Archive for Monika Miles

The Transformative Power Of Sales Tax Consulting: Real-Life Success Stories

The Transformative Power Of Sales Tax Consulting: Real-Life Success Stories

Sales tax compliance isn’t what it used to be—thanks to the Wayfair ruling and a maze of state-specific tax laws, it’s now a bit like playing a game where the rules keep changing. For businesses of all sizes, this can feel overwhelming. That’s where a seasoned sales tax consultant can be a game-changer.

Miles Consulting is ready to help you navigate the maze, as we’ve done for so many of our clients. But the proof is in the pudding, as they say. So, here are some real-world examples of how we’ve helped our wonderful clients master their sales tax obligations.

Here’s what you can read about:

  1. Case Study 1: Small Retail Business Manages a Sales Tax Audit
  • Background: Challenges faced by a security products manufacturer during a California state audit.
  • How We Helped: Use of a Managed Audit Program (MAP) to mitigate penalties and interest.
  • Results: Avoidance of penalties and significant cost savings, leading to full compliance.
  1. Case Study 2: Mid-Sized Manufacturing Company Successfully Navigates Sales Tax Challenges
  • Background: Risks identified during a due diligence process for a company planning to sell its business.
  • How We Helped Implementation of best practices to address, retroactive liabilities, reduce exposure and come into compliance.
  • Results: Reduction of audit-related stress, mitigation of financial impact, and successful sale.
  1. Case Study 3: E-Commerce Business Tackles Multi-State Sales Tax Compliance
  • Background: A SaaS company discovers unreported sales tax liabilities in multiple states.
  • How We Helped : Multi-state compliance strategy including VDAs and tax software implementation.
  • Results: Remediation of sales tax exposure, penalty avoidance, and streamlined compliance processes.
  1. Common Themes Across Success Stories
  • Cost Savings: Significant financial improvements through expert intervention.
  • Penalty Avoidance: Effective strategies to navigate complex tax landscapes and avoid penalties.
  • Improved Compliance Processes: Sustainable compliance achieved through expert advice and technology.

Want to know how we can help you? Let’s talk. Reach out to us at info@milesconsultinggroup.com.

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Written by | Posted in Sales Tax • Sales Tax Audits • Sales Tax Compliance • TaxConnections

Why Is A Nexus Review Important?

Why Is A Nexus Review Important?

A nexus study and taxability review determine where a company might have state tax exposure and the extent of that exposure. We work with our clients to identify their activities in various states and analyze the types of transactions engaged in within those jurisdictions.

Determining exposure before a proposed acquisition is good business. We also assist in determining possible exposure before a state comes to audit. And finally, we bridge the gap with respect to financial statement disclosure.

As part of each project, we work with clients to answer the following types of questions:

  • What is nexus?
    • Do we have physical presence nexus?
    • Do we have economic nexus?
  • Is my product or service taxable?
  • Are there any available exemptions (e,g, food or medical exemptions, sales to qualified non-profit entities)?
  • Must I start collecting and remitting sales and use tax?
  • I’ve collected tax from a given state and have not remitted it-what now?

Once we determine possible exposure, we assist clients in receiving maximum benefit from available amnesty programs, contract for voluntary disclosure agreements, work with their customers to determine if they have self-assessed taxes (and can therefore reduce exposure for our client) or simply document their exposure.

Economic Nexus

In the United States, the sales tax landscape drastically changed due to the U.S. Supreme Court ruling in South Dakota v. Wayfair, Inc. In June 2018, the High Court made a landmark decision that it is constitutional for the State of South Dakota to enact an economic nexus law. This established precedent and paved the way for states to establish additional ways companies may establish nexus in their jurisdiction.

Now all states which impose a state level sales tax (as well as some local jurisdictions) have enacted economic nexus laws. As a result, companies must now consider both their physical footprint (employees offices, inventory) and the level of sales activity they have in a given state. Once nexus has been established companies need to consider registering for sales tax, collecting and remitting tax, and then filing tax returns. We call that “compliance.”

What Is Economic Nexus?

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Written by | Posted in Nexus Review

Does Economic Nexus Last Forever? What You Need To Know About Trailing Nexus

Does Economic Nexus Last Forever? What You Need To Know About Trailing Nexus

The June 2018 U.S. Supreme Court ruling in South Dakota v. Wayfair, Inc. reshaped the landscape of sales tax obligations across the United States, ushering in the era of economic nexus. This landmark decision overturned the previous requirement of physical presence for establishing nexus, opening the door for states to enact economic nexus legislation. Alongside this shift, a new focus on the concept of trailing nexus emerged, presenting a continuation of tax obligations even after a business no longer meets the nexus criteria.

