In Part 2 of the Aprio SALTovation FAQ series, Meredith Smith, Stacey Roberts, and Judy Vorndran tackle the real-life costs of sales tax noncompliance.
The team shares real examples –including a wedding gown shopping trip that sparked an audit in Washington state to liens on personal accounts–on non-compliance issues. They also discuss states’ level of authority when/if you fall behind, when to register, and why exemption certificates deserve more attention than they get.
Key Takeaways:
- Why noncompliance is expensive: Washington’s statutory penalty can add up to 39%, and states are moving faster than ever to liens, jeopardy assessments, and frozen bank accounts.
- Physical presence still controls. Trade shows, conferences, traveling sales reps, and inventory can trigger nexus before any economic threshold is crossed.
- Getting a sales tax license is the easy part. The harder questions are who files the returns, who reconciles the accrual, and who monitors ongoing nexus.
- Exemption certificates are not one-size-fits-all. A business license is not a resale certificate, and a 501(c)(3) letter does not automatically exempt a sale.
- Successor liability follows the assets. Sales tax exposure transfers in both stock and asset deals, and undetected liabilities erode purchase price at closing.
- Proactive SALT advice is available. If companies cannot justify a full-time in-house specialist, outside SALT advisors can help companies mitigate risk.
Chapters:
00:00 – Intro and Welcome Back
01:46 – The True Cost of Noncompliance: A Washington B&O Cautionary Tale
05:59 – Liens, Jeopardy Assessments, and How Fast States Move
12:05 – When Do You Actually Need a Sales Tax License?
17:10 – Physical Presence vs. Economic Nexus
20:57 – Trade Shows, Live Events, and Marketplace Platforms
23:38 – Exemption Certificates: What Counts and What Doesn’t
29:59 – Selling Your Business: Successor Liability and M&A Exposure
33:33 – Why You Need SALT Advice
Resources:
- Aprio State and Local Tax Consulting: https://www.aprio.com/business-tax/state-local-tax-salt-consulting/
- Washington Department of Revenue (B&O Tax): https://dor.wa.gov/taxes-rates/business-occupation-tax
- South Dakota v. Wayfair, Inc.: https://www.supremecourt.gov/opinions/17pdf/17-494_j4el.pdf
- Colorado Retail Delivery Fee: https://tax.colorado.gov/retail-delivery-fee
- Eventbrite: https://www.eventbrite.com/
- Multistate Tax Commission Uniform Sales and Use Tax Certificate: https://www.mtc.gov/resources/uniform-sales-use-tax-exemption-certificate
Connect:
- Website: https://www.aprio.com/business-tax/state-local-tax-salt-consulting/
- Meredith Smith on LinkedIn: https://www.linkedin.com/in/meredith-smith-047aa13/
- Stacey (Roberts) Chamberlain on LinkedIn: https://www.linkedin.com/in/stacey-chamberlain-90072b5/
- Judy Vorndran on LinkedIn: https://www.linkedin.com/in/judyvorndran/
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State and local taxes—simplified. As your single-source provider for SALT solutions, Aprio can help streamline all your state and local tax compliance needs:
Disclaimer: The views, thoughts, and opinions expressed on the SALTovation podcast, including that of all participants, are the speaker’s own and do not represent the views, thoughts, and opinions of Aprio or any of its affiliates. The material and information presented on the podcast is for general information purposes only. The “Aprio” name and all forms and abbreviations are the property of its owner and its use does not imply endorsement of or opposition to any specific product or service.