State Tax Audits Are on the Rise

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Throughout the pandemic, many state & local taxing jurisdictions put a hold on audit enforcement actions for various reasons, including allowing struggling businesses to focus on keeping their doors open and employees paid.

While the financial effects of the pandemic are still being felt by many, there is a sense that the business world is turning the corner and returning to nearly “normal” operating conditions. As we begin to operate closer to full capacity, taxing jurisdictions are also settling back into normal operating procedures, which includes lifting the hold on audits.

In the first few months of 2022, we’ve noticed a significant spike in audit activity across multiple tax types including sales & use, personal property and unclaimed property. The trends we’re seeing don’t appear to be isolated to particular states or regions.

With the taxing jurisdictions ramping up audit enforcement actions, now is the time to make sure your indirect tax compliance function isn’t exposing your business to material financial risk.

If you’re under audit or recently received an audit notice, call us.

You need an advocate to ensure any audit findings are minimized to the greatest extent possible.

Do you have concerns about whether your remote workforce is exposing you to additional reporting obligations? Call us.

We can help evaluate your risk and provide practical solutions for mitigating this risk.

If you are you concerned about economic nexus, call us.

The Wayfair ruling by the Supreme Court established that remote sellers may have a sales tax collection responsibility if they meet certain economic thresholds. The Court’s decision was rendered in 2018 and the states rolled out their own threshold criteria over the next year. Now that ample time has lapsed for companies to adopt the Wayfair reporting requirements, the states are focusing more attention on companies that aren’t currently reporting.

Our State & Local Tax Practice specializes in helping clients across the country manage and mitigate risks around sales & use, personal property and real property taxes, as well as unclaimed property reporting.

If you have questions, need assistance or just want to talk about our State & Local Tax services, please contact Mike Ginski.