In this article, we’ll define economic nexus and trailing nexus, and how the two may dictate your tax obligations regarding the states in which you operate. Here’s what we’ll cover:

Understanding Economic Nexus and Thresholds: Discusses economic nexus thresholds and varying state regulations.
What Is Trailing Nexus? Defines trailing nexus.
Examples of Trailing Nexus Policies: Explores examples of trailing nexus policies by state.
Practical Considerations for Businesses: Discusses tips on how to handle trailing nexus in your state.
Not what you’re looking for? Let’s talk. Reach out to us at info@milesconsultinggroup.com.

1. Understanding Economic Nexus and Thresholds
Economic nexus, as per the nexus definition, refers to the connection between a business and a state based on economic activity rather than physical presence. Each state sets its own threshold for economic nexus, determining when a business is required to collect and remit sales tax. For instance, in Arkansas, the nexus law sets the threshold at $100,000 in sales or 200 separate transactions, whereas in California, it’s $500,000. These thresholds vary significantly from state to state, adding complexity to sales tax compliance for businesses operating across multiple jurisdictions.
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Written by | Posted in TaxConnections

Sales Tax And California’s 80/80 Rule

Sales Tax And California’s 80/80 Rule

Running a restaurant comes with its fair share of challenges, and one of the often-overlooked complexities is sales tax. Failure to navigate the intricacies of sales tax regulations can lead to costly fines and penalties. California Regulation 1603 and its 80/80 rule stands out as a key determinant in sales tax application for food establishments.

In this article, we’ll unpack the 80/80 rule when applied to sales tax, explain how it works, and how you can ensure all your bases are covered, with regard to your business’s compliance. Here’s what you can learn:

Understanding the 80/80 Rule: Explains the 80/80 rule in restaurant sales tax, determining tax application for food sales.
The Nuance of Restaurant Taxes: Discusses the complexities of restaurant tax compliance, considering factors like food temperature and sales method.
The Role of Automation in Tax Compliance: Highlights the use of automation solutions, like Avalara, to manage sales tax compliance efficiently in restaurants.

1. Understanding the 80/80 Rule
The world of taxation can be a confusing one. Tax codes are thick with rules and regulations that can be applied a number of different ways.

Case in point: the 80/80 tax rule for restaurants.
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Written by | Posted in California Sales Tax

Calculating Your Sales Tax Liability In The US: A Step-by-Step Guide For International Businesses

Calculating Your Sales Tax Liability In The US: A Step-by-Step Guide For International Businesses

We all know that there will always be one surefire aspect to business – and that’s taxes. But the question then is: are you sure, wherever you operate as a business, that you know your tax liability? It can be a messy matter, especially if you’re an international business operating in the US. And that’s what we’ll be talking about here – this guide is specifically tailored to help foreign businesses understand the essential steps involved in calculating sales tax in the US.

Navigating the US tax system can be particularly challenging for international businesses. The US has a complex and varied approach to sales tax, which differs significantly from the VAT systems common in many other countries. For foreign companies, understanding these nuances is essential to ensure compliance, avoid penalties, and accurately calculate sales tax liabilities. So, whether you’re selling products or services in all, many, or a few states, determining the correct amount of sales tax to collect and remit will ensure you stay on the right side of tax authorities, and compliant as an international business in the US.

Understanding Sales Tax Rates – Explore the variability of sales tax rates across US states and localities with examples.
Finding the Correct Sales Tax Rate – Learn how to determine the correct sales tax rate by identifying the sale location and checking state and local rates.
The Sales Tax Calculation Formula – Discover the formula for calculating sales tax and see a practical example applied step-by-step.
Calculating Sales Price with Tax – Understand the methodology for determining a sales price that includes tax, with a detailed example.
Backward Sales Tax Calculation – Learn how to calculate the pre-tax sales price from a total price that includes sales tax.
State and Local Sales Tax Rates, 2024 – Get a breakdown of state and local tax rates for the year 2024.
Using Sales Tax Calculators – Find out how to leverage automated sales tax calculators for accuracy and compliance, with recommended tools and steps.

1. Understanding Sales Tax Rates
Sales tax rates in the United States vary widely across states and localities. Each state sets its own base sales tax rate, which can be supplemented by local taxes imposed by counties, cities, or special districts. For example, California has a state sales tax rate of 7.25%, but local jurisdictions can add their own rates, resulting in a total rate that can exceed 10% in some areas.

