Sales Tax

Sales Tax

A sales tax is a consumption tax imposed by the government on the sale of goods and services. A conventional sales tax is collected at the point of sale, when it is collected by the retailer and passed on to the government.

Conventional or retail sales taxes are only charged to the end user of a good or service. Because the majority of goods in modern economies pass through a number of stages of manufacturing, often handled by different entities, often times various sets of documentation are necessary to prove who is the one liable for sales tax.

In general, sales taxes take a percentage of the price of goods sold. For example, a state might have a 4% sales tax, a county 2% and a city 1.5%, so that residents of that city pay 7.5% total.

Many countries use the value-added tax system where the business charges a percentage of the value added at every level of production of a good.

When your business bills customers for sales taxes, those sales taxes are not an expense to you; they are an expense to the customers. This means that the From the sales tax billings are liabilities to the local government, until remitted.

Sales taxes can be a complicated process and we’re here to provide clarification and ease of filing. Contact us now for help.

Audit Representation

The stress and time invested in a sales audit can be minimized by taking preemptive steps. Audits come both expectedly and as an unwelcome surprise. Its a smart move to have a tax professional lined up who is experienced with audits and what might trigger one based on your business.

Some corporate taxpayers are subject to audits due to their sales volume or business size, while other corporations are chosen due to an event such as store closing or bankruptcy.

What are some other causes that may trigger an audit?

Taxpayers with significant exempt sales or that have a large increase in the amount of exempt sales are also more likely to be audited often because there is some discretion in determining what constitutes an exempt sale. And on the flip side, a drop in taxable sales may make a taxpayer more susceptible to audit, as will claiming frequent refunds or large tax credits.

  • Taxpayers with a significant amount of exempt sales
  • The claiming of frequent refunds of large tax credits
  • A drop in taxable sales
  • Filing taxes late
  • Filing a return but not remitting use tax
  • When a vendor gets audited and they didn’t charge the proper use tax

In addition to considering forming a corporation (since sole proprietors tend to get audited more) the smartest move is to hire a tax professional to represent you in an audit.

Contact us now to make sure you’re in compliance and protected in an audit.