Bellatoris Consulting, LLC

Archive for June, 2012|Monthly archive page

Freebie Friday!

In Uncategorized on June 29, 2012 at 3:46 PM

I love Twitter.  I think it’s a great way to connect with people, stay on top of trends, and to share your knowledge with others.

This morning, I posted the tweet shown above in hopes of helping anyone who might have a sales tax question.  As a result, my friend Andy Campbell not only took me up on my offer, but asked a really good question to boot.  See below for his tweet:

I tried to reply to Andy’s tweet, but my attempts to flush out such a technical issue within 140 characters didn’t really work.  Here was my first draft:

A- thx 4 ur q. What u buyin? Cash/Credit/Groupon? AFAICT from ur tweet…..

Thankfully I decided to abandon ship and blog about it instead.

Let me lay out a couple of basics before I dig into the details of Andy’s case:

1)  In general, if you buy goods/services in a state outside of your home state, you may be subject to that state’s sales tax.

For example, if you’re a Pennsylvania resident that’s driving down I-95 toward Walt Disney World, you may find yourself making a pit stop in Virginia at a Cracker Barrel.  After enjoying some ham biscuits, you’ll see a charge on your bill for 5% Virginia sales tax.  Because you purchased something that’s subject to sales tax in Virginia, and took possession of it in Virginia, your meal is subject to Virginia’s sales tax even though you’re a Pennsylvania resident.

2)  In general, you can buy goods in a state outside of your home state without paying sales tax if you have it shipped back to your home.

For example, after you had a hearty lunch at the Cracker Barrel, you stopped in their gift shop and decided to buy 4 rocking chairs.  They can’t fit in your wood-paneled station wagon, so you have them shipped back to your home in Pennsylvania.  (In this case, Pennsylvania would ask that you pay use tax on those chairs when you file your state income tax return for that year.)

Now, on to Andy’s question:

Andy laid out a unique set of facts and circumstances because he’s a resident of Oregon (which does not have a state-level sales tax) and he often buys stuff when he travels into Washington (which has a rather uncommon sales tax policy with respect to Oregonians).

Residents of Oregon (as well as residents of Alaska, Colorado, Delaware, Montana, and New Hampshire) can generally buy goods from vendors/stores in Washington and not have to pay sales tax as long as they intend to use the goods in their home state.  There are a few exemptions to the rule (e.g. certain services, meals prepared for immediate consumption, etc.), but this is by far a very unique and generous sales tax law.

So, Andy and his fellow Oregonians can typically enjoy a sales tax exemption when traveling through Washington.  Flash your Oregon driver’s license with pride!  Just be prepared that when you take a trip to Walt Disney World, flashing your Oregon driver’s license won’t yield a sales tax exemption on your Mickey Mouse souvin-ears.

Thanks for the question Andy!

The Only Tax Podcast: Episode 5

In Podcasts on June 28, 2012 at 1:11 AM

 

In this episode of The Only Tax Podcast, I take it to the streets.  Let’s hang out in front of the IRS headquarters in Washington, D.C. and see what everyday average Joe’s have to say about our country’s tax system.

Enough jibber-jabber from me, here’s the fifth episode of The Only Tax Podcast:

The Only Tax Podcast: Episode 5

There Are Some Things that Money Can’t Buy

In Compliance on June 25, 2012 at 3:45 PM

Laundry Detergent: $12.00

Toothpaste: $4.00

Novelty Bacon-Themed T-Shirt: $10.00

Have Your Cashier Watch a Fight Instead of Calling Security: Priceless Madening!

I stopped by my neighborhood Target this weekend and I saw a group of kids hanging out near the entrance of the store.  As I was walking in, they were taking a shopping cart and mounting it on top of a concrete pillar near the store’s entrance.

I was mildly irritated.

As I collected my purchases, I stood in line only to notice that the hooligans from out front had now migrated into the store.  This time, they were singing, dancing, and one was walking on top of the parked shopping carts.

I was fully irritated at this point.

By the time I made it to the front of the line, I looked over at these knuckleheads only to see that two of them were now engaging in a full-blown fist fight.  No slap-boxing, no pretend fighting, but this was a serious bare-knuckle brawl.

I had officially lost my cool at this point.

The cashier ringing me up was about 18 or 19 years old.  When he heard the fight, he looked over to see what was going on.  My expectation was that he’d call security so the fight could be broken up and the kids could be ejected from the store.

Nope.

He just turned his attention back to my purchases and continue to ring me up.

I yelled at him, “Dude, grab your walkie-talkie and call security!”

He looked at me calmly and said, “Sorry, that’s not my responsibility.”

For a brief second, I had a deja vu moment because I’ve definitely heard that phrase before.

Let’s face it, very few companies have the budget to hire full-time sales tax professionals.  That being said, the sales tax responsibilities of most companies are often ignored.

