Sales Tax Exposure and Year-End Business Tax Planning

Hello all, and welcome to the twelfth installation of our bi-weekly publications. Today’s topics include sales tax compliance, year-end planning for businesses, as well as several updates and reminders.

Sales Tax Exposure
In today’s growing economy, it has become much easier for businesses to reach customers all over the country and in many cases all over the world. This can create a number of complex tax issues, as it could create “nexus” in multiple taxing jurisdictions. Nexus is the term used to describe a situation where a business has a connection with a particular taxing authority (e.g. a state) that requires it to collect or pay tax. Due to a Supreme Court Ruling from two years ago (South Dakota v. Wayfair, Inc.), many jurisdictions have become more aggressive with implementing their nexus policies with respect to sales tax. As a result, business owners need to be addressing a number of issues including, but not limited to:

  • Varying nexus policies and thresholds across multiple jurisdictions (each state is different)
  • Response to nexus questionnaires
  • Cost/benefit of disputing assessments
  • Use of inventory and fulfillment services (i.e. Amazon)
  • Filing requirements and mitigation of exposure

For more detailed information on sales tax nexus click here to read an article in the Journal of Accountancy. Contact us if you have questions on your specific facts and circumstances.

Business Year-End Tax Planning
As we move into the fall months and business owners have a better picture of how 2020 will shake out, please remember that it is never too early to start thinking about year-end tax planning for your business. There are ways to defer or permanently save tax dollars, but you should evaluate any option carefully before moving forward. Below are just a few ideas to consider:

  • Purchase of property and equipment
  • Year-end bonuses
  • Retirement plan contributions
  • Choice of entity
  • Accounting method changes

Updates and Reminders

October 15th Deadline – Now that the September 15th deadline is behind us, we just wanted to send a reminder that the extended due date for C-corporation returns and individual returns is October 15th. Please don’t hesitate to reach out to us with any questions.

2020-2021 Per Diem Rates – The IRS has recently issued the 2020-2021 per diem rates. The rates are effective from October 1, 2020 through September 30, 2021. You can read more about them here.

Charitable Giving – Just a quick reminder that there is now a deduction available for up to $300 of charitable contributions, even if you do not itemize your deductions.

Your Bertz, Hess & Co. tax and business advisor will be happy to discuss any of these topics.


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