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Serving Clients
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Exposure Resolution
Olivier &
Associates will resolve and to the best of our abilities minimize prior and
prospective Sales & Use Tax exposure. We will obtain an estimate of the
amount of Sales & Use Tax exposure that may exist and enable your company
to prioritize and focus on your most material Sales & Use Tax liabilities
first. Once the exposure quantifications have been completed, we will provide
recommendations and assist in executing procedures to rectify the situation.
Such assistance may include Voluntary Disclosure Agreements or alternative
registration methods designed to minimize prior and future exposure. It may
also include negotiations for interest and penalty abatement or reductions,
Offers in Compromise, and developing taxability matrices and procedure manuals
to further assist in determining taxability to reduce future errors.
Voluntary Disclosure Agreements
Saving Money,
Time And Hassle With Voluntary Disclosure.
Is your company registered to collect and pay Sales & Use Tax in every
state where you are required to be? If not, consider the benefits of a
Voluntary Disclosure Agreement which can save you money and keep you out of
future trouble.
Voluntary
Disclosure services from Olivier & Associates can help you minimize and
resolve prior-period tax exposure. If you've recently identified prior-period
Sales & Use Tax exposure, we can negotiate with the state on an anonymous
basis on behalf of your business. We can also work to minimize or abate
penalties, interest and past tax liabilities, while helping bring your company
into prospective compliance.
What Is A
Voluntary Disclosure Agreement?
A Voluntary Disclosure Agreement ("VDA") is a negotiated settlement
on behalf of a company that has not filed Sales or Use Tax returns in a
particular state. It typically gives companies the opportunity to willingly pay
these taxes without being penalized and to limit the state's look-back period.
This process can save a company hundreds of thousands to tens of millions of
dollars. A Voluntary Disclosure Agreement is generally handled by a
professional, independent third party who negotiates with the state on an
anonymous basis on behalf of a company.
Most states have a
policy of encouraging and assisting taxpayers through Voluntary Disclosure
Agreements.
How It Works.
In exchange for voluntarily coming forward to disclose a potential liability
and agreeing to register and collect Sales Tax going forward, states often
waive penalties and reduce or forgive interest. Generally, states agree not to
initiate criminal proceedings against the taxpayer (or its officers, directors
or stockholders). They also typically will not impose civil fraud penalties
based on the information voluntarily disclosed. A taxpayer who voluntarily
discloses a prior liability must agree to pay all accrued taxes for an agreed
upon look-back period. The look-back period is usually limited to the statute
of limitations period.
Keep in mind that
there is generally no statute of limitations for a company that has not been
filing Sales & Use Tax returns. In such cases, the liability for Sales
& Use Taxes extends back to the first day you were considered to have a
nexus within a particular state. This can mean the day the first sale in the
state was made subsequent to establishing nexus. VDA programs vary by state. It
is important that the person negotiating these agreements has a thorough
understanding of these various programs including:
- What terms to typically
expect from each state.
- The degree of latitude that
state statutes grant to VDA unit personnel to modify the standard VDA
terms.
- The right contacts at the
individual revenue departments.
- Sufficient experience in the
respective states to know what favorable terms are possible.
A well-negotiated
Voluntary Disclosure Agreement with a state can limit a company's exposure for
Sales & Use Tax and may include more favorable terms than typical
agreements.
Criteria For
Qualifying.
When determining eligibility for a Voluntary Disclosure Agreement, states
typically consider factors such as whether the company:
- Has a tax liability to
report; is located outside state; and was not previously registered in the
state.
- Is currently engaged in
business in the state.
- Is choosing to register
voluntarily with the state.
- Has not previously been
contacted by the state or its agents regarding its activities in
state...
- Failed to pay the tax or file
a return due to reasonable cause, and not due to negligence or intentional
disregard of the law.
Streamlined
Sales Tax
Registering with
the Streamlined Sales Tax (SST) Agreement states can be very beneficial in
certain scenarios and can help make the Voluntary Disclosure process simpler
and straightforward. Under the Streamlined Sales Tax agreement, a group of
states have joined together to provide common definitions and rules for Sales
& Use Taxes among the participating states. The most significant potential
benefit may be complete relief from all accrued Sales & Use Tax liabilities
in one or more member states. In this respect, all member states are required
to provide a one year amnesty period upon becoming a Streamlined Sales Tax
member state. The SST became effective on October 1, 2005, but additional
states continue to join as full or associate members. The original amnesty
period is past, which reduces the overall amnesty benefit and complicates the
decision as to whether SST registration will result in a net benefit. The most
significant drawback to SST registration is the requirement to file Sales &
Use Tax returns in all the SST member states for a minimum of three years
including states in which the registrant would not otherwise have a legal
requirement to file.
A careful
evaluation of your firm's situation is essential to see if SST registration is
the right exposure resolution option for you. Our SST experienced professionals
can help with the evaluation and ensure you make an informed decision. Olivier
& Associates can also assist you with the registration process and some of
the technical implementation considerations and issues such as:
- Assist in understanding your
company's benefits, rights and obligations associated with participating in the
SST program.
- Assist with completion of the
Central SST registration process.
- Assist in identifying and
managing completion of the additional Sales Tax registration requirements
imposed by individual SST states.
- Assist with selection of an
SST Certified Service Provider ("CSP") and the corresponding process
of outsourcing your SST state compliance process to the CSP.
- Assist the CSP in
understanding your company's products and services.
- Perform any necessary tax
research and proactively supply the CSP provider with any information needed to
load the tax decision tables.
- Review the taxability logic
contained in the proposed tax decision tables to identify and correct any
material inaccuracies.
- Meet with and communicate
with your company's personnel, CSP representatives and respective state
representatives as needed to insure proper installation and integration of the
CSP software and to fully turn over your Sales & Use Tax function to the
selected CSP.
- Notify you of any obstacles
that might affect the feasibility of SST participation and provide you with
proposed alternative approaches for resolving your prior period Sales Tax
obligations in relevant SST member states.
SST is not right
for everyone. Other exposure resolution options may be best for you. Selecting
which approach to use to resolve prior period noncompliance is a business
decision that should be considered carefully for each applicable individual
taxing jurisdiction.
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Contact us
today or call
1-888-466-2829 for a no-obligation consultation about your Sales &
Use Tax issues.
