{"id":6518,"date":"2026-08-04T17:27:06","date_gmt":"2026-08-04T15:27:06","guid":{"rendered":"https:\/\/leyton.com\/us\/?post_type=article&#038;p=6518"},"modified":"2026-08-04T17:27:07","modified_gmt":"2026-08-04T15:27:07","slug":"what-sales-tax-risk-really-looks-like","status":"publish","type":"article","link":"https:\/\/leyton.com\/us\/insights\/articles\/what-sales-tax-risk-really-looks-like\/","title":{"rendered":"What Sales Tax Risk Really Looks Like\u00a0"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><strong><a href=\"https:\/\/leyton.com\/us\/state-and-local-tax-s-a-l-t\/\">Sales tax<\/a><\/strong> compliance has become one of the fastest-changing areas of state taxation. New nexus standards, expanding taxability rules, and evolving exemption requirements have made it harder for businesses to know whether they are collecting, remitting, and paying sales tax correctly.\u00a0<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong><a href=\"https:\/\/www.avalara.com\/content\/dam\/assets\/documents\/document-avalara-tax-changes-2026.pdf\">Avalara&#8217;s\u00a0<em>Executive&#8217;s Guide to Sales Tax Risk<\/em><\/a>\u00a0<\/strong>reinforces what we see every day.\u00a0Nearly half\u00a0of accounting professionals believe that, if their company were audited today, an auditor would\u00a0identify\u00a0sales and use tax errors. The report also found that companies spend more than $150,000 on average just managing a sales tax audit, before any\u00a0additional\u00a0tax, penalties, or interest are assessed.\u00a0<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Over the past year,&nbsp;I&#8217;ve&nbsp;worked with businesses at every stage of the sales tax lifecycle. Some were expanding into new states. Others were preparing for an audit. A few simply wanted to understand whether they had a sales tax problem. One thing has been consistent across&nbsp;all of&nbsp;those projects. Most companies&nbsp;aren&#8217;t&nbsp;intentionally getting sales tax wrong. They simply&nbsp;don&#8217;t&nbsp;know where the risks are.&nbsp;<\/p>\n\n\n\n<h2 id=\"h-start-by-understanding-where-you-have-nexus-nbsp\" class=\"wp-block-heading\"><strong>Start by Understanding Where You Have Nexus<\/strong>&nbsp;<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Every compliance process should begin with one question: Where am I&nbsp;required&nbsp;to collect sales tax?&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Many businesses still assume sales tax obligations begin only when they open an office or warehouse in a state. Today&#8217;s rules are much broader. A single remote employee, an independent contractor, inventory stored with a third-party fulfillment provider, or exceeding an economic nexus threshold can all create a filing obligation. On their own, those activities&nbsp;don&#8217;t&nbsp;seem unusual. Put them together&nbsp;and they can create sales tax&nbsp;exposure&nbsp;a business never expected.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Avalara&#8217;s survey found that 85% of companies engage in activities that create nexus in multiple states. That aligns with what&nbsp;we&#8217;ve&nbsp;seen during Nexus Studies. Businesses are often surprised by where they already have filing obligations.&nbsp;<\/p>\n\n\n\n<h2 id=\"h-if-you-have-historical-exposure-don-t-wait-for-an-audit-nbsp\" class=\"wp-block-heading\"><strong>If You Have Historical Exposure, Don&#8217;t Wait for an Audit<\/strong>&nbsp;<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">We&#8217;ve&nbsp;had clients assume&nbsp;that&nbsp;if an audit finds a problem, the company simply pays the missing tax.&nbsp;In reality, the&nbsp;assessment usually includes tax, penalties, and interest. Many states also use sampling and projection methods. If an auditor&nbsp;identifies&nbsp;$50,000 of under-collected tax in a one-year sample period, that amount may be projected across several years, significantly increasing the assessment.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">When historical exposure is&nbsp;identified&nbsp;before an audit, a Voluntary Disclosure Agreement (VDA) can often reduce the lookback period and&nbsp;eliminate&nbsp;penalties before the state contacts the&nbsp;business. Addressing the issue proactively provides more flexibility than responding after an audit notice arrives.