Will's Whiteboard: What Accountants Don't Know About Sales Tax
How much does your accountant know about sales tax? Maybe not as much as you think.
A startling number of accounting professionals botched basic questions about sales tax, from online tax to nexus to audit risk (according to a recent Wakefield survey*).
We’re not knocking accountants - many have a solid knowledge of sales tax rules. But the survey results highlight how sales tax laws confuse and complicate life for even the savviest professionals.
How badly did accountants do? Watch the video to find out.
*400 accounting professionals surveyed.
Hi. Welcome to Will's Whiteboard, I'm Will. Recently, Wakefield surveyed 400 accounting professionals and found some really interesting results about what they believe to be true about sales tax. That's the subject of today's video.
The results of the survey are kind of a good news, bad news situation. Let's start with the good news: 96% of accounting professionals surveyed said that they were confident in the way that their company handled sales tax. Ready for the bad news? A lot of them got questions, basic questions, wrong about sales tax. And in fact only 2% got a basic question about federal sales tax legislation right.
Let's look at some other stats. I'm going to read you some questions from the Wakefield survey and you see if you can guess them right. Here's question #1: True or false, once you're audited, your company is at risk to be audited again? 58% of those surveyed said "False, you're not at risk to be audited again." Well the answer is "True," if auditors come in, they find a lot of sales tax errors, they're more likely to come back and audit you in the future.
Question #2: Hiring new employees that work from home could mean you have nexus in that state, true? 62% said "False." Here again, this is true. If you hire new employees in a state, you could very well have nexus. Nexus being the relationship between your business and the taxing jurisdiction; that means you have to collect and remit sales tax.
Here's another question: Sending a sales representative into a different means you could have nexus in that state. A good majority, 63% of those surveyed, said "False, it doesn't mean you could have nexus in that state." The answer again is "True." Reps in a state could equal nexus for your business.
Now, we're not slamming accounting professionals for getting these questions about sales tax wrong. Sales tax is incredibly complex and can be stressful to manage. In fact, 44% of those surveyed said that going through the process of contesting an audit was more stressful than getting a divorce, or would be more stressful than getting a divorce. Hopefully this helps to clear up some misconceptions about sales tax for you. Thanks very much. I'll see you next time.
The 2021 sales tax changes report: midyear update
Your guide to navigating the complicated world of tax compliance and preparing for the future
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