Bellatoris Consulting, LLC

Posts Tagged ‘Derek Hoffman – Bellatoris Consulting’

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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!


A Long Overdue Thanks

In Compliance, Use Tax on January 23, 2012 at 12:38 AM

On my 32nd birthday, I was a pallbearer at my grandfather’s funeral.  He was buried with full military honors at Quantico National Cemetery in a very quiet ceremony.  It was a perfect complement to his very humble nature.

Prior to that day, I had a perfect no-cry record at funerals.  My streak stayed intact until one minute before we all went our separate ways that warm September day.

The three military officers that presided over the service folded his burial flag and presented it to our family.  As they handed it over, they expressed their gratitude for my grandfather’s service to the United States of America.

(Cue the lip quiver.)

These three soldiers never met my grandfather, yet their gratitude was very genuine and heartfelt.

That was the very moment that I realized how I failed to express my gratitude to him.  He did a bunch of the typical grandfather type things with me, but there was one inadvertent lesson he taught me that stuck with me (pun intended….you’ll see) and I never got to thank him for it.

When I was about 5 years old, my grandfather took me to the shopping mall near my house.  I remember getting on an escalator that ascended upward toward the second level of the mall.

Within seconds, things got out of hand.

The boy in front of us (who was about my age) started to frantically scream at his mother.  “I’m stuck!”

The boy’s shoelace had come undone and became lodged in the escalator stairs.  His mom panicked and started to pull on the lace.  “It won’t come out!”

By that time, we were coming near the top of the escalator at the second floor.  I started to panic too!  I thought for sure that the boy was going to be sucked into the belly of the escalator.

That was when my grandfather reached up to the boy, grabbed his ankle and pulled his foot out of the shoe that was stuck.

The mother and boy reached the top of the escalator and hurried off.  I wasn’t even involved, but as I got to the crest and walked off, I think my eyes were as big as theirs and my heart was pounding!

I don’t recall what they said to my grandfather, nor do I recall how they got the shoe out of the escalator.  What I do recall was the feeling I got from seeing my grandfather as being cool, calm, and collected throughout the whole ordeal while everyone else was freaking out.  It was poetic!

In business, we all face emergency situations on a regular basis.  In fact, you may have had your fair share of sales tax related emergencies throughout your travels.

I’ve got good news for you!  If you have the right playbook (or the phone number of a sales tax consultant that has the right playbook…Cough Cough!), dealing with sales tax emergencies can be similar to dealing with a shoelace caught in an escalator.  With a level head and a calm demeanor, you can easily yank your foot out of the shoe and glide safely to your destination.

Whether it’s audits, monthly compliance cycles, overpayments, underpayments or any other sales tax “emergency,” we all can take a page from my grandfather’s playbook by staying cool, calm, and collected.

(P.S. – If you’ve committed fraudulent activities with respect to your sales tax compliance responsibilities, you better brace for getting sucked into the belly of the escalator!)


My Failed New Year’s Resolution

In Compliance, Use Tax on January 9, 2012 at 2:47 PM

Ah, the second week of January.  A time when gyms are seeing peak attendance.  A time when Cinnabon stores are seeing sharp declines in sales.  (Both of which are temporary, of course!)

I’m sad to report that I’ve already given up on my 2012 New Year’s resolution.  This was going to be the year where I didn’t get stressed out when companies weren’t concerned about sales taxes.

If a CFO was to tell me that sales taxes were immaterial to their company, I was just going to smile.  No stress!

If a Tax Director was to tell me that he/she doesn’t keep track of where their company is doing business, I was just going to nod.  No stress!

If a Project Manager was to tell me that sales taxes aren’t considered when they bid on new projects, I was going to…….AHHH!  (Channeling my inner Sam Kinison!)  I’m getting stressed just role-playing those situations in my mind!

Just because your car’s “Check Engine” light isn’t illuminated, does that mean you shouldn’t do any preventative maintenance (e.g. oil changes)?

Just because you haven’t had a heart attack, does that mean you don’t need to get a physical every year?

What kinds of preventative maintenance can you do to ensure that sales taxes aren’t eroding your profit margins?  Here are three ideas to consider:

1)  Examine your accounts payable functions to ensure proper compliance.  (Click Here)

2)  Examine your nexus footprint to determine where you have a taxable presence.  (Click Here)

3)  Examine the procedures used for bidding on new projects.  (Click Here)

If you drive your car 3,000 miles a month, you’re going to need more regular visits to your mechanic than the person that drives their car 300 miles a month.  The same approach applies to sales tax preventative maintenance; it all depends on your company and it’s operations.

Want more ideas that can help your company get into shape for 2012, let’s meet for lunch and grab a burger (or a salad if your New Year’s resolution wasn’t sales tax related!).


The Fine Art of Sales Tax

In Use Tax on December 13, 2011 at 4:27 PM

There I was, strolling through the streets of Monte Carlo when I stumbled upon this spectacular art gallery.  As I walked in, I immediately saw an original Marc Chagall oil on canvas.  I had to have it!

Sorry….I got my facts mixed up for a second.  I was actually strolling down Main Street, U.S.A in Walt Disney World when I popped into a gift shop.  I immediately saw a small light box with Cinderella’s castle inside and I had to have it!

