Compliance is following established laws or rules. Tax Compliance is following the laws and rules of taxation. This would include paying the tax due and filing tax returns. While sales tax compliance is preparing the filing sales and use tax returns. The taxpayer is needed to register, to be able to collect or pay sales and use taxes in a jurisdiction, returns must be filed and the tax must be remitted on a timely basis. Most firms provide their strategy for sales tax compliance, mostly it’s between 5 to 7 steps only, such as TaxConnex that use 5 easy steps for sales tax compliance, they determining nexus first, then determining taxability, followed by quantity exposure, next is to go forward the strategy, then finally the implementation.
Importance of Sales Tax Compliance
First, you need to understand the tax and sales tax services such compliance regulations are never stagnant. Imagine from the Wayfair ruling to VAT compliance, the CFO (chief financial officer) is responsible for compliance and risk management that has many things to consider when making decisions. CFOs can only devote a portion of their resources to monitoring these changes and understanding their impact on the business, and not every company has a tax team they can turn to for help sorting things out. As a result, a lot of taxpayers don’t know anything about what information goes on their return. Therefore, the compliance officer will explain to them the different deductions that they could take or the expenses that they should take and how to bring that together. While the sales tax consultant will ensure accuracy and compliance in filing sales and use tax returns.
Also, this will make everything faster and in order, since all the necessary steps will be explained to you. By the way, there are certainly legal and economic ramifications in the form of audits — which are costly and time-consuming even if no wrongdoing is found. Then there are fines if audits uncover any issues. Beyond the financial hit, an audit can damage a company’s reputation among customers and non-governmental organizations.
As companies grow and enter the mid-market, taxes become even more challenging as they expand geography, customer base, and product offerings. It is important to examine end-to-end solutions that will apply anywhere the organization is doing business. While there are technical hurdles to overcome, there are also people challenges. Today’s CPAs and controllers often don’t have a strong background in auditing and compliance. Therefore, the professional or experts with the sales tax compliance officer is very much needed.
Nonprofit organization sales tax exemption
Most nonprofits are exempt from federal and state income taxes. Frequently they’re also exempt from local and state property taxes. However there is one tax exemption that nonprofits find elusive, and that’s state sales tax exemptions. But the nonprofit need to register for a sales tax exemption, you certainly want to do it in your home state. If one is available, and the same is true for neighboring states if they offer a sales tax exemption. Also, if you have employees that are traveling to other states, you may also want to consider looking into those states about three to six months in advance because it does take the states some time to approve a sales tax exemption application.