Let me start by saying – I love use tax! I know, it’s crazy, but not all transaction tax people are sane. When I ask prospective customers about sales tax, they all know what that is, and that is the reason they are talking to us in the first place. However, when I ask prospective customers about use tax, I usually hear the sound of crickets chirping.
Everyone I talk to has a sales tax need, or at least they think they do. On the flip side, I would say less than 10% of the companies I work with know they have a use tax need as well. When I ask people "how do you handle use tax today?" they often tell me "we don’t have use tax". Really? I think most taxing jurisdictions would beg to differ.
Most taxing jurisdictions find most of their audit errors in use tax rather than sales tax. For example, approximately 2/3 of the audit dollars for the City of Denver come from use tax. That’s a lot, and it is consistent across the board. Taxing jurisdictions will review sales tax transactions, but their primary focus is on use tax transactions. That is where the auditors will spend a lot of time – digging, questioning, and looking for those hidden treasures.
What can you do to ensure you are doing things correctly? You should build a solid use tax process, just like you would build a sales tax solution. How do you do that? Well, you could start by checking us out. Use tax is just one of the things we do best. You can contact us at firstname.lastname@example.org or www.sabrix.com.