When I went to pay for the light box, I asked if I could have it shipped back to my home.  (I trust the UPS drivers way more than the airport baggage handlers!)

The cashier asked where I was sending it.  When I told her that I lived in Virginia, she lit up with joy and said, “You’re not going to have to pay sales tax now!”

I was on vacation, but the tax nerd inside of me leaped out of his lounge chair, threw his pina colada on the ground, and got into a sales tax consulting stance.

I thought to myself, “Should I tell her about the use tax I’ll have to pay to Virginia?  Should I spread the word so she can educate other guests who are in this predicament?”

Do you want to know what I said to her?  I’ll tell you, but you’ll have to buy me a pina colada first!

Artwork is a common purchase that the states track for use tax purposes.  When it comes to high dollar pieces, the states have become very aggressive in sending use tax bills to the purchasers.

Just because you’re not buying a super-expensive piece of artwork doesn’t mean that you’re out of the states’ crosshairs.  The states are getting more sophisticated when it comes to enforcing use tax laws on individual taxpayers, so be sure to pay your fair share before they come after you first.

(P.S. – If you happen to be a Disney fan like me, stop by my other blog (DisneyMBA.com) and join in on the conversation there!)


Sending Gifts to the States

In Voluntary Disclosure Agreements on December 8, 2011 at 11:22 AM

Now that December is here, you’re probably asking yourself, “Wow, where has the year gone?”

I’m right there with you!  Can you believe that it’s already time to celebrate National Voluntary Disclosure Month again?  Wow!!

After the festivities of National Nexus Awareness Month in November, it makes perfect sense to me that December would be a time to celebrate voluntary disclosures.

Here’s why I think voluntary disclosures are beneficial:

  1. You can restrict the amount of time in history that a jurisdiction can lay claim to any unpaid tax liabilities;
  2. You can have penalties abated; and
  3. You can have a third-party (ahem!) present your offer anonymously on your behalf.  This can sometimes help you get the best possible terms from his/her contacts within a particular jurisdiction.

Here’s why the jurisdictions like voluntary disclosures:

  1. It’s unfound money that they didn’t have to go looking for; and
  2. In the event a company is not registered for tax purposes in their state, this gets them into the system for prospective compliance.

Here’s why CFOs and internal auditors appreciate the fact that December is National Voluntary Disclosure Month:

  1. These agreements can trigger the release of contingent liability reserves before year-end.

If the spirit of the season is running through your company, I’d be happy to help you with your gift-giving needs this month.  Just give me a call!

You’ll sleep well knowing that you’ve handled these outstanding liabilities…leaving you well-rested for the other December Holidays!


The Five Dollar (and twenty five cents) Footlong

In Budgeting, Compliance, M&A, Profit on November 30, 2011 at 3:05 PM

I went to lunch the other day at my local fast food sandwich shop.  I won’t say the name of the chain because they don’t pay me for an endorsement (YET!).  Let’s just call them Hoagie Way.

I was standing in line behind a boy who couldn’t have been older than 7 or 8.  I was caught off guard for a second because he was by himself.  Evidently it was one of those teacher workdays for the county schools, so he was apparently on his own for lunch that day.

As he got up to the counter, he ordered a footlong ham sandwich.  (I was impressed because that’s quite a meal for such a little dude!)

When the boy was asked if he wanted anything else on the sandwich besides the ham and cheese, he went down the line, topping-by-topping, and asked everything.  (The profit margin on that sandwich had to be next to nothing!)

A teenage girl was working the cash register that day.  When it was the boy’s turn to pay, she flashed him a quick smile and asked him what kind of sandwich he got.  He confidently said, “I got a $5 footlong ham sandwich!”

She hit a few buttons on the register screen and replied, “That’ll be $5.25 please.”

The boy’s confidence seemed to be pierced when he heard the price.  He reached into his pocket and pulled out a wadded up $5 bill.  “Wait, I only have $5.  I thought this was a $5 footlong.”

The cashier apparently saw the boy getting flustered, so she leaned a little closer and said “You’re right, the sandwich is $5, but I have to charge you sales tax.  That’s why it’s $5.25.”

In a borderline whimper, the boy said, “My mom only gave me $5 for my lunch today.”

The cashier looked panicked because the line was backing up and this little boy was on the verge of tears.  I put my sandwich down on the counter and started to dig through my pockets for a quarter.

Before I was even able to find a single coin, this youngster reached over to the tip cup and helped himself to a quarter.  He said, “My mom always leaves change in this jar, so can I use some of it now?”

Surprisingly, the teenage girl didn’t mind.  She flashed him a smile and he went over to a table and attacked his sandwich in a manly fashion.

Watching that whole scene play out really hit home for me.  I’ve helped a lot of clients who only had a lonely $5 bill wadded up in their pocket when they wanted a ham sandwich.  Unfortunately, most of them couldn’t reach over the counter to snag a quarter from the tip cup when it came time to pay.

Instead of working with $0.25 in sales tax, my clients tend to talk about $2,500 $25,000 or even $2,500,000 at a time (one time on a huge M&A deal).  Forgetting about 5%-10% of your costs can cause financial catastrophes for budgets and profit margins.

