Case Study: Security Services
BACKGROUND
ABC Company is a New Jersey-based company that sells and installs security systems to ensure visitor safety and prevent theft. They offer several products and services, including software as a service (SaaS), RFID-enabled security tags for hospitals to prevent patient abduction and wandering, and capital improvements.
Despite serving clients in 25 states, ABC Corp was not aware of its sales tax filing duties in several states where it did not have a physical presence and was audited by the state of Illinois.
Initially, ABC Company hired a CPA to handle its sales tax returns, but the CPA lacked sales tax expertise and failed to consider the taxability of their transactions, neglected to research the taxability of their customers, and overlooked available exemptions.
CHALLENGE
ABC Company sells a significant portion of its products and services to exempt entities, and its offerings are subject to varying tax treatment across different states. Hence, the company needed to identify the states where it had economic nexus and ensure that it had a clear understanding of the taxability of its products and services.
SOLUTION
ABC Company sought assistance from Philip Ghaly to resolve its sales tax filing issues. Philip conducted a nexus study to determine the states in which ABC Company had economic nexus and created a taxability matrix to provide guidance on the appropriate tax treatment of its products and services, state by state. Philip represented ABC Company in an audit defense for the state of Illinois, as well as in multiple Voluntary Disclosure Agreements. They successfully negotiated the waiver of penalties and interest and facilitated registrations in states where economic nexus was identified.
RESULTS
After Philip corrected all the filing errors, ABC Company experienced an average monthly sales tax liability reduction of $8,000, representing an approximate 80% decrease. Additionally, Philip provided audit defense services and successfully reduced its audit assessment by 77% in Illinois.
CONCLUSION
Thanks to Philip's assistance, ABC Company was able to correct its sales tax errors, reduce its sales tax liability, and improve its compliance processes. Philip conducted a thorough nexus study, created a taxability matrix, and provided audit defense services, resulting in an 80% reduction in monthly sales tax liability and a 77% reduction in audit assessment for the state of Illinois. These results led ABC Company to entrust him with all their sales and use tax compliance needs. Now, ABC Company can focus on its business growth and leave the sales tax compliance management to the experts, ensuring the proper taxation of its products and services across all states, reducing its financial burden, and safeguarding its reputation.
AT A GLANCE
CHALLENGES
ABC Company sold exempt products with varying tax treatments across states.
They were audited by Illinois for not being aware of sales tax filing duties.
Previous CPA lacked sales tax expertise, neglected research.
BENEFITS
Philip conducted a nexus study and created taxability matrix.
Provided audit defense, 77% reduction in Illinois audit assessment.
80% reduction in monthly sales tax liability, approx. $8,000 savings.
TIME AND RESOURCE SAVINGS
No need for ABC Company to allocate time and resources to sales tax compliance.
Philip reviews sales, corrects errors, files returns, remits tax on their behalf.
Allows ABC Company to focus on growth without stress.
FINANCIAL SAVINGS
80% reduction in sales tax liability, approx. $8,000 per month.
Negotiated waiver of penalties and interest, resulting in cost savings.
Allows ABC Company to allocate resources towards other areas.
EXPERTISE
Provided guidance on tax treatment of products and services state by state.
Conducted nexus study to determine economic nexus states.
Has extensive sales tax expertise, represented in audit defense and voluntary disclosure agreements.
ADDITIONAL BENEFITS
All of ABC Company's sales and use tax compliance needs outsourced to specialist.
Ensures products and services are taxed correctly, reducing financial burden and protecting reputation.
ABC Company can rely on expertise and services for greater peace of mind.
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.
