Call a Thing a Thing! Clear Concise Invoices & Contracts are the Goal.

 

Sometimes it seems as if we live in a world where everyone is just trying to skate by instead of striving for the best. Excellent service is rare and “okay” service is the norm. Using fillers like “um” and “you know” takes the place of concise speech. Ambiguity is valued, while being precise isn’t. While that may be okay when you are ordering a chalupa, it isn’t okay when you are dealing with sales tax.

April Fool’s – Don’t Let the Joke be on you!

 

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.

Are You Still Feeling the Love?

February always brings to mind hearts, flowers, love and passion. Business owners usually start a business when they are passionate about what they are doing.For example, you love baking, so you open a bakery. You love working with your hands, laying tile or installing cabinets, so you become a contractor. You want to support your family, you enjoy nice things, and you have an idea about how to make money, so you open a business. Whatever the reason, every business owner has a story about why they hung out their shingle.

Why Am I Getting Audited?

“Why me?!” is a typical response when people get the notice of audit.  Here are the top reasons you are getting audited.

What Can I Do to Secure the Best Audit Result?

Everyone who receives an audit notice wants to know what they can do to secure the best possible result. For most taxpayers the “best” result is a minimization of (1) the money owed to the taxing authority, (2) money paid to any consultant, and (3) time devoted to addressing the audit. So what can you do to get the “best” results? ACTIVELY PARTICIPATE IN THE AUDIT PROCESS!!!

How Do I Avoid Owing the Tax Authority Money When an Audit Occurs?

I love this question.  The answer is simple.  Learn the tax rules as they apply to your business.  And prioritize compliance with the rules BEFORE an audit is generated.

By the time an audit is generated, your records are either good or they’re not.  You have taxed the transactions in the audit period correctly, or you haven’t.  You have paid sales or use tax due on your purchases, or you haven’t.  You have receipts and other documentation needed to conduct the audit, or you don’t.

I Hired a State Tax Consultant…They Just Took My Money And Ran (away from me)!

It is so disheartening to have someone tell me they paid someone to “handle” a sales tax audit for them and they feel cheated because nothing happened.  They have a bill and no one will speak with them about it.  For everyone who is going through an audit, I have a few things that you should question when hiring an advocate. The next blog will address what YOU can do to secure your best audit result.

Why Do Companies Have a Second Set of Books, i.e. Financial Records?

I went to a conference and the speaker encouraged business owners to have a second set of books.  I heard the suggestion and thought, “what is this craziness?!” The rationale was as follows:

  • The first set of books would be given to your CPA, and serve as the basis for tax filings etc.  It would accurately reflect expenses, revenues, etc.
  • The second set of books would remove select items to show “how the firm was really doing.”  The second set of books would eliminate expenses, such as owner salaries, owner-related expenses, and revenue that was deemed extraordinary.  It was advised that the second set of books be kept under lock and key and never confused with the “real” set of books.

As people began to make plans to institute this plan, I was struck by the level of risk associated with this practice.  It is truly dangerous to have two sets of books.

Even Glinda Can't Make a Valid Audit Deficiency Disappear

I recently came across a recording of Wizard of Oz in my DVR and I immediately started drawing parallels between those characters and the state tax world. Some clients are like Dorothy, thrown into a strange world (state and local tax), but willing to follow the yellow brick road on what can be a harrowing journey. Others are like the Lion, praying for courage or like Oz, hiding behind a curtain and making up stories to keep everything running smoothly.

5 Things Business Owners Should Know about State Taxes

When you are a business owner, there are a million things that you must understand to run a successful business.  Understanding your state tax responsibilities is normally not high on your radar.  While every jurisdiction is different, there are questions that all business owners should ask about state taxes.

Do I Need to Register My Out-of-State Construction Company To Collect Sales Tax In California?

A really nice guy named Richard called because he was awarded a construction project in California. He stated emphatically that he wanted to do the right thing. He wanted to do his job, comply with state tax law, and rest easy knowing that he covered both his bases and those of his client.

As a construction company owner, Richard has it tough. Not only does he struggle finding skilled labor, he is also challenged with high levels of competition, decreasing profit margins and sales and use tax law complexities.

Just Tell it to Me Straight: Am I Required to Register in New States Because of the Wayfair Case?