If you plan on buying lunch tomorrow, make sure you remember to grab a handful change before you leave for work.  If you’re not sure how much change to grab – I’ll be happy to help you crunch some numbers!


The Best Things in Life are (Sales Tax) Free

In Just for Fun on November 23, 2011 at 11:21 AM

Most people avoid airports on the day before Thanksgiving.  I’m a glutton for punishment, so I’m going to call it quits early today and go to Reagan National Airport.

Why would I do such a crazy thing?

Every day, I make time to have a “Daddy/Daughter Adventure” with my 2-year-old daughter Alice.  Sometimes we do simple things like running errands or visiting Grandma and Grandpa.

At least once a week, I like to change it up and do something special with her.  It just so happens that one of Alice’s favorite things to do is visit the airport.  She’s been asking to go there for a while, so that’s our plan for this afternoon.

On our 20-minute drive to the airport, we sing songs, marvel at the sights around us, and even chat about what we think we’ll see once we get there.

The walk into the terminal building becomes quite a scene.  Alice loves to wave at passersby and give them a quick “Hi!”.  When you combine that with her swift stride, most people are caught off guard.  You should see the surprised looks she gets from these strangers!

The terminal is set up so we have plenty of spots to sit down and watch the planes take off and land.  If Alice is tired of sitting, we get up and walk the length of the terminal and check out the shops.  Occasionally, we’ll walk down to the old terminal building and check out the hidden museum.  (DC natives – do you know about this museum??)

Those Daddy/Daughter Adventures only cost me $4 for parking (which isn’t subject to sales tax in Virginia!).  Any toy that I buy her for $4 (which would be subject to sales tax in Virginia!) would only be a temporary source of joy until the next one arrives.

I treasure the time I have with my family way more than any of my material possessions.  I’m hoping Alice will feel the same way as she grows up.

As we prepare to celebrate Thanksgiving tomorrow, I’ll be sure to also reflect upon how thankful I am for everyone who has shared kind words and offered support for this blog.  You guys are awesome!

Happy Thanksgiving!


Good Things Come to Those Who Wait

In Compliance on November 18, 2011 at 12:38 AM

On the weekends, my wife and I enjoy doing home improvement projects.  Nothing that requires permits, hard hats, or would otherwise be foolish to do after I’ve enjoyed a beer or two.  Just some mild sprucing up here and there.

The only problem with this weekend hobby was that I didn’t have a proper vehicle for hauling materials.  I tried putting plastic down in the trunk of my Rolls-Royce, but it didn’t work very well.

(Just kidding, I don’t drive a Rolls-Royce.  I have a very modest Ferrari that gets me from point A to B.)

To do this right, I needed a pickup truck.  In case you weren’t aware, new pickup trucks are ridiculously expensive.  That wasn’t an option!  Instead, I literally spent years combing through eBay, Craigslist, and Auto Trader looking for a solid used pickup.

Remember the old saying, “Good things come to those who wait”?

After my extensive search, I stumbled upon an Officer in the Air Force who was moving and didn’t want to take his truck with him.  The listing said he lived in my town and the pictures looked awesome.  The only hitch was that there was no asking price.

When I got there, the truck looked just like it did in the pictures (spotless).  We talked for a bit, and he wanted me to take it for a spin.  Guess what, it ran as good as it looked.  Based on my research, I was thinking the truck was worth about $7,500 (way over my budget!).

When we got back to his house, he said, “Look, I like you and it seems like you really like my truck. That’s important to me because I want it to go to someone who will take good care of it.  Will you give me $2,500?”

You probably know how that story ended!  I’ve owned that truck for three and a half years now.  Good things DO come to those who wait.

Now, does that rule also apply to sales tax?  My friend (let’s call him Pete the Procrastinator) would disagree completely.

Pete started is own business a few years ago and asked for my help with his first sales tax return.  As the 20th of the month rolled around, I called him bright and early in the morning to see if he was FINALLY ready to do his return.  His answer was, “Yeah, let’s do it this afternoon.”

We finally got to doing the return at around 3:00.  We had the data compiled, so we logged on to Virginia’s website to complete the return.

“Server Error – Try Again Later.”

We waited patiently for an hour before Pete started to panic.  I called one of my contacts at the Virginia Department of Taxation and he said the server was toasted and wasn’t going to be up until the next day.

Pete was officially in freak-out mode at this point.  (In hindsight, I feel bad about joking with him at the time by saying he was probably going to be thrown in jail that next day.)

Without a functioning website, we had less than an hour to crank out a paper return and get it postmarked.  You guessed it; we made it in time and everything was cool.

Wait a second!  What about this whole notion of good things coming to whose who wait?  It sounds like that didn’t happen here!

By waiting, Pete learned a tremendously valuable lesson (don’t procrastinate on your taxes!).  The stress of the whole ordeal wasn’t exactly pleasant for Pete, but the lesson he learned was worth it in my opinion.

P.S. – Pete has filed his sales tax returns before the deadline every month since then (or at least that’s what he tells me!).


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!


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!

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