Bellatoris Consulting, LLC

Archive for the ‘Refunds’ Category

Five Overlooked Sales Tax Opportunities

In Compliance, Refunds, Audits, Automation, Profit, Tax Planning on April 10, 2013 at 8:56 AM

Young black / african american business woman using binoculars

 

“Set it and forget it.” 

That’s how most companies approach their sales tax compliance processes.  However, some companies have long realized the bottom line impact that can come from implementing sales tax planning strategies.  It’s my hope that you’ll want to explore the five opportunities I’ve listed below so you too can optimize your company’s bottom line.

Opportunity #1: Missed Exemptions

If your company qualifies for a sales tax exemption on certain purchases, make sure your vendors are actually honoring those exemptions.  If you “set it and forget it,” you may not realize that they’re charging sales tax despite your request for an exemption.

Opportunity #2: Audit Offsets

If you find sales tax overpayments were made during an audit period, you should ask the auditor to factor those into their overall assessment.  If you “set it and forget it,” auditors won’t go looking for those overpayments for you.

Opportunity #3: A/P Support

Give your A/P department the tools (e.g. tax matrices, cheat sheets, in-house training, etc.) to make sure they’re not processing unnecessary sales tax charges.  If you “set it and forget it,” your company’s bottom line will be trimmed each day by payments that could be as much as 9% higher than they should be.

Opportunity #4: Tax Adjustments

Make sure your sales tax returns are prepared using all necessary pieces of source data.  If you “set it and forget it,” you may be missing transactions occurring outside of your billing system that should be reducing your sales tax liabilities every month.

Opportunity #5: Bidding Blunders

If your company’s profit margins have been eroded in the past by overly aggressive bids, make sure your colleagues don’t use an overly conservative approach that anticipates more sales tax than will be required.  If you “set it and forget it,” your bloated bids will hurt your chances of having a competitive edge.

Supplemental Resource

If your company’s sales tax compliance process has been on autopilot, then I have a resource you need to check out.

Below is a link to an e-book that further breaks down these opportunities, provides case studies, and even provides a bonus opportunity that’s not mentioned above.  Plus, it outlines a simple three-step process to bring these opportunities to life at your company.  It should take about 5 seconds to download, about 5 minutes to read, and as a result it will arm you with the tools to start utilizing very powerful sales tax planning strategies.

Click Here for the Free E-Book: Sales Tax Best Practices – Five Overlooked Opportunities

Companies can no longer afford to have a “set it and forget it” mentality.  Start to incorporate these strategies into your routine and you’ll see measurable results that will help you optimize your company’s bottom line.

 

Snappin’ Necks and Cashin’ Checks

In Audits, Profit, Refunds, Tax Planning, Use Tax on March 13, 2013 at 2:45 PM

Elderly Shoulder Pain

I’ll be the first to admit that I’m quick to complain, but slow to compliment.  However, that’s going to change and you can take that to the bank, Jack!

(I’m hooked on that show Duck Dynasty, so I’m channeling my inner Si Robertson.)

That being said, I want to share a compliment and send a quick shout-out to my new chiropractor, Dr. Lisa Przbysz.  I just started to get back into the routine of chiropractic care and I feel like a million bucks!

Here’s the thing, I’ve never had any back or neck problems.  Instead, I see chiropractic care as an essential element of proactive wellness.  After my first treatment, I was standing taller, there wasn’t an ounce of tension in my body, and my mind felt amazingly clear.

In that moment of clarity, I asked myself: “In what other parts of my life can I experience the high that comes from proactive action?”

As I started to chew on this question, my career naturally came to mind.  From there, I came up with three ways in which my clients could enjoy the clarity and relief that comes from proactive action:

Action #1: Check for Sales Tax Refund Opportunities Each Month.  If you wait too long to discover overpayments, they may fall out of statute and you’ll lose the chance to claim the benefit.  Plus, the time it takes to process amended returns or refund claims can be lengthy.  Set aside some time each month so you can realize the benefit immediately!

