Use Tax Reporting Simplified

Complying with use taxes is time consuming and often an inaccurate (in the case of audit liability or refunds) process. Training accounts payable and purchasing personnel to understand use tax decisions and apply each states’ use tax laws is an even more difficult challenge.

Most businesses are not attentive to use tax compliance nor plan for audit defense. Hall & Company offers a “simplified” approach to manage your use tax compliance function- “Use Tax Reporting Simplified” ,or UTRS.

The benefits of UTRS are:

• Control over use tax compliance process

• Cooperative relationship with the Department of Revenue

• Reduction or elimination of state audit costs arising from assessment penalties, interest and personnel costs.

• Increase cash flow from lower monthly compliance costs

• Accuracy in reported tax amounts

• Reduction or elimination of the need for a refund study

•            Peace of mind for closing out unaudited periods (i.e., managed or certified audit) and the receipt of potential refunds, if any.

Through the UTRS approach your company enters into an agreement with a state Department of Revenue to begin remitting use tax on purchases using an effective use tax compliance percentage, which we assist with calculating.

An effective use tax compliance percentage is computed by reviewing your company’s compliance history to determine the appropriate amount of use tax that should have been paid. The review accounts for tax paid, tax underpaid and tax overpaid to arrive at your company’s appropriate use tax percentage.

Once calculated, the agreed-upon use tax percentage will be used over the term of the agreement. Usually, the percentage will be multiplied by monthly gross purchases to arrive at taxable purchases. The appropriate use tax rates will then be applied to arrive at use tax due for the month.

UTRS eliminates the need for accounts payable clerks and or purchasing clerks to make tax decisions.

You should consider the UTRS approach if your company:

• Currently utilizes a direct payment permit

• Has a large volume of purchase transactions

• Has both taxable and exempt purchases

• Has significant turnover in purchasing/accounts payable personnel

• Has had substantial audit liabilities from use tax transactions

• Has had substantial refund recoveries from use tax transactions

Hall & Company tax professionals are ready to help ease your use tax burden.