States are getting smarter when it comes to finding sales tax discrepancies — in fact, we’ve been working with some state entities to help them improve. States are on the lookout for what we’d call “strange” behavior like a business being registered but not reporting sales tax. In the past, departments didn’t communicate well enough for the people in charge of the filing to realize that there had been a registration, and vice versa. Now, states are communicating inter-departmentally to find people skirting the law. Criss-crossing lines of communication among departments will turn up patterns of errors and evasions. It’s good for the states, but it can be a problem for anyone who has been careless about sales tax.
As states increase communication between departments and use technology like ours, it’s more likely they’ll catch those trying to evade sales tax or companies who are making mistakes on their sales tax returns. If you’re doing everything right, you have nothing to worry about. If you know you’re not, you need to start mending your ways and focusing on getting sales tax right every time. But what about the people in the middle—those who are trying to do everything right but don’t know if they are? There are a few things you should do to make sure you won’t get caught in the sales tax crisscross. Make sure all your registrations and paperwork with every state where you have nexus are in order. Even if you have been in business for years, it is a good idea to go over your business registration forms and ensure everything is still in order.
Some states require you to renew your registration every so often, too, so check to make sure you didn’t lapse by accident. Review your current sales tax processes for holes and start the double verification process for your sales tax calculations. SalesTaxDataLINK automates checking for errors, so upgrading your current processes to include our software is a sensible step. Start working to mend your past sales tax mistakes by doing self-audits of past returns. It’s not an impossible task if you have the right tools. When states are looking more closely at sales tax returns, they’re bound to look back through earlier records. Don’t know where to start? We can help. Contact us today to discuss your needs.