SALES TAX COMPLIANCE SOLUTIONS FOR QUICKBOOKS

How Can QuickBooks Users Handle the Complexities of Sales and Use Tax Compliance?

Many businesses choose QuickBooks for a low-cost accounting system, but what about handling complex sales and use tax issues? We’ll address some of the specific difficulties in Colorado, but the solutions apply to other states as well.

Common Problems

QuickBooks does not handle differences in taxability between states and local jurisdictions. This is an issue in difficult states like Colorado with home-rule cities such as Boulder, Colorado Springs, Denver, Fort Collins, Pueblo and many more. These Colorado cities and some local jurisdictions in other states can differ from their state on taxability and rates.

Secondly, for companies with multiple locations or otherwise doing business in multiple jurisdictions in Colorado, the sales tax compliance burden increases significantly. For example, companies providing sales with installations in multiple jurisdictions cannot get efficient reports from QuickBooks to handle their Colorado State return. Performing installations is a state and local “Nexus” trigger for Colorado State-collected and home-rule jurisdictions.

The Colorado Department of Revenue requires these businesses to report sales by Branch ID, even if the location is in a home-rule city. For many business, this means obtaining multiple non-physical location branch ids from the state, but QuickBooks won’t readily track sales that way.

You could set up separate DOR vendor accounts for each assigned branch id and then file the individual returns by branch id or upload a preapproved template covering all branch ids. That’s not a good solution, plus businesses still need to register and file with each applicable home-rule city too.

A third significant problem in handling sales tax in Colorado is the need for address verification. Mailing addresses and zip +4 etc. simply cannot be relied upon to determine what state-collected and/ or home-rule jurisdictions are involved.

There are sales and use tax compliance packages out there, but they are often very expensive and incomplete.

Is There a Good Solution?

Fortunately, the answer is, “Yes”.

We recommend Exactor for a low-cost, but excellent end-to-end solution. The cost for a business doing up to 200 invoices per month is $30/ month with no long-term commitment required. It includes one state filing and local returns are $8. Additional states are $12 each.

In spite of the low cost, Exactor provides real-time address verification, current rates, electronic filing of returns and making tax payments on time.

Exactor has also already determined taxability of products and services for all states with a sales tax and for local jurisdictions like the home-rule cities in Colorado. This is a huge burden to otherwise determine taxability. Exactor has been a Streamline Sales Tax (SST) certified vendor since 2006. There are more benefits too such as audit support.

While we are paid for referrals, we would gladly refer them either way as a complete, trusted sales tax compliance solution for any state and an excellent solution to handling the difficulties of sales tax compliance in Colorado.

If you prefer a Colorado vendor, Taxify in Boulder also provides QuickBooks integration with some of the same services at a similar low cost, but without the determination of taxability.

For those considering systems integration with Vertex, Onesource, Taxware, Sales Tax Datalink, PTMS etc., we have resources to help with the decision process and implementation.

The information in this tax tip addresses issues in general and is limited in scope. Any potential results discussed may vary and circumstances may warrant more or less favorable outcomes.

It’s best to be proactive and to identify and resolve issues before an auditor contacts you. Voluntary Disclosure Agreements are no longer available once you've been contacted.

Remedies are often available when you’ve discovered obligations before auditors contact you. Anonymous Voluntary Disclosure is one option. Even if you are already under audit, we can often help. See our Audit Case Studies.

To learn more about how we can help with these or the following issues, please Contact us today:

• Assistance with proactive minimization of prior period sales/use tax liabilities
• Help with nexus questions and issues
• Other sales and use tax related questions

What are your priority issues and when do you want them resolved?

Please click here for more Sales Tax Tips. For additional insight on common sales tax concerns, please see the Did You Know? section of our website.

* This tip is intended to provide general information only and is not to be considered as a substitute for professional advice.