Sales
and use taxes are collected by many state and local
taxing
jurisdictions. Each state, and sometimes the local municpalities and
counties have conflicting laws determing whether a particular sale is
subject to sales tax. Slight factual differences may result in dramatic
tax effects.
Save
Taxes in an Audit
Sales Tax auditors start with the approach that every sale is taxable.
You, the taxpayer must prove the sale is not subject to taxation.
Typical issues are whether the sale:
- Is
of a Type that is not taxable
(ex., certain services)
- Is
to an Exempt Entity (reseller or
non-profit)
- Does
not have a connection ("nexus")
to the State
- Is
the correct amount.
This requires planning and negotiation by your tax attorney in
cooperation with your accountant or CFO.
Income
Taxes Are Also Audited
Business and corporate income returns are also audited with most sales
tax reviews to verify income and expenses. The technique used by the
government is to "sample" a given year, determine the ratio of
underreporting and multiply this for all open tax years. This can
result in whopping tax liabilites, plus interest in penalties.
Tax
recovery and minimization
State sales and use tax laws are growing increasingly complex and
counterintuitive. It is important for your tax lawyer to act as your
advocate in the negotiations with states and local taxing authorities.
As part of the audit support and defense, your tax attorney will
perform the detailed tax research and investigation to determine
whether a particular activity is subject to tax.
Call me
at (856)
665-2121 today!
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