Uncovering the Complexities of Out-of-State Sales Tax Registration
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Learn techniques to better recognize and understand the best approach to manage any tax exposure.Most companies will have to deal with new state registrations as time goes on - either from organic growth of the business, or from mergers and acquisitions. Some of the most difficult aspects of registrations is not necessarily the registrations themselves, but rather in determining where and why to register in a given jurisdiction. Another difficult, but necessary aspect is assessing the liability associated with failure to file in a jurisdiction where your company has had nexus for some time, but never registered or filed. This topic helps the persons responsible for state registrations to understand how first to establish an approach for analyzing which jurisdictions require filing and then how to understand the process required for registrations and voluntary disclosure agreements. The content also explains the method required for analyzing the apportionment data and how this relates to the nexus analysis process. Failure to register in a jurisdiction where your company has nexus could result in an audit with one or more jurisdictions, which could cost the company a lot of time and resources. This information is critical for companies who experience regular growth and engage in M and A activity, so they can ensure their compliance for sales and use tax and income tax is timely and robust.
AuthorsJudy D. Harris, E.A., CMI, Crowe Horwath LLP Chris Rodgers, Crowe Horwath LLP
Christopher M. Vacek, Crowe Horwath LLP
Introduction to Sales and Use Tax
• States That Impose Sales Tax
• Sales to Customers Instate
• Sales to Customers Out-Of-State
What Does It Mean to Have Nexus in a State?
• Sales Representation
• Leased Property
• Trucks Entering the State
• Other Activities
When Is It Recommended to Register With States?
• When Initial Sales Are Expected
• When Inventory Is Shipped Into the States
• Nexus Study Is Needed
• City Registrations May Be Required
Common Business Activities Requiring Registrations
• Software Installed and Controlled Remotely
• Accessing Cloud Based Software
• Software as a Service
• Web Hosting
• Remote Sellers
• Click Through Nexus
• Drop Shipments
• Acquisition of a Company
Intro to State Registrations
• Why Do States Require Companies to Register to Collect Sales Tax?
• Who, What, When, Why and How to Register
Assessing Liability and Requirements to File
• State Apportionment/Sales
• Other Considerations
Process to Take When Registering With the States
• Which States?
• What Taxes?
• What Forms to Use
• How Best to Manage Tax Liabilities
• Quantifying the Potential Tax Liability
Common Difficulties in Registering
• No US Officers
• No US Social Security Numbers
• No Secretary of State Registrations