101 Taxes
What you need to consider if you're doing business in more than one state
Bu Inez Mello
Special to the Worcester Business Journal
Businesses operating in multiple states face challenges when it comes to understanding sales and use tax laws. State and Local Tax (SALT) problems are somewhat like hypertension - they become increasingly serious if left unattended. The following questions provide a checklist of common SALT problems, misconceptions and lost opportunities.
1 - Do you have any representatives in states other than where you are currently filing returns?
2 - Do you have inventory (on consignment or otherwise) in any state in which you are not currently filing returns?
3 - Is 100 percent of your income being apportioned among all the state income tax returns that you file?
4 - Do you ship or deliver into states in which you do not file income tax returns?
5 - Is your business legally organized as one entity? Multiple divisions?
6 - If you provide a service to customers in various states, do you attribute the revenues you earn from each in the same manner?
7 - Are you registered for sales AND use taxes in your home state?
8 - Do you file returns in states in which your ONLY activity is to solicit sales, using either an employee(s) or other representative(s)?
9 - Have any of your customers or vendors been audited recently? Have they sent you a letter stating they are being audited and asking if you have paid tax on the goods you purchased from/sold to them?
10 - Are you aware of, or concerned about any exposure or potential exposure the business may face, but is not being addressed in anyway at this time?
Inez Mello is a CPA at the Westborough-based accounting firm of Carlin, Charron & Rosen. She can be reached at imello@ccrgroup.com.
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