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Businesses Overpaying Sales and Use Taxes

By October 16, 2015 No Comments

Michael Cohn, in a recent article published in Accounting Today, discusses how many taxpayers are unaware that they could be overpaying sales and use taxes. This is because many states and localities are collecting taxes from goods and services purchased online.

The decision from a 1992 Supreme Court case, Quill v. North Dakota, states that a physical presence in a state is required to be taxed, even when the actual presence is unclear.  Many states are testing the boundaries of this decision, as a way to bring in tax dollars.

The article references a study from McGadrey LLP, which found that many businesses are filing in jurisdictions where they should not be filing and others are not filing where they should be, which subjects them to interest and penalties.

The study also identifies 10 industries that frequently overpay sales and use taxes:

  1. Manufacturing
  2. Engineering/Research and Development
  3. Biotechnology
  4. Printing/Publishing
  5. Technology
  6. Telecommunications
  7. Financial Services
  8. Insurance
  9. Health Care
  10. Pharmaceuticals

With the increase use of the Internet, and online sales, businesses must be aware of their physical presence so they do not find themselves in a court decision.

For more information on paying sales and use taxes, please read the referenced articles, or contact Terry Maycroft at (231) 736-5825 or

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