Sales Tax Project - United Carports
For United Carports we had to create the Excel file using their 2 main systems, QuickBooks Online and QuickBase. Since United Carports is a contractor, only the cost of the materials was taxable so we downloaded those costs and the zip codes where their projects were built and provided the tax district information back to them for input into California's Sales Tax Reporting website.
Sales Tax Project - Pacsafe
For Pacsafe we had to create the Excel file using their ERP, Microsoft NAV 2013. This ERP uses Jet Reports, an Excel-based report writer, in which we captured the taxable sales for both Washington State and California. For California, drop shipments are considered taxable to the manufacturer in Pacsafe's case so sales to these customers were including in determining taxable sales for Pacsafe. The Company then used the report to file their sales tax reports for both states.
Case Study - Company Confidential
In 2016 we completed a confidential Sales Tax Reporting review of a $300M publically traded manufacturer and distributor of consumer products. The Company has Nexus in 22 states and files Sales and Use Tax reports in all 22 states.
Through our detailed review, all 22 of the Sales and Use Tax reports for Q1 2016 had incorrectly reported Sales and Use Tax. The majority of the errors were improper allocation of taxable sales to each state's Tax District or to each state's proper Tax Code. The main reason for the errors is due to the complexity that each state has in how to report taxable sales.
So, what will happen with these errors? States tend to audit sales and use tax reporting every 3-5 years. Under-reporting of sales and use tax could result in penalties and will result in interest and the under-reported tax due based on the audit results.