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Keith Fleury  302.225.5146 Don Gillespie  301.296.7894 Kamal Adeni  610.409.1661 Scott Bricker  302-225-5153 Nuts & Bolts about Sales and Use Tax, Everything you wanted to know but (maybe) were smart enough not to ask. April 29, 2010
Agenda ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Brief Fact #1 The IRS tax code itself fills 2,840 pages, and contains about 2.8 million words. In comparison, the Bible has 1,340 pages and about 0.8 million words.
Who Said What About  Tax Complexity “ It’s time for a complete overhaul of our income taxes……I feel it’s a disgrace to the human race.” Future President Jimmy Carter campaigning in 1976
Who Said What About  Tax Complexity “ The hardest thing in the world to understand is the income tax.” Albert Einstein, as quoted in Crown’s Book of Political Quotations.
Who Said What About  Tax Complexity “  “ Every tax bill …is the culmination of strident debate and…compromise.  This can lead to mind-numbing complexity as the different philosophies, fight for a bill that represents their respective agendas.  To pass a bill, the competing political factions split the differences and come up with Frankenstein, leaving taxpayers with the impossible task of sorting it all out.” Senator William Roth
Who Said What About  Tax Complexity “  Taxation of business is even more complicated (than   individual taxation).  The average Fortune 500 company spends over $2 million per year on tax matters; many of the largest corporations spend over $10 million per year,…” Tax Compliance Expert, Joel Slemrod
Who   Said What About  Tax Complexity “  No one should ever see how law or sausage is made.” Chancellor Otto von Bismarck
What is included in the Sales & Use Tax function? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Sales & Use Tax function ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Sales & Use Tax function ,[object Object],[object Object],[object Object],[object Object]
Sales & Use Tax function ,[object Object],[object Object],[object Object],[object Object]
Sales & Use Tax function ,[object Object],[object Object],[object Object],[object Object],[object Object]
Sales & Use Tax function ,[object Object],[object Object],[object Object]
Sales & Use Tax Function ,[object Object],[object Object],[object Object]
Sales & Use Tax Function ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
States Imposing sales tax  ,[object Object],[object Object]
States Imposing Sales Tax ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
State Tax Collections ,[object Object],[object Object]
2009 Select State Tax Collection (Percentage of All States Total)      10.3 5.6 34.4 31.9 1.8 U.S. Total 49.1 -- -- 35.8 10.4 Wyoming 6.2 4.3 42.9 28.2 0.9 Wisconsin 9.2 -- -- 61.2 10.9 Washington 6.9 3.9 55.1 20.8 0.2 Virginia 22.7 -- -- 51.6 -- Texas 13.4 7.8 2.1 60.9 -- Tennessee 15.1 3.7 -- 56.7 -- South Dakota 6.8 3.1 32.9 40.7 0.1 South Carolina 12.1 5.8 31.8 28.3 0.2 Pennsylvania 3.1 4.3 48.5 33.0 0.5 Georgia 10.2 5.7 -- 60.2 0.0 Florida 43.2 7.4 32.5 -- -- Delaware 5.3 3.4 49.3 25.4 -- Connecticut 8.3 9.4 43.9 28.7 2.3 California 4.2 5.3 17.4 50.4 7.4 Arizona 80.1 12.8 -- -- 2.2 Alaska 7.6 5.9 32.1 24.9 3.8 Alabama              Other Corporate Income Individual Income Sales Tax Property  
 
Average Sales Tax Rates ,[object Object],[object Object],[object Object],[object Object],[object Object]
Definitions  ,[object Object],[object Object],[object Object],[object Object]
Nexus  ,[object Object],[object Object],[object Object],[object Object]
Nexus ,[object Object]
Nexus Creating Activities   ,[object Object],[object Object],[object Object],[object Object],[object Object]
Substantial Nexus ,[object Object],[object Object]
Agency Nexus ,[object Object]
Affiliate Nexus  ,[object Object]
Economic Nexus  ,[object Object]
Court Cases Debating Nexus ,[object Object],[object Object]
Case Study ,[object Object]
Nexus Political Issues Are foreign companies at a higher risk of scrutiny?
Sales Tax Exemption Categories ,[object Object],[object Object],[object Object],[object Object]
Sales Tax Exemptions ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Compliance / Automation (ADP) ,[object Object]
Audits and Appeals Process  ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
THE AUDITOR’S TARGET- YOU
Fight Or Flight ?
Fight Or Flight?
Fight Or Flight?
Fight Or Flight? ,[object Object]
Fight or Flight? ,[object Object]
THE STATE TAX AUDITORS (“We’re from the Department Of Revenue, and We’re Here to Help”)  Yeah Right  !
Is Vat in Our Future? ,[object Object],[object Object]
VAT
VAT
VAT? ,[object Object],[object Object]
VAT? ,[object Object],[object Object],[object Object]
Fun Stuff ( Strange Sales Tax laws) ,[object Object]
Fun Stuff ( Strange Sales Tax laws) ,[object Object],[object Object],[object Object]
Fun Stuff ( Strange Sales Tax laws) In Iowa Milky Way is not taxable because it contains flour and is defined as Candy But  MILKY WAY® MIDNIGHT does not contain flour is subject to tax
Fun Stuff ( Strange Sales Tax laws) ,[object Object],[object Object]
Other Strange Ordinances  ,[object Object],[object Object]
Other Strange Ordinances ,[object Object],[object Object],[object Object],[object Object]
Other Strange Ordinances ,[object Object],[object Object],[object Object],[object Object]
Other Strange Ordinances ,[object Object],[object Object],[object Object],[object Object]
That’s All Folks!!!
Any  questions?
Thank You for coming! For additional information please contact us at: Keith Fleury (302)225-5146 Gunnip & Company  LLP [email_address] Little Falls Centre Two 2751 Centerville Drive  Scott W. Bricker (302-225-5153)  Wilmington, DE 19808  [email_address] Kamal Adeni (610)409-1661 [email_address]