Action #2: Do Periodic Self-Audits.  In addition to scanning for sales tax refund opportunities each month, you should also do a quarterly process review to see if any sales/use tax underpayments are happening as well.  That way, you can correct those problems on your own terms before an auditor catches them first.

Action #3: Keep Tabs on Your Company.  The volume of internal e-mails and announcements you get is probably tipping the scale toward the “overwhelming” side of things.  Try to pay attention to what’s going on because you may find that a new product or service offering, merger, acquisition, or even the opening of new offices may trigger new sales tax or use tax compliance responsibilities.  Take note of them early on so you can take the necessary steps before it’s too late.

So, with those three simple steps, it’s my hope that you can use those ideas to help your company improve its sales and use tax compliance efforts.  Not only that, I also hope they can help you to look like a rock star!

(And you know what that means – rock stars cash checks.  Big ones!)

We All Make Mistakes

In California, Compliance, Refunds, Tax Planning on January 17, 2013 at 2:07 PM

Wrong Underwear in Laundromat

Forgetting to charge your cell phone: small mistake

Forgetting to pay your cell phone bill: medium mistake

Choosing a Blackberry over an iPhone: HUGE mistake

I’m just kidding about that last one (not really).

We all make mistakes, but doesn’t it drive you crazy when you find yourself making the same mistakes over and over again!

Want to know one of the biggest mistakes I see tax/accounting/finance/legal professionals make?  They trust that large companies are charging the correct amount of sales tax on the items they buy from them – strictly on the premise of the company’s size.

I’m sorry to say that even “large” companies make mistakes when it comes to sales taxes.

Want proof?

There’s a well-known computer retailer (I won’t say their name, but it rhymes with Smell) that just lost a significant class action lawsuit in California because they were charging (you guessed it!) too much sales tax.

When I do a sales tax process review for my clients, I always encourage them to examine the invoices they get from large vendors.  As you can imagine, I get a lot of puzzled looks when I suggest that as a step in the process because it’s easy to assume that large companies have their act together.  Unfortunately, that’s not always the case.

Here’s my call to action – Take a few minutes and look through your vendor invoices and give those large companies a scan to see if the sales tax charges look right.  You might be surprised at what you find.

Need help with a place to start, or want to hear the scoop on how you can jump in on that California class action lawsuit I mentioned earlier?  Drop me a line and I’ll be happy to help you sort it out!

How a Refund Turned Into an Assessment

In Refunds on May 29, 2012 at 1:35 PM

As a kid, I loved playing the board game “Monopoly.”

As an adult, not so much.  (I think adults tend to forget that you’re not playing with real money.)

Remember those Community Chest cards that read: “Bank error in your favor, collect $200”?  Have you ever heard of such a thing in real life?

I heard of a case where something similar happened in the tax world.  A state auditor called a taxpayer out of the blue with some great news: they were due a refund!

Here’s the punchline: before the auditor was willing to authorize the refund, he wanted to come out and conduct an on-site audit “just to double-check the overpayment.”

You can probably guess where this story is going, right!

The audit to double-check the refund quickly became an audit to issue an assessment.

Was it the auditor’s intent to turn the tides after coming for the on-site audit?

Who knows.

If that was the case, why would the auditor try to pull those types of shenanigans?

Most tax departments are spread so thin these days that they have to tell auditors to effectively “take a number” and wait in line.  This may delay the audit by anywhere from a month to almost a year.

Did the auditor mentioned above get an open invitation to stop by for his audit to double-check the alleged refund?

Absolutely!  He was on site within a few days.

See my point?

Before you work with your CFO, Controller, or whoever else is responsible for accounting for contingent liabilities (or gains in the case of the taxpayer mentioned above), be sure to do your homework.

Things in the tax world may not always be what they seem on the surface.

 

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Are You Paying Too Much Tax When You Buy a Car?

In Refunds on March 12, 2012 at 11:46 PM

 

I bumped into a friend of mine the other day and he had some great news to share.

