We are thrilled to announce that Prestige Accounting Services Group (previously Prestige Wealth Accounting Group) has joined forces with Bacchetta & Company in an exciting new partnership!
Small Businesses: Here's How the U.S. Supreme Court Wayfair Decision Affects You
If you are a small business owner, chances are good you’re paying more attention to your accounts receivables and deliverables than to a three-year-old Supreme Court decision. But knowing what happened in the Wayfair decision on June 21st of 2018 is important if you do a significant amount of business in states other than where you have a physical presence.
The Wayfair decision reversed the earlier “Quill” decision made back in 1992, and in doing so it forever changed the tax liabilities of businesses. The Quill case established that businesses were not required to collect or remit sales or sellers use taxes for states in which they lacked a substantial physical presence. But the “burdensome” administrative processes that were eliminated with that decision became the law of the land with the Wayfair decision, which established economic nexus for the state of South Dakota as either 200 transactions shipped to state residents or companies per year, or $100,000. Once that threshold is reached, states can require out-of-state companies to collect and remit sales and use taxes from their customers.
Compliance with these requirements is no small thing, and the earlier court decision was correct in referring to it as “burdensome.” But failing to comply has very real consequences in the form of back taxes and penalties. The solution is automation, almost by necessity: Without that kind of help, organizations would need at least one employee dedicated to nothing but managing and tracking sales volumes for each state as well as the various local and state regulations.
To get an idea of exactly how complex the tax could be, consider this: There are approximately 10,000 different tax jurisdictions in the United States, and identifying all of them goes beyond anything as simple as zip code, county, or city borders. Though it would be nice to think that everybody adhered to standard taxability rules as is the case for SST member states, the fact is that each jurisdiction can have its own rules regarding what does and does not get taxed. Not only does this apply to product categories like clothing, food, or luxury items, but also to services such as shipping and handling or product usage. Each rule needs to be identified and adhered to, or risk fines and penalties.
In addition to learning the rules and tax thresholds for nexus for each state, compliance requires adhering to the process that each state imposes. These are usually coordinated via state tax portals, meaning that sellers will need to have this information easily at hand – for as many as 50 states. And sellers will be responsible for tracking when tax requirements change, for every jurisdiction.
Though some states offer resale exemption certificates, following the processes required to administer those certificates has turned out to be a bridge too far for many companies. Much of this is due to the fact that – as is true with other aspects of compliance – the certificates and rules for certificate renewals have to be collected and learned for each state and is an additional burden. But failure to properly fill the certificates out can lead to them being taxed on that revenue, and lead to penalties and interest being imposed if those taxes are not properly collected.
Though following the rules represents an enormous headache and the need to invest time and money, doing so is preferable to being audited and penalized. By creating a strategy for dealing with these rules, you can not only eliminate your risk of non-compliance but also have a plan in place in case you do receive an audit letter. We strongly encourage you to contact us as soon as you receive an audit letter and do so before providing any response or submitting any information to a regional tax agency. We will be able to provide you with the information you need about how to best manage the situation.
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Get to Know Prestige Accounting Services Group (previously Prestige Wealth Accounting Group)
Offices in Flemington, NJ and Califon, NJ
Our Mission: At Prestige Accounting Services Group (previously Prestige Wealth Accounting Group), we are on a mission to redefine the tax experience for individuals and small businesses. With a focus on personalized service, strategic planning, and expert guidance, we aim to empower our clients to succeed financially with confidence and ease.
Expertise in Action: With a wealth of experience and a team of dedicated professionals, we specialize in individual and small business tax preparation. While we excel in all areas of taxation, our passion lies in serving the unique needs of small business owners in New Jersey. We understand that small business taxation requires specialized knowledge and attention to detail, which is why we go above and beyond to ensure our clients receive the guidance and support they deserve.
Tailored Solutions for Every Client: Whether you're a high-net-worth individual seeking comprehensive tax planning or a small business owner in need of accounting and bookkeeping assistance, we have the expertise to meet your needs. Our team takes the time to understand your specific situation and develop customized solutions that align with your goals and objectives.
Why Choose Us?: What sets us apart from other New Jersey tax firms is our commitment to excellence and innovation in the field of taxation. We don't just prepare tax returns; we provide strategic insights, proactive planning, and actionable advice to help our clients achieve their financial goals. With a team of two CPAs, an EA, and an ERO, we have the expertise and resources to deliver exceptional service and results.
Your Success is Our Priority: At Prestige Accounting Services Group (previously Prestige Wealth Accounting Group), we measure our success by the success of our clients. We are dedicated to building long-lasting relationships, providing unparalleled service, and helping our clients thrive in today's ever-changing tax landscape.
We can't wait for you to experience the Prestige Accounting Services Group (previously Prestige Wealth Accounting Group) difference.
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