State Tax Nexus Reviews & Studies

Introduction

All states are becoming more aggressive in locating non-filing businesses, particularly those operating largely outside their state. Unfortunately, many businesses first realize their filing obligation to another state when visited by the state’s auditor. An analysis of your company’s connections, or “nexus”, to the states it touches, directly and indirectly, will be beneficial regardless of whether your business is a start-up or established, expanding or contracting.

Each state’s laws for determining whether your company has a filing obligation vary, but all states are limited by the “minimum contacts” standards established under the U.S. Constitution. Adding to many companies’ confusion, there are separate standards applied for sales and use tax nexus and income tax nexus. For instance, a company with a representative in a state may not have an income tax filing obligation but may have a sales tax obligation. Continue reading “State Tax Nexus Reviews & Studies”

Managed Compliance & Effective Tax Rate Agreements

Companies can manage risks, lower use taxes, and reduce tax administrative burdens by using managed compliance and effective tax rate agreements. In an effort to streamline the tax compliance process, most states now allow companies to automate their sales and use tax compliance through tax agreements. These agreements operate on a prospective basis whereby “effective rates” can be assigned to the company’s expense accounts.

The states use numerous names for such agreements, including: managed compliance agreements, formulary sales and use tax agreements, single use tax compliance agreement, negotiated rate agreements, alternative use tax payment methods, simplified procedure agreements, or, as known here in Maryland, effective rate agreements. Regardless of the chosen name, the states use similar processes to form the agreements and the companies often realize fantastic results. Continue reading “Managed Compliance & Effective Tax Rate Agreements”

Find Cash by Recovering Tax Overpayments

In today’s competitive business climate, businesses paying more taxes than necessary do so at their own peril.  But when extra cash is needed, the company can hire tax professionals to recover those overpayments through refunds.

By conducting reverse audits on behalf of companies, I have rarely found a company whose tax department didn’t have some oversights, particularly regarding indirect taxes.  Likely targets for recoverable overpayments include the company’s indirect taxes, such as: sales & use taxes, value-added taxes, and excise taxes.  Certain state-specific taxes are also likely cash sources, such as the Maryland admissions and amusement tax which is levied upon the business not the customer. Continue reading “Find Cash by Recovering Tax Overpayments”

Louisiana Tax Amnesty 2009

Louisiana recently announced a tax amnesty period beginning September 1, 2009 and ending October 31, 2009. The tax amnesty will apply to all taxes “administered and collected by [the Louisiana Department of Revenue], except for motor fuel taxes.” The state will forgive all civil penalties and half the interest otherwise due. Continue reading “Louisiana Tax Amnesty 2009”

Buying or Selling a Maryland Business – Financing The Purchase

The seventh article in a series on the purchase and sale of a Maryland business. In this article I address obtaining the necessary financing to fund a business purchase.

Many business buyers’ greatest challenge is obtaining financing.  While a business purchase requires substantial funding, the buyer’s financing options are numerous.  Factors determining the best financing choice include: the seller’s needs, the buyer’s ability to pay, the company’s cash flow and assets, and the general economic climate. Continue reading “Buying or Selling a Maryland Business – Financing The Purchase”