Olivier Tax LLC

Sales • Use • Transaction Tax Solutions

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Sales and Use Tax in New York, NY

Olivier Tax prides itself on consistently delivering financial benefit far in excess of its fees. Many of Olivier Tax's services produce benefits that can easily be measured (e.g., audit defense work). Other services produce inherent financial benefits that cannot be precisely measured (e.g., a taxability matrix). In any event, David Olivier is committed to providing practical, sales, use and transaction tax solutions that result in a net financial benefit to each client. If he does not believe such is possible in your particular situation, he will communicate that to you up-front enabling you to make a financially informed decision as to whether or not to engage Olivier Tax to do the work. Get in touch with him today for more information.

Audit Assistance

Sales and use tax audit assessments are often very expensive, particularly if you and/or your advisors do not have prior experience in managing them. If you choose to handle them yourself, you will likely also find them to be quite demanding in terms of time diverted away from your core business. Theoretically, a sales tax auditor’s job is to determine the amount of tax that was legally due and then subtract what was paid to arrive at either the taxpayer’s net assessment or a net refund amount. Such rarely, if ever, occurs. Generally, sales tax auditors, first and foremost, are there to generate a significant audit assessment. Any grey area issues and anything that requires any work to understand will inevitably be interpreted in favor of assessing a tax. With respect to identifying offsetting overpayments, auditors rarely review transactions on which tax was paid. In addition, sales and expenses are usually reviewed on a sample basis and the auditor will be inclined to structure the sample population to the benefit of the taxing authority. All these variables generally result in an inflated audit assessment that also includes penalties and interest at the highest statutory rate.

People Getting Business Tax Advice in New York, NY

David Olivier has significant experience representing clients in sales and use tax audits. He knows the various ways in which audit assessments can be inflated and what alternatives are available for minimizing them. He will tenaciously challenge items erroneously deemed taxable on the audit work papers based on his knowledge of sales and use tax laws. Where additional documentation is needed to sustain exempt or non-taxable treatment, he will work to obtain such. He will also challenge the assessment of penalties and advocate for statutory minimum interest. To the extent there are material issues of disagreement that cannot be resolved with the auditor, David also has significant experience resolving issues with persons of higher authority within revenue departments and/or via administrative appeals processes.

Olivier Tax can effectively handle sales, use and transaction audits from start to finish or alternatively can start representation at any time after it becomes clear what the auditor plans to assess. The primary benefit of getting good representation early is that Olivier Tax can represent your interests in the sample selection process and can also work to minimize the number of items that get listed as taxable in the first place. It is generally easier to get items excluded from audit work papers in the first place than to get them removed once they have been included.

Fees for audit assistance work are typically based on the number of professional hours required to perform the work. David is always conscientious of the cost/benefit equation. Many audits eventually reach a point where the cost of continuing to dispute remaining issues would likely exceed the probable benefit at which point David would communicate such situation and recommend speedy settlement of the audit.

Business Meeting

Exposure Resolution

Tax exposure exists whenever a company has unpaid tax liabilities that have not yet been discovered by the taxing authorities.  Sales and use tax exposure can exist either on purchases or sales.  For most companies, exposure on the purchase side is limited to one or a small number of states where the company is headquartered, has a warehouse, a plant, or some other significant facility where the total dollar value of taxable purchases and/or use is materially significant.  One area where material use tax exposure could exist in other states is with respect to sample products and promotional materials. 

The most common area where materially significant sales and use tax exposure typically exists is on multistate sales.  For example, a company may be headquartered in one state and make taxable sales nationwide.   A company can only be compelled to collect a state’s sales and use taxes in states where it has “substantial nexus”, which according to Quill Corp. v. North Dakota, 505 U.S. 298 (1992), requires physical presence.  However, states have long taken the position that very little physical presence is needed to establish nexus and that such presence can be established by an independent sales representative or an agent.   

Now, many states and large retailers who feel disadvantaged by the physical presence standard are continually pushing for Congress to change the law and/or for the U.S. Supreme Court to hear another nexus case with the hope that the Court will agree that the physical presence requirement is no longer needed in today’s e-commerce economy. This scenario has emboldened many states to pass and assume nexus positions that essentially eliminate the physical presence requirement. Some states are alternatively requiring out-of-state vendors who aren’t required to collect sales tax to report all sales to in-state customers, including the names and contact information of such customers, to the state.

