{"id":10522,"date":"2022-06-21T16:40:54","date_gmt":"2022-06-21T16:40:54","guid":{"rendered":"https:\/\/taxops.com\/?p=10522"},"modified":"2022-06-21T16:40:56","modified_gmt":"2022-06-21T16:40:56","slug":"10-reasons-to-maintain-a-clean-culture-of-state-and-local-tax","status":"publish","type":"post","link":"https:\/\/taxops.com\/10-reasons-to-maintain-a-clean-culture-of-state-and-local-tax\/","title":{"rendered":"10 Reasons to Maintain\u00a0a Clean Culture of State and Local Tax"},"content":{"rendered":"\n<div style=\"height:53px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<figure class=\"wp-block-gallery has-nested-images columns-default is-cropped wp-block-gallery-1 is-layout-flex wp-block-gallery-is-layout-flex\">\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1024\" height=\"536\" data-id=\"10528\" src=\"data:image\/gif;base64,R0lGODlhAQABAIAAAAAAAP\/\/\/yH5BAEAAAAALAAAAAABAAEAAAIBRAA7\" data-src=\"https:\/\/taxops.com\/wp-content\/uploads\/2022\/06\/Top-10-reasons-to-stay-compliant-1024x536.png\" alt=\"\" class=\"wp-image-10528 lazyload\" data-srcset=\"https:\/\/taxops.com\/wp-content\/uploads\/2022\/06\/Top-10-reasons-to-stay-compliant-1024x536.png 1024w, https:\/\/taxops.com\/wp-content\/uploads\/2022\/06\/Top-10-reasons-to-stay-compliant-980x513.png 980w, https:\/\/taxops.com\/wp-content\/uploads\/2022\/06\/Top-10-reasons-to-stay-compliant-480x251.png 480w\" sizes=\"(min-width: 0px) and (max-width: 480px) 480px, (min-width: 481px) and (max-width: 980px) 980px, (min-width: 981px) 1024px, 100vw\" \/><noscript><img decoding=\"async\" width=\"1024\" height=\"536\" data-id=\"10528\" src=\"https:\/\/taxops.com\/wp-content\/uploads\/2022\/06\/Top-10-reasons-to-stay-compliant-1024x536.png\" alt=\"\" class=\"wp-image-10528 lazyload\" srcset=\"https:\/\/taxops.com\/wp-content\/uploads\/2022\/06\/Top-10-reasons-to-stay-compliant-1024x536.png 1024w, https:\/\/taxops.com\/wp-content\/uploads\/2022\/06\/Top-10-reasons-to-stay-compliant-980x513.png 980w, https:\/\/taxops.com\/wp-content\/uploads\/2022\/06\/Top-10-reasons-to-stay-compliant-480x251.png 480w\" sizes=\"(min-width: 0px) and (max-width: 480px) 480px, (min-width: 481px) and (max-width: 980px) 980px, (min-width: 981px) 1024px, 100vw\" \/><\/noscript><\/figure>\n<\/figure>\n\n\n\n<div style=\"height:53px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p><em><em><em><em><em><em><em><em><em><em><em><em><em><em>Being compliant is surprisingly cheaper than non-compliance so investing in getting ahead of state and local tax compliance has real benefits. Here\u2019s 10 of them to convince management to maintain a culture around a clean tax profile.\u00a0\u00a0<\/em>\u00a0<\/em><\/em><\/em><\/em><\/em><\/em><\/em><\/em><\/em><\/em><\/em><\/em><\/em><\/p><\/blockquote>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p><\/p><\/blockquote>\n\n\n\n<p class=\"wp-block-paragraph\">By <a href=\"https:\/\/www.linkedin.com\/in\/judyvorndran\/\" target=\"_blank\" rel=\"noreferrer noopener\" title=\"\">Judy Vorndran<\/a><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">You are on the internet. Guess what \u2013 that was paid for by the government. You didn\u2019t create the internet infrastructure \u2013 that was a military thing and access was subsidized by taxes. &nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Taxes have also paid for pandemic relief, roads to drive on, a military at the ready, schools to educate kids, and more, all of which comes from our collective pockets. We all benefit from a strong judicial system, licensed professionals, building codes, investor protections and more government functions. &nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Yet businesses shoulder the bulk of compliance requirements as vendors. It\u2019s not like businesses can get out of this civic duty, nor should they want to; taxes are part and parcel of \u201cdoing business.\u201d&nbsp;&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For businesses, the cost of tax compliance typically includes a sales tax automation platform as well as hiring both a tax advisor like TaxOps and internal resources to manage the processes. Unfortunately, few CPAs learn about sales taxes in school and thus, like most complicated items, specialization is necessary. Dentists do not do braces as well as root canals. Why should your CPA be any different?&nbsp;&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Sales taxes are a cost of doing business, especially in today\u2019s digital economy yet a cost many businesses choose not to make until tax trouble forces the issue. Any cost\/benefit analysis will show that being compliant is cheaper than allowing a business to fall into non-compliance. &nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">So, getting ahead of state and local tax compliance has real benefits. Here\u2019s the top ten reasons why.