Although it seems like it just happened the impact of the Wayfair decision has spread throughout the land. Missouri, as the last holdout, is implementing economic nexus standards effective at the beginning of 2023.
Although the economic thresholds of sales by dollar and quantity vary by state it is safe to say that a considerable number of taxpayers are now subject to transactional tax compliance and may not even be aware of it. The implementation of managing these taxes, and past liabilities, creates complexities that many companies historically have avoided through the lack of physical presence. And even international sellers may have a responsibility to comply.
A frequent question companies ask is how to measure the risk of non-compliance? That answer starts by analyzing the timing economic nexus began in each respective state, what that state's threshold for economic nexus is, whether any other nexus factors exist, and what the taxpayer's sales subject to transactional tax are since that nexus began.
Since a lack of compliance avoids creating statutory limitation on the lookback an audit can encompass most taxpayers are now only limited by the timing the laws were changed in each state. As time passes that will less of a consideration and the financial risks will grow dramatically. Add penalties and interest and the cost of non-compliance becomes overwhelming for smaller companies.
The burden of enforcing transactional tax compliance falls to the jurisdiction. As they find and pursue non-compliance audits occur, followed by assessments, liens and other legal pursuits of outstanding liabilities. If you have concerns on this front or would like to simply discuss what is happening just let us know.