How much does your accountant know about sales tax? Maybe not as much as you think. A startling number of accounting professionals botched basic questions about sales tax, from online tax to nexus to audit risk according to a recent Wakefield survey.
That’s not to say accountants aren’t doing their jobs – many have a solid knowledge of sales tax rules. It’s just that there are thousands of those sale tax rules and an endless combination of how to use them, where they apply, how often they change, etc… Sales tax laws confuse and complicate life for even the savviest professionals. How badly did accountants do? Well, the results of the survey are kind of a good news/bad news situation.
Let’s start with the good news: 96% of accounting professionals surveyed said that they were confident in the way that their company handled sales tax.
Ready for the bad news? A lot of them got questions, basic questions, wrong about sales tax. And in fact only 2% got a basic question about federal sales tax legislation right.
How do you think you’d fair? Test yourself with a few true or false statements from the survey:
#1: Once you’re audited, your company is at risk to be audited again.
58% of those surveyed said “False, you’re not at risk to be audited again.” Well the answer is “True,” if auditors come in, they find a lot of sales tax errors, they’re more likely to come back and audit you in the future.
#2: Hiring new employees that work from home could mean you have nexus in that state.
62% said “False.” Here again, this is true. If you hire new employees in a state, you could very well have nexus. Nexus being the relationship between your business and the taxing jurisdiction; that means you have to collect and remit sales tax.
#3: Sending a sales representative into a different means you could have nexus in that state.
63% of those surveyed, said “False, it doesn’t mean you could have nexus in that state.” The answer again is “True.” Reps in a state could equal nexus for your business.
Now, we’re not slamming accounting professionals for getting these questions about sales tax wrong. Sales tax is incredibly complex and can be stressful to manage. In fact, 44% of those surveyed said that going through the process of contesting an audit was more stressful than getting a divorce, or would be more stressful than getting a divorce.
Have questions on Sales Tax or how KTL Solutions can help add value to your company with using Avalara? Contact your local Business Representative at 301.360.0001 or email them at firstname.lastname@example.org