&nbsp;<\/p>\n\n\n\n<ol class=\"wp-block-list\"><li>Creating a process around who your business is, what you are selling, and understanding the various state and local jurisdictions where you are selling reduces problem issues that could cost big bucks to clean up.&nbsp;<\/li><\/ol>\n\n\n\n<ol class=\"wp-block-list\" start=\"2\"><li>When a business is compliant, you control the narrative with the government, potentially saving you millions of dollars in remediation fees.&nbsp;&nbsp;<\/li><\/ol>\n\n\n\n<ol class=\"wp-block-list\" start=\"3\"><li>By demonstrating commitment to compliance through, for example, a repeatable process, document storage, data including a system of record for capturing relevant information like transaction details, exemption certificates, and more,&nbsp;proves to governments that a business is serious about compliance and reduces fallout should cracks be identified.&nbsp;<\/li><\/ol>\n\n\n\n<ol class=\"wp-block-list\" start=\"4\"><li>This documentation trail can be an asset in answering sales tax audit questions, saving potentially tens of thousands of dollars in time, penalties, interest and tax owed for each state a business sells into when the audit&nbsp;trail is cold. Multiply that savings by 45 states and the District of Columbia where your business is registered and your business is audit-ready with answers.&nbsp;&nbsp;<\/li><\/ol>\n\n\n\n<ol class=\"wp-block-list\" start=\"5\"><li>An audit-ready state of operations relieves pressure on staff, who have books to close and records to maintain every month and eliminates extra work chasing their tail to find information and answer audit questions at the transaction level of detail required. Being \u201caudit-ready\u201d makes it easy for internal staff (even with turnover) to demonstrate the taxability of a product assessed in Texas vs Vermont and any place else in the United States.&nbsp;<\/li><\/ol>\n\n\n\n<ol class=\"wp-block-list\" start=\"6\"><li>When businesses aren\u2019t up to speed on state and local tax, they risk an escrow item when they go to sell, creating risk for investors and lowering cash on the purchase price. Getting state and local tax right proves a company on the selling block has their act together and&nbsp;knows what they are doing, potentially increasing investor confidence, and in the end, the purchase price.&nbsp;&nbsp;<\/li><\/ol>\n\n\n\n<ol class=\"wp-block-list\" start=\"7\"><li>The costs of remediation to catch-up can be costly, especially when non-compliance dates back years. Upfront, it might cost between $35 to $100 dollars a month to file a sales tax return. In remediation, these costs balloon into the tens of thousands of dollars to fix past wrongs and stop the clock on look backs, which depending on the state, may be indefinite if there has never been a filing.&nbsp;<\/li><\/ol>\n\n\n\n<ol class=\"wp-block-list\" start=\"8\"><li>Having a tax process in place legitimizes your business, while having a tax advisor makes your tax problems the problem of your advisor. That tax advisor is your ally, advocate and&nbsp;reference point. Government agencies recognize when you have gone the extra mile to get compliance in order and factor that in when tax issues inevitably arise.&nbsp;&nbsp;<\/li><\/ol>\n\n\n\n<ol class=\"wp-block-list\" start=\"9\"><li>Tax compliance is part of being a responsible company where employees want to work and customers want to buy. It is a culture that creates pride in place, which in today\u2019s tight labor market, should not be undervalued.&nbsp;<\/li><\/ol>\n\n\n\n<ol class=\"wp-block-list\" start=\"10\"><li>Falling behind on tax issues can close your doors. Just this reality impacts many businesses each year as countless companies across the country find themselves noncompliant and under the audit ax. What a waste of a great idea, vision and purpose when a company loses its way on tax technicalities.&nbsp;&nbsp;<\/li><\/ol>\n\n\n\n<p class=\"wp-block-paragraph\">So, protect your business with state and local tax compliance. If tax is not your day-to-day job, hire the right professionals to help keep your business ahead of tax issues and clean up past faults with repeatable processes and a tax advocate at your back. Give us a call today at TaxOps.