Our Services

Advisory Opinion Rulings

Many people have found that there is little consistency in the tax advice they receive from the government over the phone. If given erroneous advice over the phone, a business can later be charged the tax on that transaction, plus interest and penalties.
However, there is a procedure where a business or individual can get binding advice in writing from the government. This binding written advice is often called different things in different states including an advisory opinion, attorney general ruling, private letter ruling, opinion of counsel, or many other things.

We can assist you in expeditiously obtaining a written advisory opinion or other binding advice from the government. In addition, we will research the applicable law prior to submitting the advisory opinion ruling request, to help insure that the questions are phrased in such a manner that you are likely to obtain a beneficial ruling. With this binding advice your business can rely on the government’s recommended tax treatment of a transaction. If the advisory opinion is wrong, you and your business can not be held liable for the tax, interest, or penalties relating to the transaction.

Administrative Law Judge Hearings

An Administrative Law Judge (ALJ) hearing is one step in disputing a tax assessment or a refund denial issued by the New York State Tax Department. If a mediated solution cannot be reached through a Bureau of Conciliation and Mediation Services hearing before a Conferee, a formal hearing before a Judge maybe required. Generally a taxpayer has the right to appeal and request an ALJ hearing before the New York State Division of Tax Appeals, within 90 days of an assessment of conciliation order being issued.

It is critical to realize that The Division of Tax Appeals is a completely separate and independent unit from the New York State Tax Department. This is the first level of review where an employee of the “Tax Department” does not decide the outcome.

An ALJ hearing is more formal and is considered court. The New York State Tax Department is represented by an experienced attorney from their Office of Counsel. The federal rules of evidence are loosely followed. Witnesses testify and are cross-examined. Opening and closing statements are made. An Administrative Law Judge hears the testimony, reviews the evidence, and makes a determination. The determination is binding, but both the Tax Department and taxpayer may appeal a decision to the Tax Appeals Tribunal.

There are a number of administrative and procedural steps that must be followed to ensure your rights and to maximize the possibility of having your sales tax assessment reduced or eliminated. We know the rules and procedures. We know what questions to ask witnesses on the stand. We can help you and your business prevail at an ALJ hearing.

Appeals/Bureau of Conciliation

A sales tax auditor is never the final authority as to whether you and your business owe a tax debt to the government. There are numerous safeguards and appeals rights built into the system to help insure that an unsubstantiated sales tax position is overturned or that an erroneous sales tax assessment is cancelled. However, in order to preserve your rights you must file a timely appeal in writing with the appropriate state agency.

New York, like many states, has an informal arbitration process specifically designed to help many businesses avoid the time and expense of litigating a sales tax dispute in tax court. The New York State Department of Taxation & Finance has a separate unit called the Bureau of Conciliation and Mediation Services (BCMS). This unit’s responsibility is to serve as an informal mediator between a business (or individual) and the audit division of the tax department and to try to fairly resolve a tax dispute, without the need for either party to go to tax court. At a BCMS hearing, the hearing officer’s decision is binding on the tax department; however, you have the right to appeal the decision in tax court.

While filing and trying a matter before the Bureau of Conciliation and Mediation Services is less formal and less costly than tax court, there are still a number of administrative and procedural steps that must be followed to insure your rights at the hearing and to maximize the possibility of having the sales tax assessment reduced or eliminated. We will formulate and execute a carefully designed audit defense and dispute plan to help insure that you and your business prevail at a BCMS hearing and that your sales and use tax assessment is reduced or eliminated.

Audit Defense

The purpose of a sales tax audit is to determine if the taxpayer is paying the correct amount of sales tax to the State. The audit is used to promote compliance with tax laws, and as a means of increasing State revenue. As part of the ordinary course of business, most companies eventually will undergo a sales and use tax audit. Most auditors are professional and even friendly but please don’t mistake that professionalism for being your friend. While few auditors will admit it, their primary goal is to issue a substantial sales and use tax assessment.

Sales tax auditors frequently think that businesses cheat or at least intentionally try to skirt the sales tax law. They begin most audits with the attitude of trying to determine how much the business owes, not whether or not the business owes anything. Should the auditor find a transaction that the Company erroneously paid tax on, it is doubtful they will let you know about the overpayment.

It is our mission to see that your business is treated fairly on a sales and use tax audit. We help insure that gray areas in the sales tax law are interpreted in your favor. We also defend you against the sales tax auditor making unfair assumptions or erroneous projections about your business’s revenue. While it is wrong to intentionally underpay one’s taxes, it is also wrong for the government to excessively tax a business simply as a matter of convenience or to balance a budget.

