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Archive for the ‘Nexus’ Category

This Weekend’s Shoplifting Spree

In Nexus, Audits, Just for Fun, Voluntary Disclosure Agreements, Tax Planning on May 13, 2013 at 12:15 PM

Thief

Can you imagine how your mother would feel if she got this call:

“Hey Mom, Happy Mother’s Day!  By the way, I’m going to be a little late for dinner.  As soon as I post bail, I’ll be right over.”

Yep, there’s no better way to honor your mother on her special day!

I was at the grocery store yesterday trying to gather up some goodies so I could cook my wife a nice Mother’s Day dinner.  For some reason, I decided to pause and pay attention to my fellow shoppers for a second.

The first thing that caught my eye was an older gentlemen who was sampling grapes from the carefully-constructed pyramid in the produce department.  We eventually made eye contact and he gave me the, “What the hell are you looking at?” stink-eye.

Even though the guy was twice my age, I didn’t want to stick around in case he gets punchy when people like me stare at him too long.

As I moved toward the olive bar, I saw this disgusting example of a human being reach into the pile of marinated sun-dried tomatoes with her bare hands.  As she dangled them over her mouth, I thought this was the cue for me to leave and tell my wife that we would be enjoying Mother’s Day dinner at a restaurant this year.

While I was making my way back toward the entrance of the grocery store, I just happened to follow that same lady over to the trail mix bins.

You know what, I’m just going to let your imagination take care of figuring out what she did over there.  (You’re welcome.)

In the tax world, the value of the grapes, marinated sun-dried tomatoes, and sunflower seeds (even the ones that stuck to this woman’s hand as she repeatedly sampled from the container) would probably be deemed “de minimis.”

Could these people have gone to jail for shoplifting?

Yes.

Could someone go to jail for failing to pay a de minimis amount of tax?

Yes.

How so?

Well, you’ll have to wait to find out.  I’ll be posting a new episode of The Only Tax Podcast, where I’ll explain how you can avoid the criminal pitfalls from de minimis taxes.

Until then, consider only purchasing food that’s in a sealed container.

My Wife’s Car Is Becoming A Money Pit

In Automation, Compliance, Nexus, Tax Planning on October 3, 2012 at 3:58 PM

I just installed a new battery in my wife’s car and now I’m trying to decide what repair I need to tackle next.  In the very near future, it needs new tires, brake pads, a transmission flush, and a headlight lens on the left side.

To be fair, the car is six years old so it’s going to need more maintenance than just routine oil changes.

You’re probably asking yourself, “What does this have to do with sales taxes?“

Companies should view their tax planning strategies a lot like cars with respect to maintenance.

When a car is new, you typically don’t have to worry about any major maintenance for a while.  As the years go by, the normal wear and tear on a car leads to a greater need for substantial maintenance.

When a tax planning strategy is implemented, companies can enjoy the benefits for a while.  As the years go by, the normal changes in the company’s operations, as well as tax law updates, leads to a greater need to revisit the past strategies that were put into place.

[Pause for a second]

If you read the phrase “tax planning strategies” and automatically assume I’m only talking about big-ticket ideas like complicated reorganizations, then you’re mistaken.

Routine maintenance also applies to more mundane aspects of your company’s sales tax compliance practices.  For instance:

1) How long has it been since you’ve conducted a nexus analysis?

2) How long has it been since you’ve examined the sales tax collection procedures?

3) How long has it been since you’ve examined the use tax accrual procedures?

4) How long has it been since you’ve examined the reserves booked for contingent liabilities?

5) How long has it been since you’ve reviewed the exemption certificates you have on file?

This list could go on for  almost as long as the repair list for my wife’s car.

Let’s be honest with ourselves, Fridays are usually the slowest (and least productive) days of the week for most companies.  How about planning to end your week with a bang by setting aside an hour on Friday to do a maintenance check on your company’s sales tax compliance functions?

