Complying with intricate sales and use tax laws can be difficult for businesses operating in a multistate environment. Often, the complexity of these laws means companies may be operating with material amounts of exposure due to uncollected sales tax or under-accrued use tax. Baker Tilly offers proactive tax management solutions to effectively address these challenges.
A sales and use tax audit can be a time-consuming and expensive process. Rising administrative costs and aggressive state enforcement frequently results in penalty and interest charges. We provide our clients with well-designed options to manage their sales and use tax costs and minimize exposure.
Full-time focus on sales and use tax challenges
Our dedicated sales and use tax specialists have the experience, resources and contacts to minimize your exposure, avoid or recover overpayments, and control compliance costs. We review your unique situation and apply our collective knowledge of tax authority and planning techniques to address all your sales and use tax needs. Our range of services includes:
- Nexus reviews and analysis
- Historic exposure remediation and penalty abatement through voluntary disclosure or amnesty programs
- Develop sales and purchases taxability matrices for various industries (e.g., software, software as a service, real property versus tangible personal property)
- Policy and procedure reviews, including development and implementation, consulting on automated compliance solutions and exemption certificate management
- Identify and maximize application of various exemptions (e.g., manufacturing machinery and equipment, pollution abatement, research and development, etc.)
- Dispute resolution, such as audit defense, appeals and private letter rulings
- Reverse audits to obtain refunds of overpayments of sales tax to vendors or over-accrual of use tax on purchases
- Buy- and sell-side sales and use tax due diligence
- Customized training
- Special purpose entity restructuring and tax planning (e.g. aircraft leasing, purchasing companies for contractors)
- Negotiate percentage use tax reporting agreements with states to limit clients’ prospective costs of compliance
Given that many states continue to defer to dated regulations and informal letter rulings as guidance regarding the taxability of software as a service (SaaS) transactions, taxpayers must proceed with extreme caution when determining whether sales or use tax is due. Baker Tilly state and local tax specialists, Gary Peric and Chuck Lukens, discuss key SaaS sales and use tax compliance in the American Institute of Certified Public Accountants (AICPA) The Tax Adviser’s Tax Clinic section.
The time for ignoring sales-and-use-tax nexus and the potential exposure it can bring has passed. Make no mistake—state "discovery" units are scrutinizing businesses. Baker Tilly state and local tax specialists, Donna Scaffidi and Dana Delsman, discuss enacted state laws in the American Institute of Certified Public Accountants (AICPA) The Tax Adviser’s Tax Clinic section.
An emerging tool in addressing sales and use tax risk is a policy and procedures review. Baker Tilly state and local tax specialists, Jon P. Skavlem and Alyssa Geracie, discuss key aspects of such a review in the Journal of Accountancy.