Could you see your employees saying, “Sorry, that’s not my responsibility” when a sales tax issue comes up?  In fact, it’s probably happening right now as you’re reading this.

Here’s how you can potentially avoid costly sales tax mistakes that are happening as a result of no one taking ownership:

Educate Your Employees.  

Don’t feel like they need to understand every nuance of sales tax law.   Instead, help them understand how to identify a problem and seek help when it comes to the surface.

The Target cashier should have known that people fighting in the store is a bad thing.  Not only could the people in the fight get hurt, but innocent families that happened to be in the area could’ve gotten hurt as well.  Not to mention the potential for property and inventory damage to the store.

What should the cashier have done?  He should have grabbed his walkie-talkie or the phone at his register and called for security.

I’m sure the guy wasn’t lying when he said that he wasn’t responsible for breaking up a fight, but I’d be willing to bet that the Target employee manual does say something about him needing to call security when an event like that is taking place.

Who should your employees call when they have a sales tax issue?

The tax department is the best place to start.

If your company’s tax department can’t answer the question, or your company doesn’t have a tax department at all, then you need to have a sales tax consultant on your speed dial.

(P.S. – Want to know how the melee at Target got resolved?  Let’s meet up for lunch at the restaurant where this podcast was recorded and I’ll tell you the rest of the story.)

Talkin’ Trash

In Automation, Compliance, Use Tax on June 18, 2012 at 2:31 PM

The weather was awesome this past weekend, so I decided a cookout was in order.  To get ready, I ventured out for some supplies.

Stop #1 was to a big-name grocery store for beer – no food.

Stop #2 was to Whole Foods for food – no chemical additives.

(I had to do two stops because my neighborhood Whole Foods doesn’t carry my grog of choice, Kona Longboard Lager, but the big-name grocery store does.)

As I was leaving the grocery store, I tossed my receipt into an overflowing trash can and headed over to my next stop.

After I made my way through Whole Foods, I went to throw away my receipt only to be confronted with three choices of trash cans: (1) Recyclable Waste; (2) Landfill Waste; or (3) Compostable Waste.

 

Seeing this menagerie of trash cans made me think about taxes.  SURPRISE!!

Let’s Connect the Dots

For sales taxes and use taxes, would you say that your system is akin to the big-name grocery store’s trash can, or more like the Whole Foods waste system?

For example, when your company buys software, does it get flagged in the system for sales/use tax reporting as just “software” (the grocery store trash can that collects everything together) or as something like “custom software, electronic delivery” (the Whole Foods waste system)?

For sales tax and use tax purposes, software can be taxed a variety of ways depending on the type of software, the method of delivery, and any ancillary products or services that are sold along with it.

If your system isn’t setup to differentiate between off-the-shelf software (a.k.a. canned software) or custom software, you’re going to have problems determining your true sales/use tax liabilities.

Software isn’t the only tricky area to navigate for sales/use tax purposes.  Other technology industries have the same issues as well.  Plus, you can find similar issues for government contractors, manufacturers, healthcare providers, telecommunications companies, and retail industries (just to name a few).

If your accounting/tax systems are setup more like the grocery store’s trash can instead of the Whole Foods waste system, it’s not too late make the switch.  In fact, most companies just need some simple tweaking instead of a full-blown system overhaul.

Do you need help figuring out where your receipts go?  Let’s meet up at your local Whole Foods for lunch at their cafe and I’ll be glad to help!

The Only Tax Podcast: Episode 4

In Podcasts on June 13, 2012 at 4:54 PM

It’s time to take over the podcast world with some straight talk on tax!

The Only Tax Podcast is designed to share stories and insight on ways we can better utilize taxes as a tool for success.

If you’re looking for legislative summaries or analysis on certain tax provisions, this is not where you’ll find those things.  Sorry!

In Episode 4, I try to solve an age old mystery that’s been plaguing the tax world.

Enough jibber-jabber from me, here’s the fourth episode of The Only Tax Podcast:

The Only Tax Podcast: Episode 4

3 Questions M&A Teams Don’t Ask (But Should)

In M&A on June 13, 2012 at 2:39 PM

Slapdash

Slipshod

Shoddy

What better way to lead off this list by throwing out three adjectives that sometimes describe the way mergers and acquisitions go down.

Don’t take this the wrong way, I’m not trying to show any disrespect for the M&A professionals of the world.  Instead, it’s the process I’m commenting on.

When these deals are in the works, the players involved have to act fast.  If the word gets out, the deal can quickly go south.

At the same time, you need to assemble a core group of players that can ensure the deal is smart move.  If too many people are involved, the deal will take forever to get everyone’s blessing.

Ideally, an M&A deal would include the best of both worlds: speed and accuracy.

Often, portions of the due diligence that should have been done on the front end will get delayed until after the deal has been inked.

Think of it like buying a used car from someone on Craigslist.  It may look great at first, but when you take it in for service the next day, you find out that the engine and transmission require thousands of dollars worth of repairs.  Ouch!