If you need someone to help you hold up a shop light, hand you a wrench, or help you figure out where that strange ticking noise is coming from, then I’m your man.  I love getting my hands dirty from sales tax maintenance.

Happy motoring.

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Enough is Enough

In Compliance, Nexus on April 17, 2012 at 2:21 PM

 

While the convenience of my bank’s automatic bill-pay service is great, it’s easy to lose track of how much some of those bills have been costing.

Such was the case when I looked at how much my satellite TV bill cost last month.  I was overwhelmed!

Considering that my family doesn’t watch much television outside of the basic channels, I decided to take a peek at my account.

Sure enough, I was getting charged for all premium movie channels, most of the sports packages, and a few other random packages.  No wonder my bill was so high!

After determining the channels we watch on a regular basis, we trimmed down the packages and cut our monthly bill in half.

Connecting the Dots

I’ve had clients that were overwhelmed by the number of sales tax returns that they filed each month.  While some of those cases were due to limited resources, others were because they were unnecessarily filing certain sales tax returns.

If you’re filing sales tax returns in jurisdictions that routinely result in a zero liability, you should ask yourself the following questions:

  1. What type of sales does my company make in that jurisdiction?
  2. What type of presence does my company have in that jurisdiction?
  3. What type of controls does my company have to ensure all transactions relating to that jurisdiction are being properly recorded?

If you determine that you’re filing certain sales tax returns unneccesarily, it’s easy to either withdraw or suspend your account in that jurisdiction.  You can always reopen it at a later time if you need to.

Your job is hard enough, so invest a few minutes to determine whether you’re doing more work than you need to each month!

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Can Sales Taxes Bankrupt a Company?

In Bankruptcy, Nexus, Oregon, Profit, Washington on February 23, 2012 at 2:17 PM

Yes.

(Resisting the urge to make this the world’s shortest blog post……okay, I’ll share my thoughts.)

Sales taxes are often an afterthought for companies.  The old adage, “if it ain’t broke, don’t fix it” can describe how many companies view their compliance with the sales tax laws across the U.S.

If you had three blocked arteries in your heart, would you rather first discover that news through a routine checkup or in the hospital after suffering a heart attack?  A condition like that can go unnoticed for quite some time before having an unexpected cardiac event.

The same can be said about sales taxes.  You may not realize the severity of your exposure until it’s too late.

My friend Emily shared an article with me (click here) that illustrates a recent example of company that suffered a fatal sales tax “heart attack.”  As you see in the article, a $2 million assessment bankrupted a chain of mattress stores – all because of sales taxes.

Something as simple as water can destroy your home.  That’s why the water damage restoration is a multi-billion dollar business in the U.S.

Similarly, something as simple as sales taxes can destroy your company.

If your company is suffering from sales tax damage, we’ve got the tools needed to clean it up:

1)      Nexus Studies;

2)      Tax Determination Studies;

3)      Voluntary Disclosures;

4)      Refund Recoveries;

5)      Mergers and Acquisitions Due Diligence;

6)      Accounts Payable Reviews;

7)      ERP System Mapping; and

8)      Reserve Studies.

Let’s take care of any blocked arties you have before it’s too late!

 


How a Surfer Dude Made My Grammar Gooder

In Nexus on November 10, 2011 at 10:13 AM

When I was a teenager, I was fascinated by surfing and beach culture in general.  At the mall by my house (in the suburbs of Washington, D.C.), there used to be a “surf shop” that I loved shopping at.

(Now that I think about it, I guess it’s no surprise that a surf shop located so far from a beach wouldn’t last very long!)

During my summer break one year, I had the chance to go to the beach and put some of my surf shop gear to the test.

Board shorts?  Check!

Rash guard?  Check!

Neon sunscreen?  Check!

Yep, I bought a stick of Zinka neon sunscreen from the surf shop before my trip.  It was supposed to go on your nose and your cheeks (in stripes like the face paint football players wear).

As I walked toward the beach with a confident swagger (since I got rigged up from a legit surf shop), this older teenager stopped me and asked, “Dude, what is that on your face bro?”