Bulk Sale Filings

Sale and use tax liabilities often transfer between companies during acquisitions. Most states have a “Bulk Sale Filing” requirement which enables the purchasing business to get a tax clearance certificate directly from the state. This clearance holds the purchaser harmless for any of the seller’s sales and use tax issues or potential problems.

Without making a timely Bulk Sale Filing, the purchasing business can be held liable for the selling business’s sales and use tax liabilities and errors. Even if these errors have not yet been discovered by the state! Often this transferee liability can equal the total amount paid to purchase the business from the seller. And while the seller may have indemnified you, the state has the right to come directly to you for the monies due.

We will work with your business to insure that you are protected from all of the seller’s sales and use tax liabilities and potential liabilities. In addition, we will make recommendations as far as how to structure a transaction to minimize the sales and use taxes due on the assets being acquired.

E-Commerce & Online Marketplaces

A business needs to have “nexus” with a State to be subject to that State’s sales tax rules. In 1992, in Quill Corporation v. North Dakota, the United States Supreme court ruled that a business needed to have a physical connection with a State to have nexus with that State. But as the Internet, e-commerce and online marketplaces continue to grow and change the way business is done, the related sales tax rules have also changed.

In 2018, the United States Supreme Court ruled in South Dakota v. Wayfair (https://www.supremecourt.gov/opinions/17pdf/17-494_j4el.pdf) that a business can have nexus with a State even if that business does not have a physical presence in the State. This new type of nexus is often referred to as “economic nexus”. The ruling specifically upheld that a business that had over $100,000 in annual sales or over 200 transactions into South Dakota was required to follow South Dakota’s sales tax laws.

Since South Dakota’s rules were upheld by the Supreme Court, these rules can be applied to other States to determine economic nexus there. Knowing that the Supreme Court has previously decided that more than $100,000 in sales or over 200 transaction into a State will be allowed, many States simply decided to enact similar nexus laws. However, not every State has enacted similar nexus laws and some States have not enacted any economic nexus rules at all. This means that each State’s rules must be individually reviewed.

Some States have also enacted online marketplace laws. Under these laws, online marketplace facilitators are required to collect and remit sales tax on transactions facilitated through the website even though the facilitator is not the traditional “buyer” or “seller” in the transaction.

So what is the bottom line for business owners? The bottom line is that if your business makes sales into a State, you need to figure out if you have nexus with that State. If you do have nexus with that State, you need to figure out if you have to file sales tax returns in that State. If you need to file sales tax returns in that State, you need to figure out how to register with that State. Once registered in that State, you need to collect and remit sales tax as necessary.

As experts in sales tax and a partner with Avalara, a leader in automated tax software, we can help you with all your e-commerce needs!

Multi-State Sales Tax Research

Every state has its own unique set of sales and use tax laws. These laws have evolved and have been modified over many years. Some states impose tax on one type of sale, while other states say that the same sale is tax exempt, and still other states may partially exempt the sale based upon how the customer is going to use the item being sold. How is a business supposed to determine what to charge sales tax on?

We have the expertise to research and determine the proper sales and use tax treatment of the transaction in question. We will also advise you which states have beneficial tax rules for you and which states may impose more sales and use taxes upon you and your business. In addition, we will use our experience to help you LEGALLY structure a transaction, in order to minimize or eliminate the sales and use taxes that might be due.

We will work with you to gain an understanding of your business and the nature of the products you are buying and selling.

When you ask us how sales and use tax applies to a transaction, we will deliver to you a straight forward, clear tax matrix (grid) detailing how the sales and use tax laws apply in the states that you are doing business. A tax matrix commonly details things such as what documentation you need to obtain from your customers in order to avoid collecting sales tax, or how you can structure a transaction to legally avoid paying sales and use tax on a purchase. In addition, we will reference the matrix to a detailed supporting memorandum that cites the applicable statute or ruling that we based our interpretation on

Nexus and Amazon Rules

Nexus is the minimum connection or presence in a taxing jurisdiction that gives rise to a tax payment or tax collection duty. Businesses are not required to collect sales or use taxes on behalf of a state unless they have nexus in that state. Doing business in a state can create a connection (nexus) to that state. Historically, nexus required a physical presence in a state such as a business having physical property (such as inventory or samples) in a state, an employee (such as a traveling sales person) in the state, or having agents in the state operating on the company’s behalf (such as an independent contractor who is a repairman for the company).

