You do business in Minnesota or Wisconsin, or both. In today’s business environment, the big buzzword is growth. If you aren’t growing, your business is dying. At least that’s the admonition from some business experts.
However, with every step forward that a company takes, there are risks that have to be assessed and addressed. Taxes are certainly one of the biggest. As a company expands beyond one state and into another, new tax obligations develop. If that company goes global, the growth in the potential for regulatory headaches due to tax audits can be exponential.
How you respond when risks turn into reality is important. If you receive notice from a state revenue department or the Internal Revenue Service, ignoring the issue is bound only to make matters worse. By working with an experienced tax attorney, however, you have someone at your side that is prepared to work out a settlement plan or lead the charge on litigation if that’s necessary.
One of the most fluid issues confronted by many businesses today – especially retailers who sell online – is the question of sales tax collection. If, for example, a Minnesota company sells products in another state, a sales tax applies. However, the obligation for paying the tax falls to the buyer.
That has meant that a lot of tax revenue has gone uncollected. Buyers have little incentive to self-report and the state can’t track transactions it doesn’t know about.
However, Colorado passed a law in 2010 requiring online retailers such as Amazon.com to take steps to be sure that the tax is paid. And this week, the U.S. Supreme Court basically affirmed the law by refusing to hear the appeal of a lower court decision that went in favor of the Mile-High state.
Groups representing online retailers aren’t happy. They fear the decision could spark other states to pass similar laws. Some tax experts agree that’s likely to occur.
Forewarned is forearmed.