An Amnesty Worth Its SALT

A look at the B & O, Economic Nexus, Elimination of Physical Presence and Amnesty

By Michael J. Fleming

In the current economic environment, states have a tightrope to walk between balancing the need to increase revenues with the need to save and create jobs. The state of Washington probably thinks it has found a creative way to do both.

Prior to June 1, 2010 many of WA’s in-state companies that provided services were at a competitive disadvantage to out of state companies. In instituting an economic nexus standard in addition to changing the apportionment method for certain companies to “single factor receipts apportionment” WA has leveled the playing field. In fact, many WA companies with out of state sales will see their taxes go down, some substantially.

On the other hand, out-of-state companies who have never worried about the B & O before will now be subject to the WA tax, even if they don’t have a physical presence. Common sense tells us that WA will look at ways to not only make up for the tax relief they have provided their domestic companies, but also to bring in the additional revenues all states are looking for. Increased enforcement of both the B & O and the sales and use tax are two of the most logical ways to do this. Out-of-state companies who are not paying the B & O seem to be likely (and lucrative) targets. The current amnesty program is a useful tool that many taxpayers may or may not take advantage of for a multitude of reasons.

You Missed the Tax Amnesty Express

Don’t Worry. You are probably better off with a VDA anyway!

By Michael J. Fleming

Tax Amnesty programs wax and wane in popularity depending on economic conditions. Recently with the depressed economy, Amnesty Programs seem to be all the rage. State and local jurisdictions have been announcing them at a rapid pace with some jurisdictions, like the city of Philadelphia offering one for the first time in 19 years and the state of WA offering the program apparently for the first time ever. The programs usually have short windows of opportunity and require quick action in order to take advantage of the benefits. Many states increase the sense of urgency by threatening increased enforcement actions once the amnesty period ends. A prime example is Pennsylvania, who’s Revenue Secretary, C. Daniel Hassell said, “Before Tax Amnesty ended, we promised to step up enforcement efforts against anyone who did not take advantage ... Now we’re delivering on a second promise, to hold corporate officers personally accountable for taxes their businesses owe.” It is statements like this that have caused many taxpayers who were not able to meet amnesty deadlines to worry that the states will soon be knocking at their door. If you are one of these taxpayers your worries may be over. You may be able to complete a Voluntary Disclosure Agreement (VDA) and actually be better off than if you filed for amnesty.

Are You For or Against Amnesty?

by Andrew Johnson, CPA

Tax Amnesty Usually Means No Penalty -- Big Deal! You Still Owe the Tax!
What if I told you: You Can Get Out of the Whole Tax?

It seems like there’s constantly a tax amnesty being offered by some state somewhere. Amnesties can be a sweet deal, that is if you have the money to pay. That’s right, you’ll probably still have to pay the tax. Almost always when a state offers “amnesty” what they’re really offering is to waive the penalties (but not usually all or even some of the interest). Most companies are a little surprised to find this out until they realize what leverage the states really have. They have ways of finding you and in our experience it’s not usually IF they find you but WHEN. When they do find you and determine that you had nexus in their state but weren’t registered and filing tax returns with them, they will bring the hammer down.

Can You Catch Nexus From Someone Else?

Is Nexus Contagious?
Are Third Parties Carriers of the Nexus Bug?

We subscribe to some of the best resources available today when it comes to state and local tax research. Chances are, whatever question you could possibly have, we can find the answer. Today, we thought it would be interesting to look at the actions of third parties and whether specific actions might cause you to have nexus in a given state. We say "might" because this article will be based on surveys conducted of state government officials and these answers come from them. You can expect them to be as aggressive as possible in asserting nexus, so take this with a grain of salt. But take it with a small grain of salt as the states seem to be successfully pushing the envelope on what's possible.

How Far Back Can a State Go On Audit and How Long Should You Retain Your Records?

We subscribe to some of the best resources available today when it comes to state and local tax research. Chances are, whatever question you could possibly have, we can find the answer. Today, we thought it would be interesting to highlight the statute of limitations for various states and a corrollary issue of just how long you should retain your sales tax records.

You Can Check In Any Time You Like, But Can You Ever Leave?

We subscribe to some of the best resources available today when it comes to state and local tax research. Chances are, whatever question you could possibly have, we can find the answer. Today, we want to address the issue of getting out of a state where you are currently registered but no longer have nexus. Let's talk about basic Nexus concepts first.

Sampling in Sales Tax Audits

Top Questions on
Sales Tax Audits and Sampling

We subscribe to some of the best resources available today when it comes to state and local tax research. Chances are, whatever question you could possibly have, we can find the answer. Today, we want to address some basic questions surrounding sales tax sample audits.

Sampling Questions

Questions arise frequently around what is allowed (or mandated) when it comes to sampling. Just about every state uses sampling in conducting audits. The question is, do the states use "statistical" or "non-statistical" (or both) audit methods. Some of the non-statistical methods that states use are actually different types of block sampling methods. Some states use a time period such as a month or several months or year(s) and then project what they find in the sampled time period to the whole population of transactions in the entire audit period. Other non-statistical block methods that some states use are the voucher, invoice or check sequence methods where they choose every nth voucher, invoice or check number for the sample. The least frequently used method is the alphabetical method.