You turned on the TV, looked at your email, surfed the internet and everyone was talking about the Wayfair case and nexus.  You listened (a little) and now you are left wondering what it means for you and your business. For some people, it means very little.  For other people, the world exploded.

Get it in Code! The Frustrations of Contacting the Comptroller or DOR.

News flash! Understanding the Tax Code is not the easiest thing to do. The good news is that almost jurisdictions provide resources to help taxpayers. Websites with publications, FAQs, the Tax Code and Comptroller or DOR agents are all ready to assist you. 

But, sometimes complex issues cannot be resolved by reading the FAQs section of the website or with a call to the taxing jurisdiction. Websites are only as good as the information on them. I have found old, superseded information on DOR websites. I have also found information that was just plain wrong.  

Divergent Use - The Real-Life Tale of Little Red Riding Hood

Don't play Little Red Riding Hood to the Big Bad Wolf, i.e. divergent use.  Divergent use is a big gotcha for companies that expand lines of business without reconsidering Texas sales and use tax consequences.

Divergent use occurs for Texas  equipment rental companies when equipment purchased tax-free is used in  a taxable manner.  When an equipment rental company issues a resale certificate in lieu of paying sales/use tax and uses the equipment to perform services divergent use has occurred.  It is common for equipment rental companies to decide to lease equipment with an operator.  But when a resale certificate is issued in lieu of paying sales or use tax, a company may not use the equipment to perform services for clients without paying sales or use tax on the divergent use.  Sales or use tax is owed on the fair market rental value for the “normal” term of a rental to third parties or the original purchase price.

Tax Amnesty - A Pot of Gold at the End of the Rainbow

I have been quiet lately because I took a little time out to go on a working vacation. But I am back now, rejuvenated and ready to share the latest interesting tidbits about sales and use tax. 

The most important thing that everyone needs to know is that there is a tax amnesty program currently in effect with the Texas Comptroller of Public Accounts. That means from May 1 through June 29, 2018, the Comptroller is waiving penalties and interest for businesses who:

  • Did not file a required return or report originally due before January 1, 2018
  • Made an error on a previously filed report that resulted in an underpayment of taxes or additional tax due
  • Or that don’t have a permit or proper registration for collecting and remitting Texas tax.

Computer Conversions: Right after I purchase tech it is upgraded!

One of the most heartbreaking things I see too often is the ineffective technology upgrade.  How can an increase in functionality be ineffective? There’s one huge way...when you have someone who refuses to use the new technology.

We have all seen companies that pay a lot of money for computer upgrades.  Management spends a lot of time and money on the computers, software, training, and troubleshooting.  Everything seems to be going great until someone makes a simple request.

Don't Let Spring Fever Turn into an Inferno for Your Business

Spring is upon us. The birds are singing, bees are buzzing, and the pollen count is off the charts. Even if you are experiencing snow in April (which is so weird), spring fever is still contagious. But business owners and accounting departments should not get carried away clearing out old files and records, in case the state taxing authority decides to visit.

Show me the money! Say your price LOUD and PROUD!!!

People talk about clients that don’t want to pay them. The client pays too slow or raises a stink about the bill. There are several ways to deal with it. I find that an ounce of prevention is worth a pound of cure.

When people call, I tell them my prices up front. When I estimate how much time a project is going to take, I make a reasonable guess based on past jobs and then multiply the estimate by two and provide a range of prices.

Tabasco is Not the Same as Hot Sauce! Neither are Exemption and Resale Certificates.

There are some things in this world that appear to be interchangeable, but really aren’t: diamonds and cubic zirconia, Tabasco and hot sauce, Drew and Jonathan Scott.  While these things (and twin TV host brothers) may look the same, they are different.   They are as different as Texas Sales and Use Tax Exemption Certificates and Texas Sales and Use Tax Resale Certificates.

4 Red Flags: I’d Rather Eat a Dirt Sandwich than Become Involved

Hindsight is 20-20.  Over the course of my career, I have regretted accepting select engagements.  The interesting thing is a voice in my head always told me to “run!” I listen now after much aggravation and loss of time and money.  

“The content of this website is intended to convey general information only and does not represent accounting, tax or legal advice or opinion. Because tax laws, policies, and applications are dynamic and fact-specific, please consult with a state tax professional for a complete analysis of law as it may apply to your specific situation at a particular time. If you require an in-depth review of a specific fact situation, please contact our offices to establish a client relationship for opinion and advice.”