Most of the companies have adopted a very laissez-faire attitude when it comes to sales tax and 
sales tax audit. However, they never think about the fact that this pass-though activity doesn’t help at all in generating revenue. There are continuous debates on the sales tax and related statutory rules. It is not quite easy to grasp the complicated method of implementing safeguards and systems, find the right way to remit and collect the right sales and monitoring statutory rules which are widely varied. It can even baffle the mind of most compliant business people.
Here are few expert tips that will help you in Sales Tax Audit and also help you maintain Banking compliance regulations:
- Sales Tax Complexity is never to be underestimated: While most of you are familiar with the concept of nexus, which is a connection between business and tax jurisdiction which needs the collection and remittance of sales tax, a lot of business people are unaware of various dramatic changes which are taking place in nexus laws! You should review where you currently have your nexus and identify the rule changes that are applicable. You should also be sure that your business is registered in the states where it is needed.
- Always be updated about the changes in product and service taxability: Most sales through TPP’s (Tangible Personal Property) are taxable. Now the shift is slowly including intangibles and there are many states applying sales tax to certain services. You should thus, always be updated about product and service taxability as rules change and evolve, and adjust your taxing practices and accounting systems in accordance.
- Keep Consumer Use Tax in mind: The process of filing exemption certificates as well as tracking has become more complicated. Businesses managing loads of business certificates often face difficulties during audit, if they are to link specific transactions with specific certificates. To avoid such situations, you should create audit trail for your certificates, know how to generate the summary report of exemption certificates quickly and update your product & service exemption rules in each jurisdiction where you do your business.
- If you want to get the right rates, use the right tools: Businesses cut down their researches on sales tax by using ZIP code tools. Tax jurisdictions, unfortunately, mostly don’t follow ZIP codes. Tax codes vary – from individual zip codes to countries, and sales tax can be levied by municipality over and above the state rates.
- Become Audit ready: If you want to pass an audit, the most critical action that can be taken is to collect sales tax in a proper manner and ensure every transaction step has been properly documented. If all the relevant information, exemption certificates and transaction history is readily available – sales tax audits are much less painful.
To know more about Sales Tax Audit and Banking Compliance Regulations, you can take part in a webinar conducted by AudioSolutionz, where expert speaker Mark A. Loyd, ESQ., will be talking about the best practices on protest resolution process in Sales tax audit.