when Amazon started collecting sales tax in four more states — Maine, New Mexico, Hawaii and Idaho —bringing the total to 45 states and the District of Columbia.

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Amazon is no fool and sales tax nexus is no joke. States are tired of losing revenue from tax-free remote sales and are starting to crack down on businesses who fail to register or collect sales tax when their sales activities are deemed substantial enough to warrant it.

Amazon’s decision to volunteer to register to collect sales tax in more states may simply be pre-emptive to ensure that, should their sales into that state meet nexus thresholds in the future, their bases are covered.

 

While merely speculative as to motive, it is a smart move – and one that other companies may want to consider. The Quill v. North Dakota decision is decades old now, and the physical presence standard for nexus doesn’t adequately cover eCommerce. Congress still has yet to rule on new federal online sales tax legislation, despite multiple opportunities to do so. As a result, states are starting to reinterpret nexus to their own benefit in an attempt to collect tax revenues they feel are owed them. Under these broader terms, businesses can establish nexus through such activities as attending trade shows, engaging drop shippers, hiring remote employees, and (yes) online sales.

 

If you can’t beat ‘em, join ‘em

Amazon was one of the first eCommerce sellers to challenge remote seller nexus rules – an action which dubbed those policies “Amazon tax” or “Amazon laws.”  In the nine years since the eCommerce giant took New York to court over its 2008 Amazon tax law, the floodgates have opened to even more nexus changes at the state level, first with affiliate nexus and click-through nexus, and more recently with economic nexus laws.

 

The penchant for states to change or introduce new nexus laws has made it increasingly difficult and risky for businesses who sell online or into multiple states to keep track of their sales tax obligations. While it may not make sense for smaller to mid-size eCommerce sellers to volunteer to collect sales tax as universally as Amazon is now doing, it would be wise to have a solution in place to help you manage sales tax nexus — one that will scale with your business as it grows or changes.

 

Know your nexus

Nexus is an issue that Avalara gets asked about a lot. So much so, that they created a page on their website dedicated solely to helping companies understand nexus and even find out what nexus laws apply to each state where they do business.

 

Companies frequently engage Avalara’s professional services tax experts to help them determine their nexus obligations. And complying with multistate nexus is one of the biggest motivators to companies deciding to onboard Avalara’s tax automation solutions. Avalara’s software makes critical sales tax decisions automatically, pulling from the largest and most comprehensive tax database in the world and applying accurate, verified, up-to the minute rates and rules to all your transactions. In most cases, Avalara is a simple integration to existing financial systems so setup is fast and easy. Avalara can also assist with exemption certificate management, as well as filing and remitting of sales tax returns.

 

For a refresher on nexus obligations, read Avalara’s guide,
Everything you wanted to know about nexus (but were afraid to ask)

Download My Free Guide! 

 

Tags: Avalara, Sales Tax

Webinar Alert: "How to Determine Sales Tax Nexus"

Posted by Ashley Lemus on Mon, Apr 10, 2017 @ 10:35 AM

You’ve probably heard all about nexus. If not, it’s a pretty simple concept: having enough presence in a state that you need to collect sales tax in that state.

What’s not so simple to understand is what determines “significant physical presence” in other states. Why? Because most states make their own rules and define presence differently.


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While we can’t change the rules, we can help you know which ones apply to you.

Let SALT expert and former CA State Auditor Steven Cabrera explain:

  • Which activities create nexus in most states
  • The difference between Origin-based and Destination-based states
  • When you should review your nexus activities
  • How to create a nexus checklist

 

We hope you’ll register for the presentation and workshop How to Determine Sales Tax Nexus to discover why other states want you to collect sales tax. Space is limited!

 

Date: Tuesday, April 18

Time: 2:00PM ET / 11:00AM PT

 Reserve Your Seat Now

 

Avalara is an industry leader in Sales and Use Tax Automation. Can't attend the webinar at the scheduled time? Be sure to register to receive a complimentary recording, or sign up for our blog post subscriptions to stay up to date on all SMB info!

 

Tags: Avalara, Webinar, Sales Tax

Webinar Alert: Sales and Use Tax Audits Uncovered

Posted by Ashley Lemus on Mon, Apr 03, 2017 @ 03:54 PM

Ever wonder why certain businesses are targeted or the most common types of errors auditors look for?

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Or more importantly, the impact on your business should the audit outcome not weigh in your favor? The upcoming Sales and Use Tax Audits Uncovered webinar can answer those questions.

 

Using extensive data acquired from the Texas Department of Revenue and the California Board of Equalization, Pesner Johnson & Co. and Avalara uncovered the following:

  • Which four industries are audited the most
  • How many audits conducted out of state
  • Average cost of an audit including penalties, fees, and professional counsel

 

That’s just the tip of the iceberg! Plenty more insight will be shared in this complimentary one-hour presentation. Please attend and get insight found nowhere else. 

 

Register today for the webinar Sales and Use Tax Audits Uncovered. Space is limited!

 

Date: Wednesday, April 5

Time:  11:00AM PT

Duration: One hour

Reserve Your Seat Now!

 

Tags: Avalara, Webinar, Sales Tax