Reviewing the sales tax checklist

One certainty in tax practice is that sales-tax rules are never constant. Issues come up because of new types of transactions (such as cloud computing and software-as-a-service), modifications to transactions and law changes. I have an article in the AICPA Tax Insider this week - Do You Know What Is Now Subject to Sales Tax? that covers some updates.

I tried my best to make this all practical by offering how these updates are relevant to a sales tax compliance checklist. I hope you find it useful (it doesn't ask all necessary sales tax compliance questions, it just suggests ones related to some recent developments).

It is important to be compliant for sales tax because past due liabilities, interest and penalties can pile up in multiple states. And, if a taxpayer's compliance system isn't adequate, resulting in liabilities, and the vendor is subject to SEC rules, the SEC might impose a penalty. Read on ...

Hudson Highland Group was assessed a $200,000 penalty. Sanctions were brought for failure to “maintain appropriate internal controls and books and records relating to its sales tax liabilities.” A unit failed to consistently collect sales tax from customers and remit them to the taxing authorities. The problem was due to lack of adequate and proper software to calculate sales tax owed. Hudson hired a third party, but that did not relieve the company of liability. Hudson was found to have violated Section 13(b)(2)(B) of the Exchange Act – having improper internal controls such that records did not properly reflect tax liabilities.