Windward Tax Spotlight on David Smith
This month, our spotlight series focuses on David Smith, a 30-year veteran of the Georgia Department of Revenue and an expert on nexus and voluntary disclosure agreements. David was a tax auditor at the DOR and supervised the Voluntary Disclosure team. Today, David is the state tax advisor at Windward Tax.
1) Why should companies that did not have nexus in the past now be concerned about nexus?
There is good reason to be concerned about nexus now. Tax laws related to nexus are constantly changing. States are becoming more aggressive in tax audits and collections, including attempts to broaden the concept of nexus. More states are developing or have developed “data warehouses” and are scouring multiple data sources in order to find even the smallest footprint in a state that might trigger nexus.
2) If you suspect you have nexus, what should you do?
If you suspect that you have nexus, enlist the help of an expert to perform a comprehensive Nexus Review. States vary in their definition of nexus. A sales tax professional should be well-versed in the nexus qualifiers of multiple states and localities, as well as the process to pinpoint the actual date you obtained nexus. Calculations for risk exposure should be made, followed by a detailed game plan.
3) What is a Voluntary Disclosure Agreement and who should use them?
A Voluntary Disclosure Agreement is a process by which a business can request special treatment for past tax liabilities. Companies can only request a VDA if they have NOT been previously contacted by a state tax agency concerning sales tax exposure. Most states allow applicants to apply anonymously for VDAs. The states typically will require that the business remit any sales tax which has been actually collected, regardless of the time frame. If tax should have been collected but was not, the states often limit the look-back period to 3 to 5 years. Normally an applicant can also expect to have any penalties waived.
Hear more of David's advice about managing sales tax nexus by viewing the on-demand webinar -- Sales Tax Nexus: Tame the Elephant in the Room. This webinar, as well as other educational webinars, is available through the Windward Tax Academy portal. Get a 30-day complimentary subscription to this portal here.