I was thinking to myself, “Wow, by the looks of it, he seems like an honest-to-goodness surfer and I have something that he doesn’t know about yet!”

My response was, “It’s kind of like sunscreen.”

In a unapproving fashion, he replied, “It either is sunscreen or it isn’t sunscreen, dude.”

Wow, there was no way to argue with him there.  I just got schooled (on summer break of all times!).

This “kind of like sunscreen” memory came to mind today as I was celebrating National Nexus Awareness month.

When it comes to sales tax nexus (a taxable presence in a state), you don’t have the option of telling an auditor that you ”kind of” have nexus.  You either have nexus or you don’t.

How do you know if you have nexus or not?  Let’s grab lunch and I’ll “kind of” help you find the answer!


The Connection Between Hackers and Sales Taxes

In Compliance, Nexus on October 19, 2011 at 3:56 PM

Here’s a number to digest: 1.2 days.

See if you can find space in your memory bank for that number.  (Maybe you can store it next to the spot where you keep “2.3 children in the American family.”)

Some guess that it takes, on average, 1.2 days for hackers to completely revise their plans of attack against cyber security measures.  If they fail to penetrate their target at 8:00 am on Monday, they have a whole new plan of attack and point of entry lined up by lunch time on Tuesday.

These cyber threats are happening billions of times a day.  (FYI – that’s not a typo!)

We all know that business is literally evolving at the speed of light these days.  This is true for all aspects of your business, not just cyber security.  Your company’s customers are demanding more powerful technologies, quicker delivery methods, more customizable solutions, and many other improvements to your current business model.

How does this impact your sales tax planning?

1)  If the only exposure you get to your company’s sales tax data is the monthly tax returns, then you’re falling behind the times.

2)  If your sales tax returns are done each month “the way we did it last time,” then you’re falling behind the times.

3)  If you’re not constantly analyzing how your company’s new projects and product/service offerings should be treated for sales tax purposes, then you’re falling behind the times.

Because of the speed at which your company is evolving, your sales tax planning needs to keep a similar pace in order to ensure maximized profits and minimized liabilities.

If you’ve fallen behind the times, it’s not too late to get back up to speed.  Let’s setup a FaceTime chat and figure out a game plan.  (Or we can do it the old-fashioned way and meet face-to-face instead!)


Can a Sales Tax Consultant Hold the Secret to Finding the Best Pizza?

In Compliance, Nexus, Refunds on August 25, 2011 at 1:34 PM

I went to lunch at one of those chain restaurants that has a 20-page menu.  I won’t say the name of it for obvious reasons, but I sifted through the endless choices and decided on a pizza.

Why would a self-proclaimed pizza connoisseur order it from a place that also serves steaks, seafood, barbecue, Mexican, Cuban, Chinese, Japanese and at least a dozen other specialties?  Yeah, I don’t know what I was thinking.

As I sat there, I realized how my pizza experience at this restaurant could be a metaphor for the tax consulting profession.

You can get a decent pie from a place like the restaurant I mentioned above.  You can also get decent advice from a tax consultant that dabbles in all areas of taxation.

If you want extraordinary pizza, your best bet is to go to a place that specializes in pizza.  The same goes for tax advice – your best bet for specialized issues will likely come from a tax advisor that has a specialized practice.

It’s not to say that a generalist will steer you wrong.  Just be careful that he/she doesn’t put refried beans on your pizza by mistake.

Where can you find my favorite pizza spots?  Here’s a quick list:

  • New York City: Lombardi’s
  • Chicago: Giordano’s
  • Los Angeles: Mulberry Street Pizzeria
  • Orlando: Via Napoli

Observation #1 – Pizza is the flagship of each of these restaurants.  You won’t find any sushi on the menu.

Observation #2 – I didn’t list any favorite pizza spots located in my home base (the DC area).  The jury is still deliberating and bribes are accepted!

Where are your favorite pizza spots?

(P.S. – The picture above is NOT me!!)

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