The Coronatax: How COVID-19 Could Impact Sales Tax Obligations

2020 certainly hasn’t turned out how we anticipated. With the massive changes we’ve seen across the country (and the world) we’ve all had to adjust how our companies manage business. From remote working to reduced tax payments, here are a few things we’re keeping our eyes on that could impact your tax obligations in this post-Corona world.

Unexpected Exposure

Many companies quickly shifted to remote working relationships with the majority of employees. If your employees are now working from home, this may impact the amount of tax due in certain states. Some states are waiving the remote working physical nexus connection…for now…but how long will they wait to collect much needed revenues?

Beyond working from home, increased online shopping during the shutdown might have accelerated reaching economic nexus thresholds for your business. Have you been tracking your transactions accurately?

Delayed Regulation Updates

Many state and local governments ended sessions early to help maintain social distance for their members, causing votes on sales tax regulation changes to be delayed. Notably, some states determining marketplace facilitator obligations have not been able to hold their votes yet.

Increased Audit Risk

With many states seeing reduced tax revenues during the shutdown as consumers stayed home, we anticipate a drive to make back some of those revenues through increased audits. To be prepared, read our Sales Tax 501 article on the audit process and our How to Survive an Audit guide.

VDA and Amnesty Programs

Voluntary Disclosure Agreements and state tax amnesty programs help companies reduce their overall tax obligation while helping states collect past due amounts. We’ve seen a large amount of government-sponsored aid programs for businesses this year and it’s likely that will continue in the near-term with extended tax forgiveness programs. Before you pay outstanding sales tax debts, be sure to check out the local state programs to see if anything exists that can reduce your debt.

As tax regulations change due to the pandemic or anything else happening in the world, we’ll be here to keep it all straight for you. Can you handle sales tax? OYA you can!