Tax compliance has always been a balancing act – directing available energy and resources on those activities and solutions that will do the most to keep your company safe from audit risk. While the challenges may differ (as resources may be less available to some businesses during the COVID-19 pandemic) the obligation of tax professionals remains the same – doing what they need to do minimize risk.
Understanding what you can do help and where you should be directing your compliance energy at this time is an important first step. For the last several weeks, Sovos has been busy compiling and providing time sensitive and valuable information regarding changing sales tax determination, collection and remittance obligations as a direct result of the COVID-19 pandemic.
This includes real-time data on jurisdictions offering filing and remittance extensions to inform you as to what returns are due “right now” and what returns may be put aside for a few days or weeks. This data enables effective near-term priority setting within your compliance team.
Business Change Driven by COVID-19
The business landscape is changing quickly. Every day governments are issuing new directives on which businesses are deemed essential and may remain open and how they must go about conducting operations.
A couple recent examples of business change that will have an impact on taxes and reporting include:
Paper and Plastic Bags at Checkout – Bringing your own bags to the grocery store has been a staple of the environmental movement over the past decade. Similarly, state and local governments across the country have enacted either outright disposable bag bans or impose fees on customers requesting disposable bags at checkout.
Many jurisdictions have opted to remove those bans and suspend bag fees, including locations in Alaska, Colorado, Connecticut, Illinois, Maine, Massachusetts, Minnesota and Ohio. We fully expect additional jurisdictions to follow suit over the next several weeks.
Adapting to Social Distancing – Many national retailers (including some Sovos clients) have begun to offer curbside pickup/delivery services, meaning that a customer may call ahead (or use the store App) to place an order and have the items delivered directly to their car when they arrive at the store.
If your organization offers this service for a fee, be sure that you are considering the proper tax treatment? This could be especially tricky if the order includes both taxable and exempt items, for example food and paper products.
These are just a couple of small but poignant examples of how COVID-19 is changing the rules for businesses and how ensuring tax compliance has become more complex than ever. With everything that businesses must worry about during these challenging times, an audit should not have to be one of them.
Be sure to continue to monitor the feed for changing regulations due to COVID-19 that could impact your business and please, stay safe.