&nbsp;<\/p>\n\n\n\n<div style=\"height:38px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-fe48e5de wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https:\/\/taxops.com\/contact\/\" target=\"_blank\" rel=\"noreferrer noopener\">Let&#8217;s Talk Tax<\/a><\/div>\n<\/div>\n\n\n\n<div style=\"height:47px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\">More Tax News<\/h3>\n\n\n<ul class=\"wp-block-latest-posts__list wp-block-latest-posts\"><li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/taxops.com\/auditor-independence-in-the-age-of-private-equity\/\">Auditor Independence in the Age of Private Equity: What CFOs Need to Know<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/taxops.com\/r-d-credits-for-software-companies\/\">R&amp;D Credits for Software Companies: Scrum Teams, Qualifiers, and Section 174 After OBBBA<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/taxops.com\/section-174-decoupling-what-tax-pros-need-to-know-state-by-state\/\">Section 174 Decoupling: What Tax Pros Need To Know State By State<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/taxops.com\/sean-espy-new-partner\/\">TaxOps Welcomes Sean Espy as Partner, Tax Minimization<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/taxops.com\/state-nexus-demystified-navigating-tax-compliance-after-wayfair-episode-1-2\/\">Your Tax Footprint Is Probably Bigger Than You Think: What Finance Leaders Need to Know About State Nexus<\/a><\/li>\n<\/ul>\n\n\n<div style=\"height:47px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-fe48e5de wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https:\/\/taxops.com\/contact\/#subscribe\" target=\"_blank\" rel=\"noreferrer noopener\">Subscribe to Tax News<\/a><\/div>\n<\/div>\n\n\n\n<div style=\"height:47px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Being compliant is surprisingly cheaper than non-compliance so investing in getting ahead of state and local tax compliance has real benefits. Here\u2019s 10 of them to convince management to maintain a culture around a clean tax profile.\u00a0\u00a0\u00a0 By Judy Vorndran You are on the internet. Guess what \u2013 that was paid for by the government. [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":10528,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"off","_et_pb_old_content":"<!-- wp:spacer {\"height\":\"53px\"} -->\n<div style=\"height:53px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n<!-- \/wp:spacer -->\n\n<!-- wp:gallery {\"linkTo\":\"none\"} -->\n<figure class=\"wp-block-gallery has-nested-images columns-default is-cropped\"><!-- wp:image {\"id\":10182,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<figure class=\"wp-block-image size-large\"><img src=\"https:\/\/taxops.com\/wp-content\/uploads\/2022\/04\/Texas-High-Court-Clarifies-Service-Receipt-Apportionment-1-1024x536.png\" alt=\"\" class=\"wp-image-10182\"\/><\/figure>\n<!-- \/wp:image --><\/figure>\n<!-- \/wp:gallery -->\n\n<!-- wp:spacer {\"height\":\"53px\"} -->\n<div style=\"height:53px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n<!-- \/wp:spacer -->\n\n<!-- wp:quote -->\n<blockquote class=\"wp-block-quote\"><p><em><em>The Texas Supreme Court has ruled in favor of apportioning service receipts to the location of personnel or equipment, a position providing clarity to taxpayers on whether to source receipts from services performed versus where customers are at.<\/em>&nbsp;<\/em><\/p><\/blockquote>\n<!-- \/wp:quote -->\n\n<!-- wp:quote -->\n<blockquote class=\"wp-block-quote\"><p><\/p><\/blockquote>\n<!-- \/wp:quote -->\n\n<!-- wp:paragraph -->\n<p>By <a href=\"https:\/\/taxops.com\/tram-le\/\" target=\"_blank\" rel=\"noreferrer noopener\" title=\"Tram Le\">Tram Le<\/a> <\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>On March 25, 2022, the Texas Supreme Court held in favor of the taxpayer that services revenue is apportioned to the location where services are performed, consistent with Texas law.<sup>1<\/sup> The Court found that the performance of service is located where the taxpayer\u2019s personnel or equipment is physically doing useful work for the customer.&nbsp;<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The case involves Sirius XM (Sirius XM Radio, Inc. v. Hegar, Tx. Sup. Ct. No. 20-0462 (3\/25\/22)), whose headquarters, transmission equipment and production studios used in providing a subscription-based satellite radio service are largely located outside of Texas. In the 2010 and 2011 tax years, Sirius XM apportioned tax based on costs of activities in Texas and outside of Texas. Under Texas rules, service revenue is apportioned to Texas based on the \u201cfair value of the services\u201d rendered in Texas where services are performed in more than one state.<sup>2<\/sup>&nbsp;<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>For those tax years, the Texas Comptroller adjusted on audit to base the tax on the percentage of Sirius XM\u2019s Texas subscribers. The Comptroller argued that service revenue is sourced to Texas if the \u201creceipt-producing, end-product act\u201d takes place in Texas. In this case, such an act was considered the decryption of the satellite network and enabling of each subscriber\u2019s radio to receive Sirius XM\u2019s signal. However, Sirius XM argued that its services \u2013 the production and broadcasting of radio content \u2013 was mainly performed outside of Texas.&nbsp;<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The Texas Supreme Court ultimately agreed that Sirius XM was providing satellite radio content and those services are performed in Texas if the labor employed in that service is doing the work in Texas. This constitues a natural reading of the law, which requires taxes due \u201cwhere service [is] performed in this state.