Case Study: Broadcasting
BACKGROUND
ABC League is a nonprofit organization governed by its member teams. The League office, located in New York, coordinates and oversees the league's operations, including scheduling, marketing, media rights, and rules enforcement. The league generates revenue from television contracts, sponsorships, merchandise sales, and ticket sales, which are distributed among the member teams.
CHALLENGE
Despite being a nonprofit organization, ABC League is subject to sales tax on some of the services and products it purchases. However, the league is eligible for sales tax exemptions or deductions depending on the type of transaction. As a large organization, ABC League faces significant sales tax challenges related to its various activities and operations.
SOLUTION
Philip created a taxability matrix and performed a reverse sales tax audit to identify areas of opportunity and exposure in ABC League's New York purchases. He found that ABC League had paid sales tax on equipment and materials used in production and broadcasting that were exempt from sales tax, leading to a significant refund opportunity. However, he also identified areas where sales tax was not paid for taxable security services. Fully understanding sales tax laws and their application to a company's transactions is crucial to any reverse sales tax audit to minimize liabilities and optimize refund opportunities.
RESULTS
Philip filed a refund claim with the state of New York on behalf of ABC League, which approved a refund of $1.1M, including an offset of the exposure identified in the audit. The offset was not subject to any penalties or interest. As a result of the refund and audit findings, ABC League made adjustments internally to prevent future overpayments for exempt broadcasting equipment and exposure for taxable security services in New York. These changes helped ensure that ABC League remained in compliance with state sales tax laws and minimized any potential liabilities in the future.
CONCLUSION
The reverse sales tax audit proved to be highly beneficial. By identifying areas of opportunity and exposure in their New York purchases, he was able to help the league recoup a substantial refund of $1.1M, which included an offset of the exposure that was identified in the audit. The audit also helped ABC League make necessary adjustments internally to prevent future overpayments for exempt broadcasting equipment and exposure for taxable security services in New York, thus ensuring that the league remained in compliance with state sales tax laws and minimized any potential liabilities in the future. This case study highlights the importance of having a thorough understanding of sales tax laws and scoping all transactions to optimize refund opportunities and minimize liabilities.
AT A GLANCE
CHALLENGES
As a nonprofit, ABC League faced sales tax challenges on certain purchases.
ABC League needed to identify exemptions and deductions to minimize tax liability.
The complexity of sales tax laws made it challenging for ABC League to stay in compliance.
BENEFITS
Reverse sales tax audit optimized refunds and minimized liabilities.
Philip's sales tax expertise helped ABC League comply with laws.
Audit saved time and resources, allowing focus on core operations.
TIME AND RESOURCE SAVINGS
Audit saved time and resources for internal audits.
Outsourcing allowed focus on core operations.
Savings allowed for improved financial management and efficiency.
FINANCIAL SAVINGS
Audit resulted in $1.1M refund, improving financial standing.
Compliance with sales tax laws achieved significant financial savings.
Financial savings allowed investment in core mission.
EXPERTISE
Philip identified $1.1M in refund opportunities and minimized liabilities.
Expertise helped compliance and internal adjustments.
Collaboration established trust and potential for future support.
ADDITIONAL BENEFITS
Audit improved compliance, reducing risk of penalties.
Adjustments improved operations and prevented overpayments.
Outcome established trust and potential for future collaboration.
OUR MISSION
What sets us apart from other sales tax consulting firms is our commitment to offering top-notch services without charging exorbitant fees typical of other firms.
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We believe that every business deserves quality sales tax consulting that is accessible and affordable, and we have built our practice around this core value.
