IRVINE, Calif., June 22, 2018 /PRNewswire/ -- In a 5-4 vote on
June 21, 2018, the United States
Supreme Court narrowly ruled in favor of letting states collect
sales tax from online retailers. Prior to the ruling,
South Dakota v. Wayfair, Inc.,
et al. (2018), it was necessary to establish a physical
presence in a state before requiring businesses to collect and
remit sales tax. Proponents say the ruling will help state
governments increase revenues, but opponents argue that consumers
and online retailers will be harmed, particularly small merchants
like sole proprietors.
Continuing, Justice Kennedy noted
potential shortcomings in the former system: a product of Quill
Corporation v. North Dakota
(1992) and National Bellas Hess v. Department of Revenue
(1967), which stood as precedent for decades – until Thursday
morning. The precedents established by these cases, Kennedy wrote,
effectively made "a judicially created tax shelter" – that is, a
strategy to minimize tax liabilities – "for businesses that decide
to limit their physical presence and still sell their goods and
services to a state's consumers." Indicating that small businesses
– upon which Justice Roberts warned
the "burden [would] fall disproportionately" – could "seek relief"
on a case-by-case basis.
The American Academy of Attorney-Certified Public Accountants
(AAA-CPA) has already cautioned that internet retailers will become
liable "for every mistake and missing piece of documentation." In
other words, tax agencies like the California Department of Tax and
Fee Administration, (formerly known as the BOE) are going to step
up enforcement measures. Translation? More audits, more fines, and
more businesses in trouble with the law. If you're worried that
your business will be chosen for multiple sales tax audits due to
noncompliance, it may be wise to consider programs like the
California Voluntary Disclosure Program, which could limit the
penalties you face and offers hope for those caught in the
crosshairs. If your business participates in the program, the CDTFA
will (1) shorten the length of time for assessing tax against you,
and (2) waive various penalties. However, only "qualified entities"
that meet specific criteria are eligible to participate. For
example, the entity will be disqualified if it has ever been "the
subject of an inquiry" (audited by the CDTFA). See full
version of article here.
CONTACT: Dave Klasing,
dave@taxesqcpa.net, https://klasing-associates.com/
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