Ideally, sales taxes would be hot on everyone’s mind when M&A deals are in the works.  Don’t forget – when you acquire a company, you also acquire it’s liabilities.

If you were buying a company that had $1 million in unpaid sales/use tax liabilities, do you think that should be considered when determining the purchase price?

You bet!

Do unpaid sales/use tax liabilities go unnoticed in M&A deals?

You bet!

So, here’s a list of three simple questions that M&A teams should ask during the due diligence process:

  1. Where does the target company have nexus for sales/use tax purposes?
  2. Where does the target company file sales/use tax returns?
  3. Do the answers from questions 1 and 2 match up?

Sure, there are dozens of other sales/use tax questions you can ask in a due diligence process, but these three do a great job of getting the party started.

I’ve seen M&A deals stall because of 7-figure sales tax liabilities.

I’ve also seen M&A deals go through without a hitch, only to have the acquiring company uncover 7-figure sales tax liabilities when it’s too late.

How about you?

Do you have any gory sales tax stories that come from slapdash, slipshod, or shoddy M&A deals?  If so, leave them in the comments section below!

The Only Tax Podcast: Episode 3

In Podcasts on June 11, 2012 at 1:08 PM

It’s time to take over the podcast world with some straight talk on tax!

The Only Tax Podcast is designed to share stories and insight on ways we can better utilize taxes as a tool for our businesses or careers.

If you’re looking for legislative summaries or analysis on certain tax provisions, this is not where you’ll find those things.  Sorry!

In Episode 3, I interview Lyndsey DePalma and get her take on the tax lessons she’s learned while ramping up her new business, House of Steep.  Lyndsey isn’t a tax person by trade, so she’s a perfect interviewee in my opinion.  Remember, this podcast is aimed at being a breath of fresh air for the tax world.  As you’ll see, she hits it out of the park in her interview.

Enough jibber-jabber from me, here’s the third episode of The Only Tax Podcast:

The Only Tax Podcast: Episode 3

3 Tips for Keeping Your Desk Organized

In Audits, Compliance, Profit, Use Tax on June 10, 2012 at 10:28 PM

Yesterday, I was so frustrated with how messy my desk was.  I was seriously considering the idea of just stretching my arm out and sweeping everything onto the floor.  (The way that scene played out in my head was pretty awesome!)

Instead, I took a deep breath so I could solve the problem.  (Sorry to disappoint you if thought I was the bad### of the tax industry!)

The problem I have is that I stack things on my desk until I get to the point of feeling smothered.  It’s at that moment when everything gets put on hold so I can take the time to get my life organized again by cleaning off my desk.

I fully admit that I’m a procrastinator when it comes to keeping my desk organized.  (Step #1 of the 12-Step Program.)  Essentially, I programmed myself to feel that proactive maintenance in this area was more painful than watching the papers pile up.  (That’s going to change!)

Connecting the Dots

When I strike up conversations with people about sales taxes, one thing is consistent: they know that their companies have problems that are not getting addressed.  (Step #1 of the 12-Step Program.)

If sales taxes have any degree of connection to your job responsibilities, you may find that asking questions or dealing with unresolved issues is more painful than knowing that the problem is unresolved.

You might be asking yourself, “Wait a second, I thought I was going to get three tips for keeping my desk organized.  What gives?”

Don’t worry, here they are:

1) Problems need to be acknowledged.  Write out a daily to-do list that includes time for administrative tasks like keeping your desk organized.

P.S. – The same goes for sales tax.  If you write out the unresolved issues that need to be addressed, they won’t get shoved to the back-burner and begin to rot.  Just remember, if you let it rot….it’ll end up costing you a lot.

2) One bite at a time – that’s how you eat an elephant.  When it comes to stacks of papers, or whatever else clutters your desk, you can’t stretch your arm out and sweep it all on to the floor.  You’ve got to take it one step at a time.

P.S. – The same goes for sales tax.  The issues you and your company face on a daily basis can be tough to comprehend when looking at the big picture.  Instead, take it one step at a time.

3) Super powers belong in comic books, not in the office.  You’re spread thin these days, so be willing to enlist the help of others to keep your workflow moving along.  If there are things piling up on your desk that can be delegated out to others, go for it!

P.S. – The same goes for sales tax.  Enlisting the help of an outside resource (Cough Cough!) shouldn’t be viewed as an act of weakness.  The most powerful people in business didn’t get where they are today by doing everything themselves (despite what they want you to think).  They entered into strategic partnerships that fostered growth and success.

So there you have it.  The three tips I’ve listed above for keeping your desk organized can be remembered with the simple acronym P.O.S.

If you don’t keep your desk organized, it’ll end up looking like a P.O.S.

P.S. – The same goes for sales tax.  [If you have a snappy way to connect the dots here, drop it in the comment box below!]

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