Sales & Use Tax Diagnostic Review
We can alleviate the burden of multi-state compliance and possibly save you tax dollars by doing a pre-emptive review of your current compliance functions.
Why Conduct A Diagnostic Review?
Companies that operate in multiple states or have experienced rapid growth often do not have the time or resources to be sure they are complying with the various tax laws in each state. In addition, most states’ statutes and regulations are convoluted and confusing.
This results in many companies having unrecognized Sales & Use Tax liabilities, potential Sales Tax refunds, and possible savings opportunities due to unrecognized state and local Sales Tax exemptions and/or exclusions.
Our objective is identifying and resolving any material Sales & Use Tax exposure, identifying states in which the company has a sufficient presence in to be subject to Sales & Use Tax compliance obligations, and evaluating which services and products are subject to Sales or Use Tax.
What Will Sales Tax Colorado Do?
We take a comprehensive approach to analyzing your business operations to ensure full compliance and identify savings.
Understand Activities
We obtain a detailed understanding of your company’s multi-state activities, products, and services.
Review Records
We review your books, records, invoices, and current compliance procedures to identify obligations.
Identify Liability
We expose areas of potential Sales & Use Tax liability and evaluate current exemption procedures.
Find Savings
We identify possible refund opportunities and savings due to unidentified exemptions and exclusions.
Recommend Solutions
We recommend alternatives to resolve issues, reduce future risk, and decrease audit defense costs.
Do You Have Nexus?
Nexus is a term used when an out-of-state company has sufficient contacts with a given state allowing the state to require the company to collect and remit Sales Tax on taxable sales. As established by federal case law (Quill Corp. v. North Dakota, Wayfair, etc.), for a state to have jurisdiction to tax an out-of-state business, that business must have a minimum connection within the taxing state. If a seller’s connection involves clear physical presence, they have nexus. If it is remote, it's a gray area with no consensus among states.
Affiliate Nexus & State Statutes
Some states pursue 'Affiliate Nexus,' requiring a business to register due to an affiliate company’s presence (e.g., an online entity with a sister brick-and-mortar store). Generally, every state has a statute mandating that a retailer engaged in business in the state must collect tax. Most define 'engaged in business' very broadly. We can help sort out the rules and determine whether your company has sufficient presence and recommend whether registration is required or beneficial.
What Is Physical Presence?
Physical presence is typically found if a business has a permanent presence in the state such as:
A business location (office, warehouse, store)
Resident employees working in the state
Tangible property (leased or owned) located in the state
An independent contractor acting as an agent
Other third parties acting as agents to conduct business
Regular and systematic visits by employees or agents (even if temporary)
Don't Let Nexus Catch You Off Guard
A de minimis presence may still create a Sales & Use Tax collection and filing obligation in some jurisdictions. A number of states have implemented so called “Amazon Laws” to force remote sellers to collect sales tax.
Let our experts help you navigate these complex rules and ensure you are compliant only where necessary. Our team provides expert support for sales and use tax compliance in Colorado and across the United States.
Common Questions About Diagnostic Reviews
Start Your Diagnostic Review
Identify your risks and opportunities today with a comprehensive diagnostic review from Sales Tax Colorado.