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Overpaying Sales TaxTypically your vendors will charge sales tax automatically on their invoices. However, the tax you have to pay depends entirely on how your purchases are used, something your vendor will not be aware of. There are a large variety of reasons why you shouldn’t pay sales tax on your purchases. For example, depending on the state you operate in, if you buy equipment used for research and development, as part of an OEM product or for maintenance and repair, you may be charged too much sales tax. Our process is to go through you purchases history for every transaction to identify the purpose of the purchase, and in instances where the item was used for a tax exempt purpose we will identify the sales tax charge and prepare a claim against the vendor. The vendor should repay these overcharges, and they in turn recover their overpayment from the state, and we help facilitate this process. |
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Overpaying Use TaxIn situations where your vendor does not charge sales tax automatically, the onus is on your company to accrue Use Tax and pay the state directly. The situation of overpayment occurs via the incorrect classification of how items are used in the manufacturing process . Chances are you’re overpaying Use Taxes unless you classify every line of every payment, and government audits will not catch these overpayments. It is up to you as the taxpayer to recover these funds, the government will never voluntarily offer to refund. A typical Sales and Use Tax audit recovers between 0.01% and 0.03% of gross billings - for a typical billion dollar company we usually see recoveries of over $2 million for every year we audit. There could be more than millions in lost profit waiting to be recovered, and with state time limits on claims your opportunity for recovering those funds is running out. |