The global pandemic was among the most difficult business environments imaginable to try to operate a business in. Unfortunately, sales tax was not immune to these issues.
However, many state and local governments offer voluntary disclosure programs that can allow businesses to fix those issues. For example, the New York City Department of Taxation & Finance is making it easier to apply for its Voluntary Disclosure and Compliance Program. Their new process uses automated algorithms to determine if a business is submitting the necessary data and can even allow a business to complete the process electronically without communicating with a Department of Finance representative. You may not even need to file the actual return, just remit the tax and minimum interest.
Many states governments are also running similar programs. Some states even offer a reduced look-back period or will consider waiving the entire look-back period.
States often work with those taxpayers who voluntary contact them and register going forward. This can be a great way to minimize your past exposure and get set up to collect sales tax and file returns going forward.
As we’ve discussed many times in our newsletters, this June will be three full years since the South Dakota v. Wayfair decision so states may be looking to begin programs to audit out-of-state sellers soon. By going through the Voluntary Disclosure process now, it may save your business time and money compared to the audit process later.
If you’d like to find out if you’re eligible for a Voluntary Disclosure or need help applying for those programs, contact us!
Audit Closed As No Change
A business came to Sales Tax Defense LLC because they were under audit by the NYS Department of Taxation & Finance, which they were handling on their own, but the Department was telling them they owed a lot of money.
Tax Defense asked them about their business, and we realized that based on the information they were telling us, they did not owe any money at all. The business owner was confused, because he had an Advisory Opinion from the auditor supporting their position that that there was money owed, or so they thought.
Tax Defense took the same Advisory Opinion that the auditor determined made tax due, we added some additional tax law and wrote a letter explaining to the auditor what the Advisory Opinion actually meant and backed our position with additional examples from the law. After reviewing out letter, the auditor closed the audit as a no change. The business did not owe ANY MONEY!