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Case
Studies
Home-based, Multi-state Employees Create
Nexus
O&A Saves Company $65,000
In Accrued Sales Tax
A company that provides research,
consulting and training services to customers in the financial industry had
employees working out of their homes in 18 states. The business became
concerned that they were handling their Sales & Use Tax reporting
requirements incorrectly so they engaged Olivier & Associates (O&A).
After reviewing their Sales & Use Tax reporting compliance, O&A
determined the company had nexus, or a responsibility to collect, in several
states due to the presence of the employees working out of their own homes.
"Nexus" is the legal term used in Sales & Use as the overall
determination as to whether or not a business or individual has sufficient
physical presence in a jurisdiction to be required to follow its tax laws. This
generally results in an obligation to collect and remit Sales & Use Tax in
that jurisdiction.
We then
researched the taxability of their products and determined the company had
Sales & Use Tax exposure of approximately $73,000 from the failure to
collect tax and file returns in a number of the states where employees worked
from home. O&A then negotiated agreements, on a no-name basis, with the
states where the company had Sales & Use Tax exposure. All of the states
that were owed money agreed to waive penalties and reduce interest. In
addition, several states agreed that the company would only have to file on a
prospective or going forward basis, forgiving any prior tax liability.
The
result: After O&A determined which states the company had nexus in, the
company knew the proper amount of Sales Tax to collect, and what products and
services were taxable. We saved the company nearly $65,000 in accrued Sales
Tax, interest and penalties through negotiating Voluntary Disclosure Agreements
where there was exposure.
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