The single biggest tax issue for your business in the next few years is probably going to be nexus. States are broke. If they can find a way to draw you into their state, they can make your business liable for sales tax and franchise (aka "not-income") tax, and you liable for state income tax. The first step for the state will be to prove that you have some kind of nexus. If there is no nexus, then there is no way to get hold of you and/or your business for tax purposes.
Just how bad is this problem? Two years ago, a well-known seminar presenter had to write checks totaling almost one million dollars. Why? He had been giving seminars across the country but figured since he didn't have employees or offices in the various states that he'd never have to worry about nexus. Wrong!
He didn't charge sales tax when he should have and the states caught him in the act. He ended up settling for approximately one million dollars. But, with penalties and interest, the amount could have been much, much more.
The problem with nexus is that it's complicated. Case law that varies from state to state. Each state gets to make up its own rules. And so, until states get together with one cohesive program, you could end up responsible for knowing 50 different sets of rules. Confusing? You bet! And that doesn't even take into account all of the counties, cities and other special purpose taxing units. There are actually almost 10,000 different districts that you could have to come into compliance with. OUCH!
There are three things you need to do right now to get ready for this potential problem:
Learn what you can about Nexus.
Determine if you need a nexus negotiator to negotiate past sins away.
Only after you've done all the necessary negotiation, get into compliance for the future.
Are there tax loopholes available for state nexus challenges? You bet. In fact, if you plan ahead you can actually LESS tax than you do now by successfully planning and implementing a nexus strategy.
Article Source: http://EzineArticles.com/?expert=Diane_Kennedy
Just how bad is this problem? Two years ago, a well-known seminar presenter had to write checks totaling almost one million dollars. Why? He had been giving seminars across the country but figured since he didn't have employees or offices in the various states that he'd never have to worry about nexus. Wrong!
He didn't charge sales tax when he should have and the states caught him in the act. He ended up settling for approximately one million dollars. But, with penalties and interest, the amount could have been much, much more.
The problem with nexus is that it's complicated. Case law that varies from state to state. Each state gets to make up its own rules. And so, until states get together with one cohesive program, you could end up responsible for knowing 50 different sets of rules. Confusing? You bet! And that doesn't even take into account all of the counties, cities and other special purpose taxing units. There are actually almost 10,000 different districts that you could have to come into compliance with. OUCH!
There are three things you need to do right now to get ready for this potential problem:
Learn what you can about Nexus.
Determine if you need a nexus negotiator to negotiate past sins away.
Only after you've done all the necessary negotiation, get into compliance for the future.
Are there tax loopholes available for state nexus challenges? You bet. In fact, if you plan ahead you can actually LESS tax than you do now by successfully planning and implementing a nexus strategy.
Article Source: http://EzineArticles.com/?expert=Diane_Kennedy
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