Sales Tax Overpayments and Refunds
Sales tax impacts one of the most important assets a business has–cash flow. Without good cash flow, your business could be in trouble over paying bills and cutting paychecks, even if the money is around but just not available. When your company doesn’t have the needed amounts available to draw on, your business suffers. Sales tax is one area that few business people think about when it comes to cash flow problems but it is an area all accounting and tax managers should focus on. Good sales tax management helps ensure that cash is flowing well through your business and is available when you need it, instead of tied up in the sales tax process.
It is likely that the biggest source of unnecessary sales tax money tie-ups is overpayments. If your business has overpaid on sales tax because your calculations were incorrect, that’s money your business could use — but now it has vanished. It’s not uncommon for states to stay silent on overpayments and many of them consider it the business’s fault for bad management. Instead of turning over payments to businesses, states consider that money theirs. Ohio’s Tax Commissioner, Joe Testa recently spoke out against these sorts of practices, saying “It just made my blood boil when, not long after taking office, we learned that the tax department was keeping a secret from businesses that they had overpaid their taxes and then was then playing games about returning their money.”
The press release also outlined his new plans to help businesses understand their errors in overpayments and correctly apply for the amount due to them. Past practices forced the businesses to request a refund and they only received the amount requested, even if it was well less than the amount overpaid. Although Ohio is reforming practices, the majority of states are “playing games,” to use Testa’s phrasing. If you’re not double-checking your sales tax payments for correct calculations, there’s a possibility that your cash flow is more strapped than it should be and your business is suffering because of sales tax overpayments.
Checking sales tax and going back through records can be a real pain and time-consuming, however, and that’s the reason why few businesses ever double-check for overpayments. States are taking advantage of this fact and keeping your money without any rights to it. Instead of falling into the trap of overpaying and never seeing a dime back, look for a solution to help you check for overpayments. Our software quickly audits your past sales tax filing and payments to show you where mistakes lie and takes you through the process to apply for a refund.