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Use Tax
States that impose a sales tax also impose a complementary use tax on the use storage or consumption of tangible property and specifically enumerated services within the state. Since the Constitution prohibits states from charging sales tax on sales outside of state lines, a use tax is needed to create balance between vendors in states with different sales tax regulations. Use tax must be self-assessed by the purchaser if sales tax was not paid and use of taxable tangible personal property or taxable services occurs in state.
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Sales Tax Audit
The purpose of a sales tax audit is to determine if the taxpayer is paying the correct amount of sales tax owed to the State. The audit is used to promote compliance with tax laws, and as a means of increasing State revenue.
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Tangible Personal Property
Property that has physical substance, excluding land, buildings, and fixtures or equipment that become an integral part of real property. Intangible property, such as money, stocks, bonds, mortgages, certificates of deposit, and so on, is also excluded from this definition.
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Nexus
The minimum connection or presence in a taxing jurisdiction that gives rise to a tax payment or tax collection duty. Businesses that located in one state are not required to collect sales or use taxes on behalf of a different state unless the have nexus in another state. Doing business in a state outside one's own creates a connection (nexus) to that state. A business can create nexus by having physical property in a state, employees in the state, or having agents in the state operating on the company's behalf.
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Audit Process Flowchart
Source: Multistate Guide to Sales & Use Tax Audits by Daniel M. Davis
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The Selection Process
Sales and use tax audit candidates are chosen due to the cell system, random selection, previous audit experience, tax return analysis, or targeting of certain industries or firm sizes. There are four most common reasons why you may be selected for a sales tax audit:
1. Random Selection
2. The New York State Department of Taxation and Finance may target industries that typically have sales tax issues such as:
− Cash Businesses
− Businesses with Taxable Ratio issues (Vendors who sell goods or services that are not 100% taxable or non-taxable)
3. The New York State Department of Taxation and Finance may target industries that typically have use tax issues such as:
− Businesses with large depreciation on income
− Professional services
− Financial services
− Law Firms
− Doctors
− New or Changing Businesses
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Company Overview
Olivier & Associates LLC, is a boutique tax consulting firm that only provides sales, use, and transaction tax advice. We are a highly specialized team of nationally recognized accountants, attorneys and former tax state auditors who understand Sales, Use and Transaction Tax law from both sides of the table. Our clients range from Fortune 1000 companies with annual revenues in the billions, to businesses with revenues closer to $250,000 annually. Olivier & Associates works with proactive companies and with companies that suddenly find themselves needing help when facing serious Sales & Use Tax problems. We also provide professional advocacy services for companies that are under Sales Tax audit and need assistance in negotiating with state and local taxing authorities.
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The Team
David P. Olivier
Founder and Managing Principal
Wall Street, New York office
(212) 232-4588
David Olivier is the Founder and Managing Principal of Olivier & Associates headquartered on Wall Street. He is one of the nation's leading experts on Sales, Use and Transaction Tax issues, and spent nine years serving Fortune 500 and middle market clients at KPMG LLP before forming his own firm. Today, David leads a highly specialized team of nationally recognized accountants, attorneys and former state auditors that focus solely on Sales & Use Tax. He is a leader in the Sales & Use Tax industry, often recommending initiatives and policy that are adopted by state agencies.
Mark L. Stone, CPA, MST
Principal
Long Island, New York office
516-931-1500
Mark Stone is a Principal at Olivier & Associates and leads the Long Island, New York office where he specializes in Sales, Use and Transaction Taxes. Mark's work as a New York state tax auditor as well as a Tax Manager at several prominent accounting firms over the past 15 years has earned him a reputation as one of the top professionals for multi-state Sales and Use Taxes. He is frequently invited by various organizations to speak on Sales & Use Tax issues, and serves as an expert witness testifying in tax court on behalf of clients.
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Services
Olivier & Associates specializes in assisting other professionals and businesses with complex multi-state sales and use tax issues and solving sales and use tax problems. We are experienced in:
− Sales tax audit defense,
− Identifying refund opportunities,
− Negotiating voluntary disclosure agreements (VDAs),
− The streamline sales and use tax project (SSTP),
− Identifying refund opportunities,
− Compliance reviews,
− and Nexus determination.
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