Sales & Use Tax Issues

Sales & Use Tax Issues

Sales tax is a tax placed on retail sales, rentals and leases of most goods, and any taxable service. Use tax is a sales tax on purchases made outside of an individual’s state of residence for taxable items that will be stored, consumed, or used in the individual’s state of residence and on which no tax was collected in the state of purchase. Generally, when you buy an item outside of the state of North Carolina or online that is stored or consumed in North Carolina where no North Carolina state tax is paid, you will owe use tax.

Sales and Use Tax Issues

An experienced sales and use tax attorney can advise and represent individuals and businesses in a full range of sales tax and use tax matters, including:

• Responsible officer assessment issues—Determining who the responsible officer is within a business and what his or her liability is.
• Employment services—States collect a portion of withholding taxes for services related to temporarily placed employees. Sales taxes do not apply for permanently placed employees.
• Assessment of use tax— If you do not have records of your out-of-state purchases, an attorney can help you estimate your use tax liability.
• Internet purchases and taxation—Consumers and vendors can be held liable for sales taxes covering all purchases and sales.

Sales Tax Evasion

In North Carolina, any person or business that intentionally fails to make payment of legally incurred sales and use taxes is guilty of tax evasion and can be faced with incarceration and monetary fines. Examples of sales tax evasion include:

• A North Carolina retailer that collects sales tax from customers and intentionally fails to report the sales tax they collect.
• Retailers who intentionally fail to report taxable retail sales on which sales tax is due, especially in cases where actions are taken to mislead tax authorities.

Risks

State tax authorities are vigilant in investigating sales tax violations by service providers. The most common problem faced by businesses are allegations of improperly reporting sales tax, failing to remit sales and use taxes, and improperly withholding sales tax, as mentioned above.

Underreporting sales tax can occur for a number of reasons, ranging from failing to properly charge sales tax to failing to understand relevant state laws for the state in which you do business. It can also result from poor recordkeeping.

Whether you have an existing sales tax issue or are on the cusp of starting a business in a new geographic area, consider talking to a tax attorney at Dysart Willis to ensure you understand the legal requirements of use and sales tax.

Contact Us Today

Oftentimes, a taxing authority can assess a higher amount than your company actually owes. It is important to pay attention to documentation and information that you are being asked for, and a tax law attorney can help negotiate with the tax authority to arrive at the correct amount of sales or use tax owed, if any.

The tax attorneys at Dysart Willis will be your advocates in protecting you or your company from overreaching assessments, fines, and penalties while helping you maintain compliance with state laws. Contact Dysart Willis today to schedule a consultation with an experienced sales and use tax lawyer.