 

“Derek, I finally decided it was time for a new car!”

 

He knew that I was a hardcore car dude, so he was shocked when I responded by saying, “Oh no!!  Did you buy it already??”

 

I quickly retreated and apologized for my knee-jerk reaction.  I was genuinely happy for this guy because his car was almost 20 years old and falling apart; but the tax nerd inside of me spoke out of turn.

 

I explained my rudeness by saying that I knew of a way to save on his tax bill and I was worried that he missed the opportunity.

 

(In Virginia, car dealers are allowed to pass through their business license taxes to customers….but few customers know that they’re allowed to decline the charge.)

 

My friend isn’t a tax nerd like me, so he had no clue how this worked when he bought his car.  To him, it was just another line-item cost that was set in stone.

 

Many organizations operate this way when it comes to sales tax – they assume that it’s set in stone.

 

Just because a vendor charges sales tax doesn’t always mean that they’ve done it correctly.  Here are a few examples of where they can go wrong:

 

  1. Charging sales tax on products or services that aren’t subject to sales tax.
  2. Charging State A’s sales tax on products that are sent to State B.
  3. Charging the wrong rate of sales tax.

 

These are just a few examples, but you’d be surprised at how often vendor invoices include the wrong amount of sales tax.

 

How often does your company scope out potential sales tax refund opportunities?  (Most companies do it about as often as my friend replaces his cars!)

 


Can Luck Be A Tax Planning Strategy?

In Audits, Refunds on November 14, 2011 at 12:05 AM

After coming home from a family vacation recently, there was a mountain of mail that awaited me.  Sifting through a day’s worth of junk mail is a drag, but a week’s worth is really annoying.

My annoyance quickly turned into curiosity when I saw a strange letter in the pile.

The envelope itself was made from a high-quality paper.  My name and address was obviously hand-written.  The return address was very corporate sounding.

Instead of tossing it into the junk pile, my curiosity got the best of me and I opened the letter.

As I unfolded the single sheet of letterhead, I noticed the logo at the top: US Airlines.

Wait a second?  US Airlines?  Are they a knockoff of US Airways like how Dr. Thunder is a knockoff of Dr. Pepper?

The body of the letter notified me that I was the lucky winner of two roundtrip airline tickets to anywhere in the United States.  All I had to do was call a toll-free number to collect my prize…….wait a minute!

I hit up my favorite search engine (since they don’t pay me for an endorsement yet, I’ll call it Boogle), and it turns out that this was a marketing scam perpetrated by a travel agency.

Travel agency?  Those companies still exist?  I guess desperate times call for desperate measures.

Another industry falling on desperate times is state government.  Surprise!

A client of mine got a call from an auditor recently.  Guess what, it was because the auditor thought his company was due a refund.

Wow!  An unsolicited call from an auditor that wasn’t to setup an audit.  Better yet, it was to say that they had money coming back to them!!

Just like my letter from “US Airlines,” the call came with a hitch.  The auditor wanted to swing by and make sure his calculations were correct on the potential refund.

Can you guess where this story is going?  Yep, the auditor showed up within a few days and initiated a full-blown audit with a sizeable deficiency in tow.

In the past, auditors were okay if you told them that you had to delay an audit because of other pending audits or compliance cycles.  This auditor obviously wanted to jump to the head of the line (and it worked!).

The bottom line: if you think there are refunds to be had, don’t wait for the state to voluntarily turn them over to you.  Besides, it’s more fun to track them down when you have a bald sales tax consultant by your side!


Look to a Punk Rocker for a Sales Tax Lesson

In Refunds on October 4, 2011 at 11:53 AM

In college, I took a class on non-profit management.  As people piled in on the first day, not one familiar face entered the room.  As the seats in the classroom filled, only a couple remained open (one of them was next to me).  Just as I made that observation, my new neighbor walked through the door.

Multi-colored hair, facial piercings, tattoos, denim jacket with assorted patches, crazy jewelry….this guy looked like he just walked off the set from a 80s hair band video.  He sat down in the chair next to me, extended his hand and said, “Hey, I’m Uncle Kenny.”

