Your Go-To Choice for Sales and Use Tax in New York, NY
Do you need help with gross receipts tax, excise tax, or sales and use tax in New York, New York? You are not alone. Currently, 45 states plus the District of Columbia, Puerto Rico, Guam, and nearly 10,000 local jurisdictions impose a sales tax and a compensating use tax. Each state or territory has its specific proprietory concerning the application of sales and uses tax.
Local sales and use tax in New York, New York often mirrors the laws of their respective state or territory, and in such cases, they are administered and collected by the individual state or territory. However, there are still numerous local jurisdictions that have their own sales and use tax statutes and that require separate sales and use tax registration and return filing. Gross receipts taxes, excise taxes, and other transaction taxes may also be imposed. Such taxes also vary by jurisdiction and are often limited to certain industries and product/service types. Also, the products and services to which sales, use, and other transaction taxes are intended to apply are continually evolving resulting in a never-ending stream of new potential taxability questions.
Whether you know precisely what you need or are just feeling overwhelmed and do not know where to begin, Olivier Tax is here to help. While the need possibilities are endless, the following are some common scenarios in which it may make sense to get professional assistance:
- You are undergoing a sale/use tax or other transaction tax audit. Sales, use and transaction tax audits can be very costly, especially if you are not represented by someone who is highly experienced in handling such audits and who has a solid understanding of the applicable tax laws and your rights as a taxpayer. David Olivier is here to fill that role.
- You are selling or merging your company and undergoing a sales tax due diligence review. Most jurisdictions hold purchasers of companies liable for any sales tax liabilities of the predecessor. To protect themselves, purchasers typically hire an accounting firm to perform a due diligence review to identify such potential liabilities. Money to cover such potential liabilities is then withheld and put in escrow until such liabilities are either paid or ultimately determined not to be owed. Due diligence audits are often much worse than sales tax audits since they often simultaneously involve liabilities in numerous states and exposure estimates tend to be based on worst case scenarios. It is extremely valuable to have experienced professional representation on your side to push back against overly conservative exposure estimates and to help you implement a plan for quickly resolving and minimizing any identified exposure, so you can pull your money out of escrow and maximize the amount you get back.
- You are buying a company. Olivier Tax will perform a sales tax due diligence review of the target company and help you minimize the risk of being held liable for the predecessor's unpaid sales tax liabilities.
- You need help determining where you should be collecting sales tax. While you are still only required to collect sales tax in states where you have "nexus", states are increasingly experimenting with aggressive positions and lowering the threshold for establishing nexus. Challenging such positions can be extremely costly with a low probability of ultimately prevailing. Not collecting sales tax reduces compliance costs and can result in a competitive advantage but those advantages will quickly be reversed by costly audit assessments if it is later determined that a collection responsibility existed. Sales tax, if properly and timely collected, is an expense to the customer but it usually becomes a major expense of the seller when it is assessed on an audit. An experienced sales tax professional can help you identify the jurisdictions in which potential exposure exists, help you properly weigh the risks of non-compliance and help you get into compliance going forward while minimizing prior liabilities, if any.
- You need help quantifying and resolving sales, use and transaction tax exposure. David Olivier will use a prioritized approach to resolving prior period liabilities and will typically recommend and utilize different approaches for different jurisdictions depending on specific case factors -- such as the dollar amount involved, availability of formal exposure resolution programs (e.g., voluntary disclosure, amnesty, etc.), ongoing exposure risk, existence and strength of alternative tax positions, the desire of the client, etc. Most jurisdictions are willing to enter into agreements with undisclosed taxpayers pursuant to which, previously undetected liabilities can be disclosed in exchange for a limited lookback period and abatement of penalties. Some jurisdictions may also agree to a partial or full abatement of interest. In a best-case scenario, a jurisdiction will agree to forgive all prior period tax liabilities with the taxpayer agreeing to comply going forward.
- You need help identifying sales, use and transaction tax overpayments and securing refunds. This service is typically performed on a contingent fee basis and typically involves a detailed review of purchase transactions to identify sales and use tax erroneously paid to vendors and/or self-assessed and paid directly to the corresponding taxing jurisdiction. Before filing a refund claim, it is important to also assess the extent to which there may also be underpayment exposure, as filing a large refund claim often triggers an audit. While a taxpayer is undergoing an audit is typically an ideal time to file an offsetting refund claim. In that case, the auditor will already be in the process of identifying underpayment exposure and refund claims submitted usually get processed faster.
- You need help determining the taxability of products and services that you sell or purchase. On the sales side, it typically makes sense to err on the side of collecting sales and use taxes since the burden is on the customer rather than the seller, but it is essential from a customer relations perspective that taxes reflected on their invoices be justifiable based on the applicable laws. It is also important to be prepared to justify to an auditor any decisions not to charge tax. Sales and use taxes paid on purchases are directly borne by the purchaser and there is financial incentive to err on the side of not paying tax. However, it is important to be prepared to demonstrate to an auditor a good faith effort to pay the proper amount of taxes due and that any decisions not to pay tax were based on reasonable interpretations of applicable laws. David can prepare a custom-tailored taxability matrix showing recommended taxability decisions by product/service and jurisdiction that cites applicable statutes and includes explanatory footnotes.
- You need help determining the sales, use, and transaction tax treatment of a particular large dollar transaction or high impact issue. David can perform a detailed review of the issue and prepare an opinion letter, which includes a detailed description of the relevant facts, the issues in question, conclusions, and a detailed discussion of the analysis supporting the conclusions. If a transaction has not occurred yet, there may also be opportunities to structure the transaction in a manner that legally eliminates or reduces the tax.
- You want to get a binding opinion from a taxing jurisdiction regarding a particular sales, use, or transaction tax issue. David can prepare and submit a letter-ruling request to the corresponding taxing jurisdiction on your behalf. If a favorable ruling is received, auditors from the jurisdiction will be required to honor it. Such rulings are only binding with respect to the taxpayer to whom they were issued. Prior to submitting a ruling, it is important to evaluate the probability of obtaining a favorable ruling. An unfavorable ruling will substantially weaken the taxpayer's potential to benefit from a more favorable position on future audits.
- You have a sale, use, or transaction tax concern that does not fall into one of the above-listed categories. There can be countless other reasons to reach out to Olivier Tax. If the issue is important to you, let's discuss it. David can help.