However, New York was the first to say that nexus can be created when an online retailer has a commission-based referral agreement with a resident within the state (an “affliate.”) One such example is when an out of state business with no physical connection with New York agrees to place a banner ad on an in-state business’s website. The out of state business agrees to pay a commission to the in-state business every time someone clicks on the banner ad and buys products. Nexus has just been created. In New York, this has become known as the “Amazon Rule” or affiliate nexus.

Several states have followed New York’s lead. We know the nexus rules and we can review your operations to determine if you have nexus in various jurisdictions. We can also help resolve any potential sales and use tax liability in these different jurisdictions.

Nexus Studies

Nexus is the minimum connection or physical presence in a taxing jurisdiction that gives rise to a tax payment or tax collection duty. Businesses are not required to collect sales or use taxes on behalf of a state unless they have nexus in that state. Doing business in a state can create a connection (nexus) to that state. A business can unknowingly create nexus by having physical property (such as inventory or samples) in a state, an employee (such as a traveling sales person) in the state, or having agents in the state operating on the company’s behalf (such as repairmen of sales agents.) Any of these activities can create nexus while the business’s main operations take place in another state.

If you have nexus with a state and don’t know it, you’ll probably never file a sales and use tax return in that state. Filing a sales and use tax return is generally the only way to start the statute of limitations running in a state. The statute of limitations is the period of time in which a state’s tax department can come back to you or your business and issue a tax assessment against you.

We will review your multistate operation in order to determine if you have nexus in various jurisdictions, where you are not currently filing sales and use tax returns. By proactively identifying these potential trouble spots it allows the business time to either end the nexus causing activity or to begin collecting the applicable sales and use taxes from your customers.

Offer-In-Compromise

Unfortunately some businesses and individuals may incur a sales and use tax liability that they can never pay off. It may appear that there is no escape or hope for businesses and individuals in this situation. However, the states are not generally looking to put businesses out of business or foreclose on a person’s home simply because of one or two tax mistakes.

When a sales and use tax assessment is so large that there is little chance that it can ever be paid, it might actually encourage someone to stop paying all of their taxes. This results from the thought process of, “Well if I already owe the state 1 million dollars, what is the big deal if I owe the state 1.1 million dollars? I’ll never be able to pay either amount…” In order to give individuals and businesses a second chance and to give these people an incentive to pay their future taxes, the states have created a tax, interest and penalty forgiveness program called an Offer-In-Compromise (OIC).

The way an Offer-In-Compromise (OIC) works is that the individual or business in question must make a complete financial disclosure to the state. A detailed analysis of future cash flows, wages and other potential assets must be done in order to determine how much someone can reasonably pay and still have a chance at a fresh start. There is a substantial amount of work, analysis and negotiating that goes into a successful Offer-In-Compromise (OIC). However, an OIC is a last chance where the government will literally forgive tens of thousands of dollars in tax, interest and penalties in order to give a business or individual a fresh start. We will review all documents prior to filing for an OIC to ensure that they are complete, and then work to expedite a resolution. In addition, we will negotiate with the state to obtain the most favorable terms and maximum debt forgiveness possible.

Payment Plans

If you owe the government money for unpaid sales and use taxes, it is possible to get a payment plan with them. These payment plans are commonly called Installment Payment Agreements (IPAs.)
The government may require a significant amount of corporate and personal financial disclosures prior to agreeing to an installment payment agreement. In addition, the government often files a tax lien against you to secure the tax debt.

We can work with you to help minimize the amount of paperwork, time and disclosures needed to setup an IPA. In addition, with our expertise we can explain and help document why the government should give you the longest payment plan allowed.

We have been very successful in negotiating installment payment agreements with the state that do not require the filing of a tax lien against the responsible persons. This can be critical in preserving an individual’s credit score and business standing. In addition, we can work with you to target corporate payments, to insure they are applied toward the portion of a sales and use tax assessment that is also a personal liability.

Penalty Abatements

A simple, honest mistake relating to sales and use taxes can result in thousands of dollars of penalties. The government is quick to impose penalties, but slow to abatement them. Generally, a taxpayer must show that “reasonable cause” exists for the abatement of a sales and use tax penalty. The government is quick to assume that “willful neglect” led to the mistake. However, you and your business should never just pay a penalty without first considering if there are grounds to get that sales tax penalty abated.