I shook his hand and introduced myself as Grandpa Derek.  (Actually, I didn’t say that….but how awesome would that have been!)

When I asked Uncle Kenny what his major was, he said, “I haven’t really declared a major but I’m really into fireworks so I think I’m going to go the Computer Science route.”

Wow!  I immediately assumed that Uncle Kenny was looking for cooler ways to blow up stuff through his college education.  This was going to be an interesting semester.

As it turns out, Uncle Kenny was referring to the coding language called “Fireworks” and he was an honest-to-goodness computer genius.  At first blush, I thought he was just some goofball.  As I got to know him better over the course of the semester, I realized that I was experiencing another one of those “Mom was right” moments.  You really can’t judge a book by its cover.  Uncle Kenny proved to be incredibly smart, friendly, and a very hard worker.

Believe it or not, I’m taking this trip down memory lane in honor of National Sales Tax Refund Claim Month.

When you’re doing a review of your Accounts Payable processes, looks can be deceiving.  Just because you see an invoice from a large well-known company doesn’t always mean the sales tax was correctly charged.  Large well-known companies make sales tax mistakes too, so remember what your mom told you and “don’t judge a book by its cover.”

P.S. – In case you were wondering, Uncle Kenny liked to be called “Uncle Kenny” because he had a young nephew that really tugged on his heart-strings.  He had a few health emergencies after birth and was lucky to be alive.  Kenny loved him very much and talked about him all the time.  Yet another reason why I felt like a heel in judging this guy so wrong when I first saw him.


The Forgotten October Celebration

In Refunds on October 3, 2011 at 11:59 AM

Most people know that October is noted for being the breast cancer awareness month as well as the time we celebrate Columbus Day and Halloween.  For sales tax aficionados like myself, we also know that October is National Sales Tax Refund Claim Month!

How should someone celebrate such an occasion?  Great question!  Here are some examples of opportunities that are worth celebrating:

1) Accounts Payable Review: Click HERE for an example of an opportuniy you may find in such a review.  Typically speaking, A/P groups are measured by their speed instead of their accuracy.  The default often becomes: “If In Doubt, Tax It.”  Go get some of that back!

2) Bad Debt Review: Click HERE for a discussion on why bad debts can present an opportunity for getting sales tax refunds.

3) Targeted Transaction Review:  Diving into your records head-first may result in discovering random refund opportunities.  Instead of a shotgun approach, try a rifle-shot approach.  Examine your business practices and look at specific areas instead.  You may find it easier to see a consistent pattern of errors that will make your efforts pay off quicker.  One example: does your company do sale/leaseback transactions?  If so, double-taxation often happens with those.

Do a little fall-cleaning and try to dust off some sales tax refund opportunities.  It’ll make cruising into year-end a much smoother ride if you have some cash coming back in the door.


Can a Record Retention Policy Cost Big Bucks?

In Audits, Compliance, Refunds on September 7, 2011 at 5:34 PM

I was an eyelash away from sealing the deal on a six-figure refund claim.  I made a call to my client to ask for the final set of supporting documents.  Victory was in sight.

“Yeah, we don’t have any of those invoices.  Sorry.”

What??  These transactions happened two years ago.  Why wouldn’t they have any copies of these invoices?

The answer ended up being very simple.  My client was a government contractor and their operations people had a 6-month record retention policy for security purposes.  Anyone in the accounting profession, however, is used to a window of 3-7 years for keeping records.

In the case of my refund claim, we were lucky enough to sweet-talk my client’s vendor into providing copies of the invoices we needed.  Because of that, we were able to save the refund claim.  Without those invoices, we would have walked away with nothing.

If your company has unusually short record retention policies for groups outside of the accounting/finance area, then you need to figure out how to get your hands on documents that may be required for future purposes (e.g. audits and refund claims) before they get lost in off-site storage.

How many different record retention policies does your company have?


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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