Note: Some states just have a state rate, while others include county or special assessment rates, resulting in a combined overall percentage.

2. Finding the Correct Sales Tax Rate
To determine the correct sales tax rate for your business:

Identify the location of the sale: This includes where the product is delivered or where the service is performed.
Check state and local tax rates: Use resources such as state tax authority websites or online databases to find current rates. Just to make things a little easier though, we’ve compiled the latest rates for you in a table a little further on – keep reading.
Apply the rate to your sale: Ensure that you use the combined state and local rate for the transaction’s location.

3. The Sales Tax Calculation Formula
Calculating sales tax involves a straightforward formula:

Sales Tax=Sales Price×Sales Tax Rate

Step-by-Step Guide
Determine the Sales Price: The price of the product or service before tax.
Identify the Sales Tax Rate: Use the correct combined state and local rate.
Multiply the Sales Price by the Sales Tax Rate: This gives you the amount of sales tax to collect.
Add the Sales Tax to the Sales Price: This gives you the total price that the customer pays.

4. Calculating Sales Price with Tax
Sometimes, you need to determine the sales price inclusive of tax, especially in retail settings where prices are displayed with tax included.

Note: In California, certain disclaimers like ‘we pay your sales tax’ mean the seller is choosing not to collect sales tax at the point of sale, but the tax is still due, representing a liability that needs to be considered.

Methodology
To find the total sales price with tax included:

Total Price=Sales Price×(1+Sales Tax Rate)

Example:

With a sales price of $100 and a tax rate of 8.875%:

Total Price=$100×(1+0.08875)=$100×1.08875=$108.88

5. Backward Sales Tax Calculation
In some scenarios, you might need to work backwards from a total price that includes sales tax to determine the original sales price and the amount of tax included.

To find the pre-tax sales price:

Example
If the total price paid is $108.88 and the sales tax rate is 8.875%:

These formulae and methodologies can be applied universally, regardless of the sales tax rate or the initial sales price, ensuring accurate calculations for both inclusive and exclusive tax scenarios.

6. State and Local Sales Tax Rates, 2024
A breakdown of average state, local and combined tax rates.

Remember, though, these percentages are subject to change on a regular basis. Always be tax-savvy – check these rates regularly to avoid unpleasant surprises at filing time.

Note: City, county and municipal rates vary. Local rates are weighted by population to compute an average local tax rate.
(a) Three states levy mandatory, statewide, local add-on sales taxes at the state level: California (1.25%), Utah (1.25%), and Virginia (1%). We include these in their state sales tax.
(b) The sales taxes in Hawaii, New Mexico, and South Dakota have broad bases that include many business-to-business services.
(c) Special taxes in local resort areas are not counted here.
(d) Salem County, N.J., is not subject to the statewide sales tax rate and collects a local rate of 3.3125%. New Jersey’s local score is represented as a negative.
Sources: Sales Tax Clearinghouse; Tax Foundation calculations; State Revenue Department websites.

Source: Tax Foundation

7. Using Sales Tax Calculators
Automated tools can significantly simplify the task of calculating sales tax, especially for businesses operating in multiple jurisdictions. These tools ensure compliance with varying tax rates and regulations across different locations. (We’ve been around long enough that some of our clients have done calculations manually…but those days are pretty far behind us!)

While automated sales tax calculators, such as those provided by Avalara, QuickBooks, and TaxJar, and through sales portals like Shopify offer robust solutions, human oversight is essential for accuracy. This is necessary to account for potential changes in tax laws and local regulations that automated systems might not immediately reflect. The human touch is vital, and that’s where Miles Consulting can help.

How to Use Sales Tax Calculators
Choose a Reliable Calculator:
Look for calculators provided by reputable sources such as tax authority websites, accounting software, and well-known online resources. It’s important to choose tools that are regularly updated to reflect the latest tax rates and rules.
Example calculators include those offered by state departments of revenue, accounting software like QuickBooks, and dedicated tax services like Avalara and TaxJar.
Input Sales Data:
Enter the sales price of the product or service.
Provide the necessary location details where the sale occurs (i.e.; if brick and mortar – then at the store; if in e-commerce, the “ship to” address). This includes the state, county, and city, as local tax rates can vary significantly.
Verify the Results:
After entering the data, review the results to ensure the calculator has applied the correct combined state and local tax rates.
Cross-reference with official tax rate information from state or local tax authority websites to confirm accuracy.
By leveraging these tools, businesses can streamline their sales tax calculation processes, reduce errors, and ensure compliance with tax regulations across multiple jurisdictions. However, always remember to periodically verify the accuracy of these tools and stay informed about changes in tax laws that may affect your business.