In order to obtain penalty abatement you must show that the error resulted from a “reasonable cause” rather than “willful neglect.” We will work with you and your business to develop, document, and present to the government the grounds (reasonable cause) for penalty abatement. We will follow through and elevate the penalty abatement request to supervisors or hearing officers whenever necessary.

Never pay a penalty without first questioning whether reasonable cause exists for its abatement. Penalties and interest on tax assessments can quickly put a profitable business out of business. In some cases, the owners and corporate officers can be personally liable for the payment of the sales and use tax penalties. We will do everything possible to obtain penalty abatement on your behalf.

Responsible Person Assessments

Corporate officers and owners often have a fiduciary responsibility to insure that all sales and use taxes are properly collected and remitted to the government. This is true even if a business fails to collect the taxes in question. Imagine not collecting sales tax from a customer and then the government assesses the company you work at for the tax they claim to be due, plus interest and penalties.

The government can assess you personally for the amount of taxes the business could not pay as well as putting a lien on your house, seizing your bank accounts and begin garnishing your wages. All because the company you worked for erroneously failed to charge a customer sales and use tax.

While this sounds very unfair, it is the law in many states.

In order to be held as a responsible person, you have to have had “the responsibility and authority to insure the collection and remittance of the applicable sales and use taxes.” The government generally assumes anyone remotely involved in the sales and use tax reporting process is a responsible person. Often the government is wrong and over reaching. Never accept being held as a responsible person without a fight. We will defend you and help preserve the lifestyle you have built for your family. But you must act quickly if assessed, there is a limited time period allowed by law for you to dispute and appeal a sales tax responsible person assessment.

Reverse/Refund Audits

No one wants to over pay their sales and use taxes. However, sellers can be held liable for sales tax, interest and penalties on monies that they never collected but should have. This results in many sellers taxing almost every transaction. Regardless of whether or not there might be some type of exemption from tax for you and your business.

Armed with an understanding of your business and how you are using the items you are purchasing, we will advise you of what transactions you should pay tax on, and perhaps more importantly what transactions you should NOT pay tax on. We will then perform a “reverse audit” on your books looking for transaction and purchases that you may have erroneously been charged tax on.

We will then prepare the appropriate claims to obtain refund of any erroneously paid sales and use taxes. We will file this claim directly with the government or supplier as required by the law in your state. We will also work with you to provide your supplier with the correct documentation in order to assure that he/she does not charge you sales tax on future transactions. Lastly, we will provide you with a management letter detailing the results of our sales and use tax reverse audit, which will help enable to avoid any future overpayments of tax to your suppliers.

Sales and Use Tax Amnesty

Sales and use tax amnesty, is a program where by a state will abate or reduce the interest and penalties due from an individual or business in return for payment of the remaining balance due on a sales and use tax assessment.

Many states are implementing sales and use tax amnesty programs in order to try to plug a hole in the current state budget. Depending on the specific state program, amnesty allows you to settle both current sales and use tax bills and potential sales and use tax problems. Generally the settlement abates all penalties and reduces or eliminates the interest.

However, there are very specific due dates and applications that must be followed in order to avail oneself to the benefits of the current sales and use tax amnesty programs. Once the due date to file for an amnesty program has passed a state generally imposes additional penalties for the failure to resolve the tax assessment during the amnesty period.

We have helped dozens of businesses and individuals save hundreds of thousands of dollars by taking advantage of the various state sales tax amnesty programs.

Sale and Use Tax Due Diligence

Compliance with all of the sales and use tax laws can be extremely difficult. An erroneous interpretation, honest mistake, or even reliance on a long-held industry practice can cost a business tens of thousands of dollars. We have the expertise to review your Company’s sales and use tax procedures and determine if they are in compliance with the governmental requirements. If a mistake is detected, we will advise you on how to correct it. If you request, we will quantify the prior errors and amend prior filings to bring your business into full compliance with the sales and use tax law. In addition, we can help you to recover sales and use taxes from your customers that should have been collected.

If you are buying a business, you may inadvertently buy that business’s sales and use tax mistakes and assessments. Many professionals only focus on the income tax aspects of buying a business. We can review the records and procedures of the target company to determine if there are outstanding assessments for sales and use taxes or if a mistake or erroneous interpretation has lead to a potential sales and use tax liability that the government has not yet discovered. With this knowledge you can then set up the applicable escrow accounts or purchase price adjustments that reflect this potential liability.

