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  • WHO TO CONTACT DURING THE LIVE PROGRAM

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    IMPORTANT INFORMATION FOR THE LIVE PROGRAM

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    additional people, please call customer service at 1-800-926-7926 ext. 1 (or 404-881-1141 ext. 1).

    Strafford accepts American Express, Visa, MasterCard, Discover.

    • Listen on-line via your computer speakers.

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    • To earn full credit, you must remain connected for the entire program.

    Sales Tax Exemptions and Resale Certificates: Compliance

    Issues, State-by-State Requirements and Updates

    TUESDAY, APRIL 7, 2020, 1:00-2:50 pm Eastern

    FOR LIVE PROGRAM ONLY

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  • April 7, 2020

    Sales Tax Exemptions and Resale Certificates: Compliance Issues, State-by-State Requirements and Updates

    Stacey L. Roberts, CPA, State and Local Tax Director

    TaxOps

    sroberts@taxops.com

    Judith B. Vorndran, JD, CPA, MSBA, Partner

    TaxOps

    jvorndran@taxops.com

  • Notice

    ANY TAX ADVICE IN THIS COMMUNICATION IS NOT INTENDED OR WRITTEN BY

    THE SPEAKERS’ FIRMS TO BE USED, AND CANNOT BE USED, BY A CLIENT OR ANY

    OTHER PERSON OR ENTITY FOR THE PURPOSE OF (i) AVOIDING PENALTIES THAT

    MAY BE IMPOSED ON ANY TAXPAYER OR (ii) PROMOTING, MARKETING OR

    RECOMMENDING TO ANOTHER PARTY ANY MATTERS ADDRESSED HEREIN.

    You (and your employees, representatives, or agents) may disclose to any and all persons,

    without limitation, the tax treatment or tax structure, or both, of any transaction

    described in the associated materials we provide to you, including, but not limited to,

    any tax opinions, memoranda, or other tax analyses contained in those materials.

    The information contained herein is of a general nature and based on authorities that are

    subject to change. Applicability of the information to specific situations should be

    determined through consultation with your tax adviser.

  • Sales Tax Exemptions & Resale Certificates Compliance Issues, State-by-State Requirements and Updates

    Presented by Judy Vorndran, Esq., CPA, and Stacey Roberts, CPA

  • Presented by

    • Specializing in designing tax strategies and solutions that improve business tax outcomes

    • 20+ years of public and private sector accounting experience, both practical and in management, she’s gained the essential business acumen necessary to be a key advisor to clients

    • Managing all compliance issues related to state income/franchise, SALT, real and personal property and unclaimed property taxes for flow through entities and C corporations; identifying planning opportunities and state and local credits and incentives; and, mitigating state and local tax controversy issues

    • Frequent speaker and instructor on SALT issues for industry and professional organizations including the Denver Tax Institute, Product PowerUp, NowCFO and more.

    Stacey Roberts, CPA 303-393-2318

    sroberts@taxops.com

    TaxOps.com

    6

  • Presented by

    • Marrying tax and law exclusively in State and Local Tax (SALT) for 25+ years

    • Helped more than 1,000 taxpayers figure out who they are, where they are and how best to comply with tax duties

    • Leads the SALT practice at TaxOps, helping clients navigate the morass of issues to make it less taxing

    • 3-year appointment to Colorado’s legislative Sales and Use Task Force to help simplify its complex sales tax system

    • Dually licensed attorney and CPA, Judy is also president of the Colorado Chapter of the American Academy of Attorney- CPAs

    • Nationally recognized thought leader and award-winning instructor

    • Successfully changing laws in states and local jurisdictions promoting simplicity

    Judy Vorndran, CPA, Esq. 720-227-0093

    jvorndran@taxops.com

    TaxOps

    304 Inverness Way South

    Englewood, CO 80112

    TaxOps.com

    7

  • 8

    A G

    E N

    D

    A

    Collect the Tax or Get

    the Doc

    Criteria & Compliance

    Compliance Protocol

    Best Practices

  • Banking the cannabis industry

    Collect the Tax or Get the Doc

    9

  • Compliance Duties

    • Every transaction between a buyer and a seller should be taxed or documented

    • Business selling into the resale, wholesale, or exempt entity markets must “collect the tax or get the doc”

    • Legitimate document attesting to the proper exemption that applies to the transaction

    • Document demonstrates a transaction is tax-exempt, relieving the seller a company of collection duties

    10

  • Tax Exemption Types

    • Customers and transaction are tax-exempt for three basic reasons

    • Use-based exemptions are linked to products put to use after the transaction is complete (generally, resale products)

    • Product-based exemptions relate to the nature of the product being sold (in some states, manufacturing equipment is exempt)

    • Buyer-based exemptions relate to the type of buyer purchasing the goods or services (in some states, government and/or non-profit organizations are exempted from paying sales tax)

    11

  • Role of Sourcing

    • Exempt transactions also depend on the location of the buyer and the seller

    • Inconsistent application across states, increasing audit risk • Most sales within a state are based on the location of the seller

    • Sales made between states are typically based on the consumer’s location

    12

  • Whose Problem is It?

    • Complicated patchwork of nexus rules and sales tax regimes

    • Vary from state to state, leading to uncollected sales taxes and risk

    • With no universal, clear and complete definition of nexus, every party in the food chain has work to do to see if they need to collect sales tax or get an exemption

    • Responsibility falls on various entities throughout a transaction cycle • Originating manufacturer several states away could end up holding the sales tax bag for a

    reseller or distributor that isn’t property licensed in the end-user’s state

    Manufacturer Distributor Wholesaler Retailer End-user

    13

  • Sales Tax Risk

    • Tripping nexus in any form may create sales tax risk • A business with nexus in Virginia selling to a third party that holds

    an exemption certificate in Colorado might not be able to validly exempt the sale in Virginia

    Click- through Nexus

    Use of Affiliates

    and Agents

    Negotiated Direct Pay

    Permits

    Unsigned and Expired Certificates

    Licensing Which

    Certificate to Secure

    14

  • Sales Tax Risk

    • Nexus exposure • Physical

    • Click-through

    • Affiliate

    • Wayfair/Economic

    15

  • Economic Nexus Snapshot

    Source: Avalara Resource Center (As of February 2020)

    17

    https://www.avalara.com/us/en/learn/sales-tax/south-dakota-wayfair.html

  • Drop Ship Nexus Ugly, 3-parties to a Transaction

    SELLER

    SUPPLIER

    CUSTOMER

    NEXUS

    DELIVER

    Y

    Order

    Seller price

    Supplier price

    Resale certificate

    Source: Avalara

    18

  • Drop Ship Nexus It's Complicated!

    • Complicated if one of the parties has nexus but the others do not

    • Comes down to who gets the resale certificate, and from where, and who collects the tax

    Supplier perspective. If you provide drop

    shipping, does the seller have nexus?

    Seller perspective. If you use drop shipping,

    does your company have nexus?

    • If no, as a supplier have you exceeded

    the threshold on behalf of the seller into

    a shipping state?

    • If yes, you created nexus for the seller

    and must request a resale certificate

    • If no, did the supplier exceed thresholds on

    your behalf to your customers into a shipping

    state?

    • If yes, you have nexus in the supplier

    shipping state and should register for a sales

    tax licenseSource: Avalara

    • Before Wayfair, less certificates needed to be collected because supplier may not have nexus

    • Post Wayfair, deliveries th

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