In honor of April Fool’s Day, which is just around the corner, I thought it would be good to highlight the most foolish things that I have seen as a sales tax consultant: Lies.
We are all familiar with the boldfaced lie. You know, the lie that is so silly and easily disproved that it is a waste of time to even try to float it. Like trying to say you didn’t eat the last cookie, when no one else is home and you have crumbs on your mouth.
Yet time and again, I run across clients who not only lie to the Comptroller, but even lie to me. Don’t say that you only rent equipment when your website has a whole page devoted to the construction services you provide. Don’t tell me you only sell to out of state customers, when your invoices have a Texas “ship to” address.
Auditors routinely look at company websites, in addition to all of the documents that you are required to provide them. They research your business. It is a part of their job. If you are telling boldfaced lies, they will find out. Then they will think you are hiding something and everything you say will be subject to a higher level of scrutiny.
Lying to your sales tax consultant is not the best idea in the world, either. Remember, your sales tax consultant works for you. We are your advocate. You should be as honest and forthcoming as possible in order to have effective representation.
One of our best clients told me that some of the sales tax deficiency that the auditor assessed was correct. He came out and admitted that he kept the sales tax that he collected. You are probably wondering, if he was dishonest, why was he one of our best clients? Because, in addition to paying my bill, he didn’t lie to me. I didn’t have to go through all of his records trying to disprove the tax collected, not remitted assessment when he knew the auditor was correct. He saved time and money by being honest.
Contrast that with another client who also had tax collected, not remitted. He didn’t admit it until the end of the engagement, after I had reviewed all of his records and reported the results of my review. Then, he sheepishly admitted that he may have kept some of the sales tax he collected. Because he wasn’t honest, he had to pay me for the time expended trying to disprove the audit results. He also had to pay the sales tax, interest charges and the 50% penalty associated with tax collected, not remitted.
Lying about being a natural blond or taking that extra brownie is relatively harmless. Lying to the Comptroller or your sales tax consultant is not. Remember, if your lies are discovered, things will not go well for you. For your conscience and business’s sake, you should be open and above board with the taxing authority and your consultant. Honesty really is the best policy.