Sales and use tax compliance have always been complicated, but now is more important than ever following the South Dakota v. Wayfair case. More than 30 states have imposed or plan to impose new sales tax laws due to the Supreme Court decision. With all the new laws, we suggest that every company does a sales and use tax review to ensure their compliance and protection.
Evaluate Sales Presence
Even though the headlines of all the recent articles are referring to online businesses being affected by South Dakota v. Wayfair, almost every business will need to evaluate their sales presence in certain states to determine if they have nexus. Nexus is the minimum connection with a state that requires filing and paying of tax. Many wholesalers, distributors, manufacturers and other non-internet retailers will also need to review their sales tax situation.
Our sales and use tax review starts with a discussion with our client. First, we gain an understanding of their business in depth, including what states they may have activity in and significant amount of sales. Then review how sales tax currently is handled within their business. We will request a list of sales totals and transactions by state. This helps us understand the details to prepare an analysis of their current situation and determine if there are additional states that they have nexus in.
With South Dakota v. Wayfair, physical presence is no longer necessary to create nexus for sales tax. Nexus can be created by making certain thresholds of sales or transactions into a state. We will review the client sales and activity information, and determine if our client has nexus in states they are currently not filing in. We will also determine the amount of past exposure. Our team will discuss with the client what options they have to handle past exposure and proceed for future exposure.
How DHJJ Can Help
Due to the ever changing laws in sales tax and in all the different states that our clients operate in, we suggest a sales and use tax review every year. This helps our clients keep abreast on new laws as well as remaining as efficient as possible in reporting in order to focus their time on growing their business.
If you believe your company would benefit from a sales and use tax review, please contact DHJJ’s SALT group at (630) 420-1360 or fill out the form below.