When Your Small Business Faces a Huge Sales Tax Assessment

Robert MillerSales Tax Audit News

The decline in gasoline prices and other economic factors has diminished sales tax revenue for states across the U.S. The  Tax Department is always looking for opportunities to increase tax revenue.  Unfortunately for tax-paying small businesses, tax authorities often take more than they are really owed. Not because they are malicious. But because auditors are not required to identify qualified credits or exemptions that the business may qualify for that could reduce their tax. Auditors solely represent the interest of the state.

Challenging a Sales Tax Assessment

Assessments are often unchallenged because the in-house accountant, CPA or finance team is not intimately familiar with intricacies of the tax law that could reduce the sales and use tax liability of the business. The result is a staggering amount of erroneously overpaid tax being remitted  to the state every year. I know this to be true because I was a Sales Tax Auditor for the State of NY.

Small Business – Big Tax Bill

A small business in New York State recently found themselves facing a $100,000 sales tax assessment. They could have paid the bill, or set up a payment plan to pay off the debt over time, incurring interest along the way. Fortunately, they did seek the assistance of a sales tax expert who was successful in appealing the assessment, negotiating a settlement of less than $30,000.

$70,000 is a great deal of money to any organization. For this small business, the newly negotiated settlement preserved operating capital and vital cash flow.

The 3 Main Reasons Small Business Owners End Up Overpaying Sales Tax:

  1. They have no idea they are overpaying sales and use tax.
  2. They assume their accountant or CPA has it covered.
  3. They think they cannot afford an expert.

3 Reasons a Small Business Owner Should Never Overpay Tax

  1. A compliance review will reveal whether the business is paying the right tax at the right time (avoiding costly penalty and interest).
  2. Sales Tax Experts support your accountant or financial team by providing in-depth knowledge and experience of managing only sales tax matters – and exactly why so many corporate sales tax departments, accountants and tax attorneys depend on sales tax experts for such guidance.
  3. The cost to retain a Sales Tax Expert is typically a mere fraction of the amount of the original assessment and final negotiated settlement. So, you could say it would be crazy NOT to hire an expert.

Do You Need a Sales Tax Expert?

Facing a Sales Tax Audit? Or, just received a large assessment? Find out why a sales tax expert is a better choice than your business accountant, CPA, finance team or tax attorney.