2023 Marcum Year-End Tax Guide

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THE MARCUM YEAR-END TAX GUIDE 2023

THE HIDDEN COSTS OF NON-COMPLIANCE: THE IMPORTANCE OF SALES & USE TAX BY ANTHONY KWAN AND MARK THOMAS

In today’s landscape of ever-evolving state and local tax laws, ensuring tax compliance is increasingly complex. The growth of companies and their offerings can lead to overlooked sales and use tax liabilities. The 2018 South Dakota v. Wayfair Supreme Court decision has further complicated matters, allowing states to tax e-commerce and remote sales regardless of a company’s physical presence. Many businesses that previously had no obligation to file sales and use tax returns in states where they had no physical presence are now caught off guard and have started filing returns.

Sales & use tax compliance is critical for several reasons: • Businesses are legally obligated to collect and remit sales tax on taxable goods and services, with non-compliance leading to penalties. • Complying helps businesses maintain a positive image and credibility among customers, suppliers, and other stakeholders. • Non-compliance can lead to costly financial consequences

• Sales tax is a vital revenue source for government services like education and infrastructure. • Accurate sales tax compliance reduces the risk of being audited and costs associated with tax audits. • Efficient tax processes ensure businesses have accurate records, proper documentation,

THE IMPORTANCE OF AUTOMATION AND SOFTWARE IN COMPLIANCE As businesses comply with various state and local filing obligations related to sales and use tax, the need to utilize software to automate the different tax calculation and filing processes becomes necessary. Whether a small or large business is rationalizing to invest in tax calculation software, the reasons for budgeting resources for this can procure various long-term benefits, such as: • Accurate sales tax calculations across different jurisdictions. • Time savings by automating

and streamlined reporting systems. This simplifies and improves overall business operations.

that significantly strain a company’s resources and profitability.

Sales tax compliance is essential for businesses as it ensures legal adherence, protects reputation, avoids financial consequences, supports fair competition, contributes to government revenue, minimizes audit risks, and simplifies operations.

• When all businesses collect and remit sales tax, it prevents others from gaining an unfair advantage by not charging tax, resulting in a level playing field.

tax processes for various products and locations.