And we’ve said it before, but we’ll say it again, it’s always better to first consult with a human. Come to Miles Consulting Group – book a consultation, drop us a line, or send us an email at info@milesconsultinggroup.com.

Written by | Posted in Sales Tax Liability

Vermont Is The Latest State To Administer The Taxability Of SaaS

Vermont Is The Latest State To Administer The Taxability Of SaaS

If you’re a frequent reader of our blogs, you know that we regularly report on the taxability of Software-as-a service (SaaS). Today, we report that Vermont has joined the ranks of states that do require sales tax collection on revenue from SaaS. In a recently updated previous blog (What To Know About The Taxability Of SaaS In 18 Key States – Multi State Tax Solutions | Miles Consulting Group), we discuss where SaaS is taxable in 20 states (and also certain local jurisdictions). As of July 1, 2024, we can now add Vermont to that list of taxable states.

Effective July 1, 2024, a new law in Vermont repeals its sales and use tax exemption on prewritten computer software accessed remotely (i.e., cloud software), thus subjecting items like software as a service to Vermont’s sales and use tax rate of 6%.

The amendment reads that “Tangible Personal Property” means personal property that may be seen, weighed, measured, felt, touched, or in any other manner perceived by the senses. “Tangible personal property” includes electricity, water, gas, steam, and prewritten computer software regardless of the method in which the prewritten computer software is paid for, delivered, or accessed.

If your company is doing business in Vermont and is selling the SaaS product in Vermont too, Miles Consulting Group can assist with any questions that you may have.

Book a consultation, drop us a line, or send us an email at info@milesconsultinggroup.com.

Written by | Posted in TaxConnections

Navigating Restaurant Sales Tax With The 80/80 Rule And Automation

Navigating Restaurant Sales Tax With The 80/80 Rule And Automation

Running a restaurant comes with its fair share of challenges, and one of the often-overlooked complexities is sales tax. Failure to navigate the intricacies of sales tax regulations can lead to costly fines and penalties. California Regulation 1603 and its 80/80 rule stands out as a key determinant in sales tax application for food establishments.

In this article, we’ll unpack the 80/80 rule when applied to sales tax, explain how it works, and how you can ensure all your bases are covered, with regard to your business’s compliance. Here’s what you can learn:

  1. Understanding the 80/80 Rule: Explains the 80/80 rule in restaurant sales tax, determining tax application for food sales.
  2. The Nuance of Restaurant Taxes: Discusses the complexities of restaurant tax compliance, considering factors like food temperature and sales method.
  3. The Role of Automation in Tax Compliance: Highlights the use of automation solutions, like Avalara, to manage sales tax compliance efficiently in restaurants.

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Written by | Posted in 80/80 Rule And Automation • Sales Tax

Which Activities Create State Tax Issues?

Which Activities Create State Tax Issues?

Multi-State Tax Consulting

 

In this day and age, nearly every company conducts business across state lines. Are you aware of all the additional taxes and fees you may be liable for?

We assist companies with state sales tax and income tax matters. As companies expand their operations and send salespeople across the country, or sell to consumers in other states via the internet, they create into nexus (or taxable presence) and have to think about filing in other states. That’s where Miles Consulting Group comes in.

We help companies answer questions on multi-state tax compliance:

  • Where do you have nexus creating activities?
  • What are the rules? What are next steps?
  • When was nexus created? When should you begin filing?
  • How much retroactive exposure has been created? Can we help you reduce it?

As state tax rules change, we help our clients address these questions by bridging the gap between your business and complex state tax laws.

We are often asked these three questions:

  1.  Why Is A Nexus Review Important?
  2.  Which Activities Cause State Tax Issues?
  3. Multi-State Tax Consulting

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Written by | Posted in State Nexus • TaxConnections

How Is Software As A Service(SaaS) Treated Under State Tax Law?

How Is Software As A Service(SaaS) Treated Under State Tax Law?

A very important and often misunderstood area in the sales tax arena is the taxability of cloud-computing, cloud-based services, etc., collectively often referred to as Software-as-a-Service (or SaaS). The moniker alone is enough to start the state tax conversation down an interesting path.

The Basics
When we work with clients to determine how something should be taxed, we start with a few basic questions and then work from there.