With everything that is happening in this area, it is not surprising that many companies are concerned and confused about where they may have sales and use tax exposure on the sales side. Sales and use tax exposure on sales can be particularly problematic because it often involves numerous states and because the sales and use tax expense is intended to be borne by the purchaser, not the seller. For most companies, billing customers for previously uncollected sales and use taxes is not a realistic alternative so they end up bearing the expense burden associated with paying the tax plus any applicable penalties and interest.

David Olivier has significant experience helping companies identify, quantify and resolve their potential sales and use tax exposures and get into compliance going forward. Where there is significant sales and use tax exposure, it generally makes financial sense to be proactive in resolving it. If the taxpayer does nothing and is selected for audit, such taxpayer is in the worst possible position. If the taxpayer has not yet been contacted by the taxing authority, there are generally alternatives available pursuant to which prior period liabilities can be resolved for significantly less than would be owed if the taxpayer was instead discovered and audited by the taxing authority. Possible benefits of taking such proactive steps include limitation of the number of prior periods subject to tax, abatement of penalties and partial to full abatement of interest. In some cases, it is possible to receive full forgiveness of all prior period obligations with the taxpayer agreeing to comply going forward. Alternatives for resolving prior period exposure and the related benefits vary by state and what makes sense to implement often also varies depending on a taxpayer’s specific set of facts. David is well-apprised of existing voluntary disclosure programs, currently available amnesty programs and other alternatives for resolving and minimizing prior period sales, use and transaction tax obligations.

Exposure resolution projects can often be divided into subprojects for which the time required to perform the work can be reasonably predicted based on prior history. When such is the case, Olivier Tax will offer to perform the work for a fixed fee. For example, there is typically a separate fixed fee for exposure review and quantification work and a per state fixed fee for exposure resolution work. 

M&A Work

Whether you are on the buyer’s side or the seller’s side of an M&A transaction, Olivier Tax will help protect your interests with respect to sales, use and transaction taxes. There are two primary sales, use, and transaction tax issues to address in an M&A transaction. First, there is the question of whether and to what extent, sales and use taxes may apply to the transaction. Second, there is the issue of successor liability.

The fact that a transaction is structured in a tax-free manner for federal income tax purposes does not necessarily mean that state and local sales and use taxes do not apply. Many, but not all, states have sales and use tax exemptions or exclusions that typically apply to M&A transactions. In cases where no such exemption or exclusion applies, tax-free treatment can often be achieved by restructuring the transaction. Where restructuring would be required to legally avoid sales and use tax, it is important to consider and carefully weigh the potential sales and use tax benefit against any foreseeable non-sales tax consequences to determine whether such restructuring makes sense overall. 

Reviewing the Documents

Whether an M&A transaction is structured as a bulk asset sale or an equity sale, states typically hold the purchaser responsible for any unpaid sales and use tax liabilities of the seller. This is commonly known as “successor liability” and it is most often the most significant sales and uses tax issue of concern in an M&A transaction. In a typical scenario, the target company has business facilities in one or a small number of states where it complies with the sales and use tax laws, but has been making taxable sales in numerous states for years where it hasn’t been collecting sales and use taxes, but arguably has had a legal obligation to do so the entire time. The potential sales and use tax exposure related to uncollected sales and use taxes can be astronomical. The buyer will want to fully protect itself and will want the seller to put enough in escrow to cover any sales and use tax liabilities that could potentially arise. The seller, on the other hand, will want to limit its escrow contribution to only cover liabilities that are likely to actually arise. The buyer will be inclined to assume that every state will conduct an audit, one hundred percent of the target company’s prior sales will be assessed and that every state will impose penalties and interest at the highest rates. The seller will want to assume that, perhaps, one or two states will audit and, if so, most of its customers will have self-assessed the use tax, penalties will likely be abated, and interest will be imposed at minimum rates.

David Olivier can help every step of the way with M&A related sales and use tax issues. With respect to the transaction itself, David is well aware of the potentially applicable sales and use tax exemptions. He also knows the common ways in which transactions can be restructured to legally avoid sales and use taxes.

