After thirty years and more than one thousand tax executive searches, we have learned quite a few lessons in the tax executive search profession. This article is about the lessons we have learned repeatedly. By learning these lessons in advance, you will benefit from this knowledge on your next tax executive search. As CFOs work to contain costs at multinational organizations, they often minimize recruiting fees in their tax department budgets. This is a costly mistake in the long run because doing so companies block their access to an extraordinary pool of tax professional talent that will not submit their resume to an online ad or a company portal. The reason is tax professionals desire greater privacy when considering a new tax opportunity. This hidden population of tax executive candidates can only be introduced the old fashioned way, by retaining a tax recruiter to cold call hundreds of tax executives about your tax opportunity. There is a significant difference in the talent pool available to a company when they retain a recruiter to go out and conduct a thorough search of the marketplace for talented tax candidates.

There is a positive impact on an organization who chooses to conduct a thorough search by an experienced tax recruiter, versus conducting a search on your own. There is a difference in tax savings to an organization whenever they invest in attracting the best of the tax profession to their tax organization. Investing in your tax team will have a positive financial impact on your company. The CFOs I have worked with over the years who treat their tax executives like Gods and Goddesses know their inhouse tax teams are saving millions(billions) of dollars to the company bottom line every year or over a ten year period. One tax executive I know came up with more than one billion in savings over a ten year period on an IP strategy. The company would have been charged over one billion US tax dollars by the country tax revenue authorities over ten years if they had overlooked this tax savings opportunity. CFOs supporting their tax leaders with the staff and budget they need to operate proactively are knocking it out of the ballpark with tax strategy home runs. However, management needs to support their inhouse tax team to produce a treasure chest of tax savings opportunities for the company. The idiom “penny-wise, pound foolish” is often used to describe something that is done to save a small amount of money now but will cost a large amount of money in the future.” This idiom is the best way to describe the difference between retaining an experienced tax recruiter or conducting a tax executive search on your own.

Conducting A Tax Executive Search On Your Own

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A nexus study and taxability review determine where a company might have state tax exposure and the extent of that exposure. We work with our clients to identify their activities in various states and analyze the types of transactions engaged in within those jurisdictions.

Determining exposure before a proposed acquisition is good business. We also assist in determining possible exposure before a state comes to audit. And finally, we bridge the gap with respect to financial statement disclosure.

As part of each project, we work with clients to answer the following types of questions:

• What is nexus?
  • Do we have physical presence nexus?
  • Do we have economic nexus?
• Is my product or service taxable?
• Are there any available exemptions (e,g, food or medical exemptions, sales to qualified non-profit entities)?
• Must I start collecting and remitting sales and use tax?
• I’ve collected tax from a given state and have not remitted it-what now?

Once we determine possible exposure, we assist clients in receiving maximum benefit from available amnesty programs, contract for voluntary disclosure agreements, work with their customers to determine if they have self-assessed taxes (and can therefore reduce exposure for our client) or simply document their exposure.

Economic Nexus

In the United States, the sales tax landscape drastically changed due to the U.S. Supreme Court ruling in South Dakota v. Wayfair, Inc. In June 2018, the High Court made a landmark decision that it is constitutional for the State of South Dakota to enact an economic nexus law. This established precedent and paved the way for states to establish additional ways companies may establish nexus in their jurisdiction.

Now all states which impose a state level sales tax (as well as some local jurisdictions) have enacted economic nexus laws. As a result, companies must now consider both their physical footprint (employees offices, inventory) and the level of sales activity they have in a given state. Once nexus has been established companies need to consider registering for sales tax, collecting and remitting tax, and then filing tax returns. We call that “compliance.”

What Is Economic Nexus?

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Amending Sales And Use Tax Returns

What Are The Current Rules?

For businesses operating in multiple states, keeping up with State and Local Tax (SALT) compliance can feel like a never-ending puzzle. And when a notice for a  SALT audit lands in your in-box, with its deep dive into your tax filings and business activities, it can all seem too much to handle. But with the right preparation and plan and partners to assist you, it’s  possible to sail through the audit.

Understanding SALT Audits

In this article, we’re generally talking about a “SALT audit” as  a thorough review conducted by state or local tax authorities in a given state to verify that businesses have accurately reported and remitted taxes, which can include sales tax, use tax, or income tax . Audits can also be related to payroll taxes or personal property taxes, but our focus in this article is on the sales tax audit.

Each state has its own rules, meaning that businesses operating in multiple states must navigate a web of differing requirements. An audit usually begins with a formal notice from the state, followed by the auditor’s request for records. The process can span weeks or months, depending on the scope of your operations.

This article breaks down how to prepare for a SALT audit, including the key phases to ensure compliance and avoid costly penalties.

Here’s what you can find out:

1. Self-Audit (Regular Internal Audit) – Before the audit

• Organize Your Records: Ensure all tax and financial documents are accurate and complete.
• Assess Your Risk: Identify potential issues in your sales and use tax processes and proactively review and correct tax records
• Expert Assistance: Consult with a tax professional for guidance.

2. Pre-Audit (Preparing for the Audit)
   

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