Tax exposure happens when a company has liabilities from unpaid taxes that are not recognized by tax authorities. Often, these unpaid taxes are either sales taxes or use taxes—sales taxes are taxes that are paid when items are sold, exchanged, or transferred while use taxes are taxes that are paid when an item is stored, used, or consumed. Failing to resolve this exposure can result in consequences for taxpayers, which is why it’s important for them to use the services of an accountant that is well-versed in exposure resolution for sales and use taxes.
Businesses that are dealing with tax exposure, especially when they are related to sales and use taxes, should get in touch with the Roseville sales and use tax exposure resolution accountants that work with Cook CPA Group as soon as possible. Businesses can gain control of their finances by resolving tax issues as quickly and thoroughly as possible.
Sales and Use Taxes for Roseville, CA Businesses
There are many taxes that businesses in Roseville have to deal with on a daily basis. However, sales and use taxes are usually the most involved, which makes them the most likely to be troublesome for business owners. Sales and use taxes in California are administered by the California Department of Tax and Fee Administration.
California Sales Taxes
Sales taxes are paid by customers at the time that they make a purchase. Currently, the sales tax rate in California is 7.25%, although local sales taxes and even special district taxes can also be added on. Many business owners add the sales tax onto the price that they charge a customer, which is acceptable; however, many business owners fail to pass on the tax to the state. Businesses that are based in California must pay sales taxes when the sale is made within the state; businesses that are based elsewhere but have nexus in California must also pay sales taxes.
California Use Taxes
While sales taxes are levied on the sale of merchandise, use taxes are levied on the use, storage, and/or consumption of that same merchandise. They are usually applied to things that are purchased from businesses that are located outside of California. Its purpose is to level the playing field between retailers that are based in the state that are required to collect taxes and retailers that are based outside of the state that are not.
Use taxes are either Vendor/Retailer Use Taxes or Consumer Use Taxes. Vendor/Retailer Use Taxes are put on sales that are made to customers who are based outside of California by vendors who are based inside of California. Consumer Use Taxes are imposed on consumers when the vendor doesn’t collect a sales or vendor use tax and then remitted to the jurisdiction that is collecting it.
How to Deal with Exposure Resolution in Roseville
When a Roseville, CA company’s unpaid tax liabilities remain undiscovered by tax authorities, it is known as tax exposure. Sales and use tax exposure usually happens when a company makes sales in multiple states or if they have established substantial nexus in a certain state.
Voluntary disclosure agreements are often the best way for companies to resolve tax exposure. A voluntary disclosure agreement will allow a company to certain benefits for disclosing their tax liabilities, as long as they have not registered to collect taxes in a state where they have nexus. By entering into a voluntary disclosure agreement, companies can reduce or waive the penalties that come from their tax exposure while gaining some protection from audits. They can reap these benefits and protections if they agree to disclose all of their tax information, pay their unpaid taxes, and comply with sales tax laws going forward. Voluntary disclosure agreements also limit look-back periods and can reduce or eliminate interest assessments.
Companies are qualified to enter into voluntary disclosure programs if they meet certain criteria. These criteria include doing business in California but being located outside of California, being registered with the California Department of Tax and Fee Administration, having not been previously contacted by the California Department of Tax and Fee Administration, and having failed to pay their taxes in the past because of reasonable cause.
How an Experienced Accountant Can Help You with Sales and Use Tax Exposure Resolution
Accountants can assist Roseville, CA companies with their sales and use tax exposure resolution by assessing their exposure vulnerabilities. They can also help companies enter into voluntary disclosure agreements, which will alleviate the penalties that they face for having tax liabilities if they agree to disclose all of their tax information. Another way that accountants can help companies with their exposure resolution is to help them negotiate their interest and abatements, enter into an offer in compromise, and reduce their overall penalties. Accountants can work hard to determine how sales and use tax laws apply to companies’ specific situations and circumstances and identify potential exposure vulnerabilities. Accountants are always available to assist companies with their tax planning so that they can be proactive about avoiding tax liabilities and exposures.
Get in Touch with Our Roseville Accountant for Sales and Use Tax Exposure Resolution
If your business is currently dealing with sales and use tax exposure, you are encouraged to seek the help of a knowledgeable accountant as soon as possible to help you resolve the exposure. Contact the Roseville sales and use tax exposure resolution accountants soon so you can move forward towards a healthy financial future.