With respect to successor liability, David has significant experience representing the interests of both buyers and sellers. In either case, he will typically review and quantify the target company’s potential sales and use tax exposure. If working for the buyer, David will help ensure that prior sale and use tax liabilities of the seller and expenses associated with resolving them are paid for by the seller. He will also help you get into compliance going forward. If working for the seller, David will help you negotiate more reasonable escrow requirements with the buyer, which will include devising and carrying out a plan for proactively resolving and minimizing the amount actually needed to resolve your prior period sales and use tax liabilities. The plan would typically involve entering into settlement agreements with key states where significant exposure exists. The anticipated benefits of such agreements typically include limitation of the prior look back period, abatement of penalties and imposition of minimum interest. In the best-case scenario, a taxing authority may agree to forgive all prior period liabilities in exchange for a commitment to prospectively comply.

M&A work is typically performed for an hourly fee, a fixed fee or combination of both, depending on the specific scope of work and the degree to which the number of required hours can be reasonably estimated.

Taxability Consulting

Taxability Matrices and Technical Business Tax Advice in New York, New York

Sales, use and transaction tax laws can be perplexing.  Every state applies and administers them differently and the products and services to which they are intended to apply are constantly evolving much faster than lawmakers can enact statutes and revenue departments can issue guidance.  Accordingly, new questions about the application of sales, use and transaction taxes to particular scenarios are constantly arising and there is regularly a need to make judgement calls as to how tax laws that haven’t kept pace should apply to products, services, scenarios, etc. that didn’t exist and weren’t anticipated when the statutes were originally enacted.  In such situations, actionable tax decisions are still needed, and a company’s adopted tax positions are often based as much or more on risk management and other business considerations than they are on the inconclusive tax laws.   

David has excellent sales, use and transaction tax research skills and if there is authoritative guidance on a subject, he will find it. Focusing on sales, use and transaction taxes day in and day out, he also generally has a good feel for positions revenue departments are likely to take on audit and for positions other companies in the same industry are taking. Sometimes, the tax laws really are inconclusive, and the taxpayer will essentially need to make a business decision regarding the position it will ultimately adopt. In such cases, David will make sure that such decisions are well-informed ones from a risk management perspective and that you have everything you need to explain your decisions to auditors, vendors, customers, etc.

Olivier Tax’s technical advisory services include but are not limited to sales, use, and transaction tax taxability matrices, opinion letters, planning, and verbal business tax advice in New York, New York. A taxability matrix typically provides easy to understand taxability decisions in table format for multiple products and services in multiple states on one page if possible. The matrix typically cites relevant statutes, regulations and other authority supporting the taxability decisions and typically also includes explanatory footnotes. Opinion letters typically address one or a handful of questions that are of material significance to the taxpayer. They typically include a facts section outlining the facts upon which our analysis is based, an issues section clearly and succinctly defining the questions, a conclusions section briefly stating our conclusions and a detailed discussion section describing the analysis supporting our conclusions.

Olivier Tax’s fees for services in this area are often performed for a fixed fee for each separate work product.

Refund Reviews

In general, Olivier Tax is not currently positioned to do contingent fee refund review work.  However, David Olivier does have significant experience identifying overpayments and securing sales and use tax refunds and Olivier Tax is equipped to do the following with respect to sales, use and transaction tax refund review work and related services:

Analyzing Financial Figures
  • Perform sales, use and transaction tax refund review work at its standard hourly rates.  If the refund claim is significant and the basis for the claim is solid, an hourly fee will likely save you significant money.  For example, a $1 million sales tax refund might result in a $400,000 contingent fee but may only require $30,000 in professional time to prepare, submit and secure. 
  • Perform refund review work concurrent with audit assistance work or another paid project that already includes reviewing purchase invoices in the scope of services.
  • Review the technical merits of potential refund claim positions.
  • Review and opine on any downside risk (e.g., sales tax exposure) of filing a refund claim. 
  • Review refund claims and any related support documentation and offer suggestions for improvement.
  • Regularly inform you of potential refund opportunities and planning ideas.
  • Represent you on any audits triggered by refund claim filings.

Disclaimer: This website and the information contained herein is intended to provide general information only, and is not to be considered as a substitute for accounting, consulting, investment, legal, tax, or other professional advice or services. Should you have questions or require further assistance, please contact Olivier Tax.