&nbsp;<\/p>\n\n\n\n<h2 id=\"h-registration-is-only-the-beginning-nbsp\" class=\"wp-block-heading\"><strong>Registration Is Only the Beginning<\/strong>&nbsp;<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Registering in a state&nbsp;isn&#8217;t&nbsp;the finish line. As the business grows, its sales tax footprint changes with it. New employees, new customers, and new product lines can all affect where tax needs to be collected.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">That&#8217;s&nbsp;why we encourage&nbsp;our&nbsp;clients to revisit their sales tax position&nbsp;periodically. Ongoing compliance means filing&nbsp;accurate&nbsp;returns,&nbsp;monitoring&nbsp;nexus,&nbsp;and&nbsp;reviewing product taxability.&nbsp;<\/p>\n\n\n\n<h2 id=\"h-don-t-nbsp-overlook-the-purchase-side-nbsp\" class=\"wp-block-heading\"><strong>Don&#8217;t&nbsp;Overlook the Purchase Side<\/strong>&nbsp;<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">One area&nbsp;that&#8217;s&nbsp;often overlooked is the purchase side.&nbsp;We&#8217;ve&nbsp;worked with companies that were collecting sales tax correctly but still overpaying thousands of dollars because vendors&nbsp;are&nbsp;charging&nbsp;sales&nbsp;tax after the business qualified for an exemption.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Avalara also reported that&nbsp;roughly&nbsp;25%&nbsp;of the&nbsp;companies&nbsp;do&nbsp;not&nbsp;maintain&nbsp;a system for tracking exemption certificates. That creates audit risk and often leads to avoidable tax costs.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">We&#8217;ve&nbsp;also&nbsp;had clients&nbsp;that were self-assessing use tax on purchases that were&nbsp;exempt. In many cases, the accounting team applied&nbsp;use&nbsp;tax as a precaution because they&nbsp;weren&#8217;t&nbsp;confident about the exemption rules. After reviewing the reconciliation process, we&nbsp;identified&nbsp;transactions that should never have been taxed.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For taxes that have already been paid,&nbsp;Leyton&nbsp;SALT team can help&nbsp;recover&nbsp;those amounts through vendor refund requests or formal state refund claims.&nbsp;&nbsp;<\/p>\n\n\n\n<h2 id=\"h-looking-at-the-bigger-picture-nbsp\" class=\"wp-block-heading\"><strong>Looking at the Bigger Picture<\/strong>&nbsp;<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Sales tax risk&nbsp;does not&nbsp;always&nbsp;come&nbsp;from one big mistake. More often, it builds over time. A business expands into a new state. A remote employee is hired. An exemption certificate expires.&nbsp;Together&nbsp;these overlooks&nbsp;can become expensive.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">At Leyton, that process often starts with a Nexus Study. From there we help clients evaluate VDAs when historical exposure exists, register in new states,&nbsp;establish&nbsp;an ongoing compliance process, review exemption certificates, evaluate use tax procedures, and&nbsp;identify&nbsp;refund opportunities through reverse sales tax audits. Looking at the full sales tax lifecycle gives businesses a clearer picture of both their risks and their opportunities.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Sales tax compliance has become one of the fastest-changing areas of state taxation. New nexus standards, expanding taxability rules, and evolving exemption requirements have made it harder for businesses to know whether they are collecting, remitting, and paying sales tax correctly.\u00a0 Avalara&#8217;s\u00a0Executive&#8217;s Guide to Sales Tax Risk\u00a0reinforces what we see every day.\u00a0Nearly half\u00a0of accounting professionals [&hellip;]<\/p>\n","protected":false},"author":72,"featured_media":6522,"menu_order":0,"comment_status":"open","ping_status":"open","template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[429,431],"tags":[455],"expertise":[374],"class_list":["post-6518","article","type-article","status-publish","format-standard","has-post-thumbnail","hentry","category-state-local-tax-salt-en","category-state-and-local-tax-salt-en","tag-salt-en","expertise-state-and-local-tax-salt"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v28.1 (Yoast SEO v28.1) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>What Sales Tax Risk Really Looks Like\u00a0 - 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