If you are considering selling your business, we can review your operations to make sure that you are collecting sales and use taxes as applicable. In addition, we will evaluate your purchases to see if you are underpaying or overpaying your sales and use taxes. If you are overpaying them we will work with you to obtain a refund from the government, and if you are underpaying, we will instruct you as to the correct rules. By correcting any sales and use tax errors, you maximize the value of your business and the potential sales price for it.

Sales and Use Tax Filings

Timely filing tax returns is obviously crucial to sales and use tax compliance. Through filing returns, sales tax is remitted to the state. But also, filing returns start the statute of limitations for a filing period, providing a key protection for your business or your client.

With the Supreme Court Decision in South Dakota v. Wayfair, businesses have never been required to file more sales and use tax returns in more states than they are now. Each state has its own sales and use tax return form. This forces you to understand numerous methods of reporting sales and indicating tax collected. Each state has its own rules for filing frequency (monthly, quarterly, annually, occasionally) and whether or not a business is required to make estimated sales tax payments or sales tax prepayments. Filing deadlines are even different in every state. Certain jurisdictions within a state can also require its own tax return to be filed on top of the state return. Tracking all these different filings and remittances can be a hardship on a business simply trying to operate.

Sales Tax Defense LLC can help you with your sales and use tax filings in every state and local jurisdiction in the county. We work with our clients to obtain the necessary sales information and handle all the filings. This can allow you to spend your time and energy on your business instead of worrying about filling sales and use tax returns.

Sales Tax Check-up & Hot Line

The sales and use tax laws and regulations are confusing and contradictory. How can you be sure that your business is in overall compliance with the sales tax law? A small oversight can cause a substantial tax liability. Does your accountant discuss your business’s sales and use tax procedures with you, or does he just file a quarterly return for you?

In just half a day we can meet with you at your office, discuss your business and its major services and products, and evaluate how the sales and use tax rules apply. During this general review we will look at what products and services you tax, what exemption documentation you should be obtaining, and what potential sales and use tax exemptions might apply to your purchasing. If warranted we may recommend a more detailed analysis, or we will inform you that you have little to be concerned about.

For a small monthly retainer, we can be your “sales tax help line.” Rather than calling an anonymous extension at the state’s tax authority, we will be your source for the correct sales and use tax solutions for your company. By understanding your business model, we will tailor our advice to your organization, rather than just blindly telling you to pay tax on a transaction as the state often does. When needed, we will put our recommendations in writing and support them with case law and other rulings. And when you ask us a question, you can expect an almost instantaneous response, where as the government can make you wait months for an answer.

Streamlined Sales Tax Project

The Streamlined Sales Tax Project (SSTP) is an attempt by approximately 20 “member” states to simplify and unify their sales and use tax laws. By having one (nearly identical) sales and use tax system in place, the SSTP’s goal is that many more businesses will comply with the law and register to collect tax in the state, regardless of whether or not that business has nexus (a legal presence) in the state.

The Streamlined Sales Tax Project offers a sales tax amnesty program for businesses that voluntarily sign up for this program and agree to collect and remit all sales and use taxes in the member states. It is an extremely complex decision whether to join this program. Compliance with the SSTP’s filing requirements can be burdensome without proper guidance and software.

We have successfully advised businesses and implemented SSTP compliance procedures for our clients. In addition, the rules and laws governing this program are continuously changing. We regularly monitor these changes and inform our SSTP clients of relevant information. For more information about the Streamlined Sales Tax Project please contact us or visit: http://www.streamlinedsalestax.org.

Voluntary Disclosures

Most sales and use tax errors do not occur intentionally. Some occur from misunderstanding the law and other errors result from not even knowing that sales and use taxes apply to a transaction. There are also instances where a sales tax error is DELIBERATE or where a sales tax return is intentionally understated. The states have a system in place where an individual or a business can correct an error, REGARDLESS OF THE CAUSE, and avoid all monetary and criminal penalties. In addition, many states will waive or reduce the amount of interest that is due. All that must be done is to file corrected sales and use tax returns and pay the amounts due.

However, you can NOT simply mail corrected returns to the state and hope to get this tax, interest and penalty forgiveness. You must apply through a complicated process and obtain prior approval from the state; this approval is called a voluntary disclosure agreement (VDA).

The terms and conditions of a voluntary disclosure agreement can vary from state to state and from business to business. We will negotiate the best possible VDA on your behalf. We will look to minimize the “look-back” period. (The period which needs to be corrected.) And will try to get you the longest payment period possible for any monies due. Best of all, in most states we can negotiate your VDA for you, while you remain ANONYMOUS. When done anonymously, you can walk away from the state’s offer if you do not like it.