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Kamal Adeni - Nuts and Bolts Of Sales Tax

  • 1. Keith Fleury 302.225.5146 Don Gillespie 301.296.7894 Kamal Adeni 610.409.1661 Scott Bricker 302-225-5153 Nuts & Bolts about Sales and Use Tax, Everything you wanted to know but (maybe) were smart enough not to ask. April 29, 2010
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  • 3. Brief Fact #1 The IRS tax code itself fills 2,840 pages, and contains about 2.8 million words. In comparison, the Bible has 1,340 pages and about 0.8 million words.
  • 4. Who Said What About Tax Complexity “ It’s time for a complete overhaul of our income taxes……I feel it’s a disgrace to the human race.” Future President Jimmy Carter campaigning in 1976
  • 5. Who Said What About Tax Complexity “ The hardest thing in the world to understand is the income tax.” Albert Einstein, as quoted in Crown’s Book of Political Quotations.
  • 6. Who Said What About Tax Complexity “ “ Every tax bill …is the culmination of strident debate and…compromise. This can lead to mind-numbing complexity as the different philosophies, fight for a bill that represents their respective agendas. To pass a bill, the competing political factions split the differences and come up with Frankenstein, leaving taxpayers with the impossible task of sorting it all out.” Senator William Roth
  • 7. Who Said What About Tax Complexity “ Taxation of business is even more complicated (than individual taxation). The average Fortune 500 company spends over $2 million per year on tax matters; many of the largest corporations spend over $10 million per year,…” Tax Compliance Expert, Joel Slemrod
  • 8. Who Said What About Tax Complexity “ No one should ever see how law or sausage is made.” Chancellor Otto von Bismarck
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  • 20. 2009 Select State Tax Collection (Percentage of All States Total)      10.3 5.6 34.4 31.9 1.8 U.S. Total 49.1 -- -- 35.8 10.4 Wyoming 6.2 4.3 42.9 28.2 0.9 Wisconsin 9.2 -- -- 61.2 10.9 Washington 6.9 3.9 55.1 20.8 0.2 Virginia 22.7 -- -- 51.6 -- Texas 13.4 7.8 2.1 60.9 -- Tennessee 15.1 3.7 -- 56.7 -- South Dakota 6.8 3.1 32.9 40.7 0.1 South Carolina 12.1 5.8 31.8 28.3 0.2 Pennsylvania 3.1 4.3 48.5 33.0 0.5 Georgia 10.2 5.7 -- 60.2 0.0 Florida 43.2 7.4 32.5 -- -- Delaware 5.3 3.4 49.3 25.4 -- Connecticut 8.3 9.4 43.9 28.7 2.3 California 4.2 5.3 17.4 50.4 7.4 Arizona 80.1 12.8 -- -- 2.2 Alaska 7.6 5.9 32.1 24.9 3.8 Alabama             Other Corporate Income Individual Income Sales Tax Property  
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  • 33. Nexus Political Issues Are foreign companies at a higher risk of scrutiny?
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  • 44. THE STATE TAX AUDITORS (“We’re from the Department Of Revenue, and We’re Here to Help”) Yeah Right !
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  • 46. VAT
  • 47. VAT
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  • 52. Fun Stuff ( Strange Sales Tax laws) In Iowa Milky Way is not taxable because it contains flour and is defined as Candy But MILKY WAY® MIDNIGHT does not contain flour is subject to tax
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  • 60. Thank You for coming! For additional information please contact us at: Keith Fleury (302)225-5146 Gunnip & Company LLP [email_address] Little Falls Centre Two 2751 Centerville Drive Scott W. Bricker (302-225-5153) Wilmington, DE 19808 [email_address] Kamal Adeni (610)409-1661 [email_address]