\u201d This rejects the Comptroller premise of service taking place at the customer location. The Court also rejected the use of the \u201creceipt-producing, end-product\u201d test to determine where a service is being performed.&nbsp;<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Although the Court ruled in favor of the taxpayer, the case was remanded to the Appellate court for further review of Sirius XM\u2019s cost of performing services and evidence to support its \u201cfair value of services\u201d performed in Texas.&nbsp;&nbsp;<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The Texas Supreme Court opinion provides clarification in apportioning service revenue in Texas and determining whether services are performed in the state. Taxpayers doing business in Texas should carefully review business operations, nature of services, i.e., properly characterizing the services provided to customers and location of equipment, facilities, and personnel to properly apportion revenue.&nbsp;&nbsp;&nbsp;<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>In addition, if services are being performed in Texas and outside of Texas, taxpayers must properly evaluate methods of determining the fair value of services and maintain sufficient evidence to support what revenue is apportioned to Texas. Contact a TaxOps advisor is you need assistance assessing nexus and taxability in the state of Texas and everywhere you do business.&nbsp;<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Tram Le is a member of the SALTovation team at TaxOps and an adjunct professor at the University of Texas at Arlington. She writes about hot topics in state and local tax affecting business operations and growth strategies and the Spreading SALTovation column for Tax Notes.&nbsp;Reach out to Tram at <a href=\"mailto:tle@taxops.com\" target=\"_blank\" rel=\"noreferrer noopener\" title=\"Tram Le\">tle@taxops.com<\/a>.&nbsp;&nbsp;<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:spacer {\"height\":\"53px\"} -->\n<div style=\"height:53px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n<!-- \/wp:spacer -->\n\n<!-- wp:buttons -->\n<div class=\"wp-block-buttons\"><!-- wp:button -->\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https:\/\/taxops.com\/contact\/\" target=\"_blank\" rel=\"noreferrer noopener\">Let's Talk Tax<\/a><\/div>\n<!-- \/wp:button --><\/div>\n<!-- \/wp:buttons -->\n\n<!-- wp:spacer {\"height\":\"47px\"} -->\n<div style=\"height:47px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n<!-- \/wp:spacer -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>More Tax News<\/h3>\n<!-- \/wp:heading -->\n\n<!-- wp:latest-posts \/-->\n\n<!-- wp:spacer {\"height\":\"47px\"} -->\n<div style=\"height:47px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n<!-- \/wp:spacer -->\n\n<!-- wp:buttons -->\n<div class=\"wp-block-buttons\"><!-- wp:button -->\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https:\/\/taxops.com\/contact\/#subscribe\" target=\"_blank\" rel=\"noreferrer noopener\">Subscribe to Tax News<\/a><\/div>\n<!-- \/wp:button --><\/div>\n<!-- \/wp:buttons -->\n\n<!-- wp:spacer {\"height\":\"47px\"} -->\n<div style=\"height:47px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n<!-- \/wp:spacer -->","_et_gb_content_width":"","spt_transcript":"","footnotes":""},"categories":[229,226],"tags":[974,252,967,284,12,126,977,975,978,265,968,913,976,269,19,101,80,964],"class_list":["post-10522","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-state-and-local","category-tax-news","tag-27-cents","tag-accountant","tag-amazon-web-services","tag-cfo","tag-colorado","tag-cpa","tag-deliveries","tag-delivery-fee","tag-delivery-tax","tag-finance-professional","tag-mainframe-access","tag-new-tax","tag-retail-delivery","tag-returns","tag-sales-tax","tag-state-tax","tag-tax-provider","tag-tax-service"],"aioseo_notices":[],"jetpack_featured_media_url":"https:\/\/taxops.com\/wp-content\/uploads\/2022\/06\/Top-10-reasons-to-stay-compliant.png","_links":{"self":[{"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts\/10522","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/comments?post=10522"}],"version-history":[{"count":7,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts\/10522\/revisions"}],"predecessor-version":[{"id":10530,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts\/10522\/revisions\/10530"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/media\/10528"}],"wp:attachment":[{"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/media?parent=10522"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/categories?post=10522"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/tags?post=10522"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}