I Serving Clients Nationwide I
Sales & Use Tax Tips for January 2009
SALES TAX REFUNDS
Sales Tax Refunds and Overpayment Prevention can Really Pay Off!
As many businesses find themselves struggling in today’s economy, obtaining Sales and Use Tax refunds can be more vital than ever. Perhaps of even greater importance is the prevention of further overpayment cash drains by addressing and correcting the underlying problems leading to overpayments. Reviewing books, records, invoices, available exemptions, current Sales and Use Tax compliance procedures and alternatives allowing qualification for other exemptions can really pay off!
The first step in applying for such a refund is to identify the errors and overpayments and their causes. An internal review or a review from a qualified third party will help identify and quantify the problem areas and the dollars at stake.
Such overpayments can occur for a variety of reasons. For example, vendors may charge a company sales tax on purchases made for resale. Additionally, vendors often just do not know the taxability of their own products or services as laws are complicated and change, and as sales expand into other states and jurisdictions. In other cases, sales or use tax on a purchase may have been paid to two states or localities. Missing eligible exemptions or slight changes that could make a purchase eligible commonly lead to overpayments. Alternatively, purchases may qualify for an exemption such as manufacturing even if the company isn’t a manufacturer.
Tax personnel at many companies just do not have enough time or resources to dedicate to sales tax issues. Other reasons may include simply paying too much tax due to vendor or internal rate or calculation errors. Proper handling of bad debt write-offs may also qualify for a sales tax refund.
Refunds can be very significant and some states even pay interest on the overpayments; however, most states have a statute of limitations that require refund requests within a certain period of time. It is important that overpayments are identified in a timely manner before the limitation expires and the refund opportunity is lost.
Caution: Refund requests usually trigger audits! Proper evaluation of the company’s own sales and use tax compliance procedures and assessing the risk and potential rewards is key. The resulting changes can reduce future overpayments and audit exposure too.
Our professionals can help with refund issues and minimize potential exposure to make sure your company is in compliance with sales and use tax laws. For more information please see the Refunds or Diagnostic Review sections of our website.
Click here for more Sales Tax Tips or visit our website www.oatax.com. For additional insight on common sales tax concerns, please see the Did You Know? section of our website.
Should you have questions or require assistance please Contact us today or call 1-888-466-2829 to speak with an Olivier &
Associates Sales and Use Tax professional for a no-obligation consultation about your Sales & Use Tax issues.
* This tip is intended to provide general information only and is not to be considered as a substitute for professional advice.