Has nexus has been created?
This includes looking at both the physical presence as well as an economic presence. Following the U.S. Supreme Court’s June 2018 ruling in South Dakota v. Wayfair, many states enacted economic nexus statutes which require sellers to collect and remit sales tax in those states based on sales or transactional thresholds. In this process we also look at when nexus was created based on physical presence or economic nexus.

Is the product taxable?
Once nexus is established, the sale of tangible personal property by a retailer to a customer in a given state is generally taxable. We start there, and then review the transaction to see if there are any exemptions that would cause the sale of the property to not be taxable.

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Written by | Posted in Software As A Service

Explaining Nexus Threshold By State

Explaining Nexus Threshold By State

Understanding the intricate web of sales tax nexus thresholds is key for businesses navigating the complexities of state taxation laws. As the digital age continues to reshape traditional business models, the concept of nexus—the connection between a business and a taxing jurisdiction—has become a focal point in determining tax obligations. Nexus can be created by physical presence (i.e.; employees or contractors in a state, an office, or inventory) or economic .

The table below aims to shed light on the diverse nexus thresholds established by individual states across the United States when determining economic nexus for sales tax. Each state presents its own set of criteria that trigger nexus for sales, income, and other tax purposes. By delineating these thresholds, businesses can proactively strategize their operations to ensure compliance and mitigate potential liabilities.

As a business operating in one, or many, of these states, its truly vital that you have clear knowledge of their tax regulations and nexus thresholds.

Things can get a little messy in these matters, so consult the below table, consider your individual fact pattern and then come to Miles Consulting  – we’ll help you understand your unique tax challenges, whatever state you’re in. Our professionals can help with sales tax compliance (filing returns when and where you need to), retroactive remediation, merger and acquisition due diligence, and audit support, among others.

We start most conversations with clients by talking about nexus because that determination is the starting point of a relationship with a state and its taxing authority. Once nexus is established, a company has an obligation to then determine if its products and services sold to customers in that state are subject to sales tax, whether there are relevant exemptions, and then their requirements to file sales tax returns. Nexus is just the first step in the process of becoming compliant.

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Written by | Posted in State Nexus

Preparing For A Sales Tax Audit: Tips And Best Practices For Middle Market Owners

Preparing For A Sales Tax Audit: Tips And Best Practices For Middle Market Owners
Navigating a Sales Tax Audit: A Comprehensive Guide to Protecting Your Business

If you’re reading this, you’ve probably received a letter of audit from a government entity. You’ve also likely now gotten over your initial anxiety and are looking for help with the next steps. You’re in the right place – we’re here to tell you that there’s no need to panic.

So, what exactly is a sales tax audit? And what can you expect?

Definition of a Sales Tax Audit

A sales tax audit is a rigorous examination conducted by state taxing authorities to review a business’s sales tax returns, financial records, and transactions. The primary objective is to ensure compliance with applicable tax laws and regulations regarding the collection, reporting, and remittance of sales tax.

We know, sounds scary. But we can help you navigate the process successfully. In this guide, we’ll unpack various aspects of sales tax audits, including triggers for audits, documentation requirements, strategies for responding to audit findings, the role of tax professionals, and the possible consequences of an unsuccessful audit.

Here’s what you can discover:

  1. Understanding Sales Tax Audits
  • Triggers for a Sales Tax Audit
  • Types of Sales Tax Audits
  • Common Misconceptions about Sales Tax Audits

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Written by | Posted in Sales Tax Audits

How Can A Nexus Review Provide Peace Of Mind?

How Can A Nexus Review Provide Peace Of Mind?

In this day and age, nearly every company conducts business across state lines. Are you aware of all the additional taxes and fees you may be liable for?

We assist companies with state sales tax and income tax matters. As companies expand their operations and send salespeople across the country, or sell to consumers in other states via the internet, they create into nexus (or taxable presence) and have to think about filing in other states. That’s where Miles Consulting Group comes in.

We help companies answer questions on multi-state tax compliance:

  • Where do you have nexus creating activities?
  • What are the rules? What are next steps?
  • When was nexus created? When should you begin filing?
  • How much retroactive exposure has been created? Can we help you reduce it?

    As state tax rules change, we help our clients address these questions by bridging the gap between your business and complex state tax laws.

    We are often asked these three questions:

    1.  Why Is A Nexus Review Important?
    2.  Which Activities Cause State Tax Issues?
    3.  Are We Out of Compliance or Being Audited?

      Why Is A Nexus Review Important?

Written by | Posted in Nexus
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