Most tax and accounting firms don’t have a dedicated Sales Tax Department. So why does Orbiss have one? And what's so great about it?
We’re glad you asked!
To illustrate the importance of having sales tax expertise, let’s consider the humble croissant. Did you know that in New York, a simple pastry sale can be taxed in no less than four different ways depending on the specifics of the sale? It may appear harmless, but don’t let the croissant fool you. This petit French treat can wreak havoc on your business if your sales aren’t properly managed.
Let's dive into the perplexing world of croissant taxation - here are some of the different sales tax possibilities:
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Frozen in a supermarket: The croissant is tax-free. Génial!
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Fresh from a bakery: Also tax-free.
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Reheated in a bakery: Now it's "prepared food" and subject to sales tax.
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Sold in bulk for resale: Complex tax implications galore!
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“How can this be?” you may ask, “Four different tax implications? It’s just bread!”
Au contraire mon frère. Alas, sales tax is rarely that simple.
It all depends on the context of the sale. The croissant ambiguity remittance basis (CARB) varies dramatically depending on where it’s been sold, who it’s been sold to, and more. Generally, sales tax is determined by three main factors:
- Is the customer taxable?
- Is the product or service taxable?
- Do you have sales tax nexus in the relevant location?
“Oh là là!” you say, “Enough! Take the croissants out of production and be done with it!” But buckle in, we’re just getting started...
Croissants are complicated enough, but what about the taxability of digital products and services? How are SaaS sales taxed, for example?
The answer is a sales tax expert's favorite phrase: it depends.
Every state has different laws, rates, and regulations when it comes to sales tax. Interstate sales add another layer of complexity - some states even have reciprocal agreements with one another. If your business operates in multiple locations, you may have a web of conflicting regulations to navigate. Even with the best intentions, maintaining tax compliance is a highly complex undertaking.
And yet, determining your sales tax liability is crucial. Penalties for failing to pay, file, or report can lead to severe consequences. These include hefty fines and potential criminal charges. Underpaying sales tax means your business will ultimately have to make up the difference - a potentially crippling financial burden. That’s why it is very very very very important to make sure your business is aware of its potential sales tax liabilities from day one.
There is a lot to consider when it comes to sales tax. You always need to balance the revolving tax implications of your product, customers, and nexus - not to mention local, state, and federal regulations that can change daily. And the onus to comply falls on the business itself, not its clients or regulators.
That’s where our Sales Tax Department comes in. Our team is dedicated to identifying your potential liabilities, tracking legal changes, and strategizing for the long-term success of your business. By working proactively, we’ll keep you in compliance from your very first bake sale. While some firms can assist with sales tax, Orbiss has an entire team that specializes in sales tax. We’re here to manage the technicalities so you can focus on what matters most: perfecting that secret croissant recipe.
With all that in mind, well, do you really want an accounting firm
without a Sales Tax Department?
