Why it is important for companies to look at Sales Tax

March 27, 2008

  

        Many corporations view sales tax as just another cost of doing business. We would like to take a moment to review why it is important that companies review their procedure for paying sales tax.

 Here are a few questions to think about:

·        Do you know how much sales / use tax your company pays every year?

·        Does your company have a sales tax procedure in place?

·        Are these procedures being followed?

·        How much training has been given to the people responsible for accruing use tax?

·        Has there been frequent turnover in the position that handles this responsibility? 

Recently we spoke to a potential client who stated that over the last 3 years they had invested from  $250m upto $280m in capital improvements in their facilities. During this process either the owner or a subcontractor is purchasing material for specific improvements. Taxes may be paid for an item at the time of purchase however the ultimate test for tax is how is the item being used.  

 We have one client who was purchasing granite counter tops. The subcontractor was paying the tax on the granite tops and passing the tax onto our client thru a stipulated contract. Our audit defined that the granite counter tops were being installed into each unit thus becoming real property, which would make the purchase tax exempt.

These factors, and many others, contribute to why so many companies are paying more use and sales tax than they should.   

Part of an audit procedure should be looking at the entire operation within your company and how it is broken down into independent operating divisions. Each operation should be treated as a separate entity and determine the tax implications for each of their purchases.

It is also important to look at both sides of the equation. The state will come in and do an exposure audit. Is your company not paying tax on purchases that should be taxable. 

We not only look at that aspect but also determine if you are paying taxes on purchases that are actually tax exempt.  

Tax laws are complicated. Our staff is comprised of former state auditors who are familiar with the the tax codes in multiple sates.

In these difficult budget times, most states are running at a deficit and are becoming more aggressive at bringing in additional revenue. Don’t expect them to tell you if your company has overpaid its use and sales tax!

The onus is on you!

Do you feel that you may be overpaying Sales Tax?

For your own protection, you need someone who has your company’s best interest at heart.

Our clients are receiving significant refunds for overpayment of sales tax.

Let us know your thoughts?

You may email george@hbsadvantage.com

Hutchinson Business Solutions ……Your CFO on the Go.  

Creating Opportunities Today,…Defining Savings for Tomorrow.

Visit http://www.hutchinsonbusinesssolutions.com/ to learn more about saving opportunities available for your company.

Spread the good news….. share this information with a friend.  

One Response to “Why it is important for companies to look at Sales Tax”

  1. I came across your blog on Technorati. Nice site layout. I will stop by and read more soon.

    Mike Harmon

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