QUESTIONS ABOUT CORPORATE TAXES


In this section we answer corporate tax questions that we often hear.
It’s not a forum for getting detailed advice but it answers some common questions that we’ve categorized into our six service areas. Select one of the six service icons to see questions in that category.

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SALES AND USE

Here’s a staggering statistic: There are about 13 million state and local rules associated with sales and use tax.

If you are a multi-state business, and you are a little unsure of what your filing should be, it’s wise to get professional advice.

Questions to ask your advisor: Are you covering all your risk, filing your returns where you need to, and optimizing your tax plans around reduced rates, exemptions, or other opportunities that might be available to you?

If you’re not satisfied with the answers, VPTax can help.

Let’s start with basics. Fundamentally, sales and use taxes are imposed by state and local jurisdictions on consumers of taxable goods and services.

This is not a tax on the sale of goods and services. However, there are 46 different sets of rules as each state establishes its own laws.

It’s generally recommended that you register for sales tax when you have both sales and employees in a state.

Even though your product or service may not be taxable in the state, if you are registered for payroll, the state will be looking for sales tax returns.

This depends on the magnitude of sales in a state; and it varies by state. Once you register and begin filing, the state will notify you of your filing frequency.
No, if you maintain proper documentation. Each state has its own required reseller document, typically known as a reseller certificate. You must obtain a current reseller certificate for each reseller.

If you are audited and do not have the proper documentation, there are several available courses to reduce your liability. If you still have a relationship with your customer, you can either obtain a copy of the certificate or obtain evidence that the customer has already paid the tax. The unfortunate reality is, the customer may no longer be around or may be unwilling to cooperate. This is a good reason to stay current on your reseller documentation.

Yes. Most states require a return listing all sales. There are lines on the return to report non-taxable sales. Problems arise when the in-state sales reported on your state income tax return do not agree with the aggregate total sales reported for sales tax purposes.
It depends. Historically, most states did not require the collection of sales tax on downloaded software. This was on the basis that there was no transfer of tangible property. However, many states have eliminated this distinction and are now taxing downloaded software.
Going back to basics, sales and use taxes are ultimately paid by the ultimate consumer. If the tax is not collected by the provider/seller, the consumer has obligation to pay the use tax. This means that if you purchase taxable goods and the seller does not collect sales taxes, you need to accrue and pay use tax. This is often the case when property is acquired online.
Possibly. Many states have exemptions. Many of these exemptions require special filings and registrations.

Also consider whether property is initially purchased for inventory and subsequently consumed in research activities. Absent an R&D exclusion, use taxes are due on this consumed property.