Recognizing Your Multistate Sales and Use Tax Risks

The following scenarios illustrate the types of routine business situations that can present significant sales tax challenges and risks for multistate businesses.

• Introduction of new products or services to customers or a shift in customer base. Increasing complaints from customers about incorrect tax charges on invoices.
• Expansion or contraction in the number of states where your product or service is sold. Your business received a Nexus questionnaire from a state where you are not filing tax returns.
• Your business has just recently implemented a new billing system and sales tax was only partially considered during implementation.
• Your business is introducing a new product or service for which the taxation is not adequately addressed by existing state law.
• Your business has a fairly good grasp of its sales tax obligations, but would like a resource to consult with when unusual situations arise.
• Your business has just determined that is has under-collected sales tax in many states for a number of years. The tax, penalty, and interest are significant.
• Your business has been notified that a state wants to audit your sales taxes for the past five years. This will be your first audit by this state.
• Your business is making a series of capital expenditures to upgrade your technology and manufacturing capacity. Before signing the contracts, you want to know if there are ways to minimize any sales tax expense on these transactions.