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Sales and Use Tax

Key questions about sales and use tax for businesses include: are we charging tax when we should be, and are we paying taxes on the appropriate purchases? Most states impose a tax on the sale of tangible personal property to a purchaser that is located within their jurisdiction. And the burden of collecting tax from the purchaser is imposed on the seller of that property, assuming the seller has nexus.

States differ on what is considered a taxable sale. Some include labor, freight, shipping and handling, maintenance, and rents. Some states tax services. While there is some commonality for exemptions, such as for resellers, there are also many differences. Most states also impose a use tax on purchases in the event the seller does not charge the sales tax, or is not obligated to do so.

Michael Silver & Company CPAs can help determine whether you are paying too much sales tax on your purchases, whether you are taking advantage of proper exemptions, and whether you are paying proper use tax when the sales tax is not charged by the seller. We can also help determine whether you are properly charging sales tax in all the appropriate jurisdictions and whether you have the proper documentation to support your tax-exempt sales. Not charging sales tax in states where you have nexus can result in exposure to costly additional taxes and penalties.

Sales and Use Tax Audits

In the event of an audit, the seller is obligated to pay uncollected sales tax, plus interest and penalties. In the case of non-filers of sales tax returns, not only can the liability revert six or more years, the unanticipated expense can threaten a business' profitability.

Michael Silver & Company CPAs can help determine whether you are appropriately collecting sales tax when applicable, and possibly identify situations where you may not have any obligation. If you have been contacted by a state or local jurisdiction to comply with a sales tax audit, our State and Local Tax team can help you manage the process and help reduce or eliminate any resulting liability.