CMA Community

1. Mike Mitchell III
   Member

   Reputation:14

    

   At a recent meeting of CMA’s Western Home Furnishings Credit Group, long-time member Sandberg Furniture informed the group that a tax auditor from the State of Texas was currently on site at Sandberg’s office requesting Texas Sales and Use Tax Exemption Certificates (aka Resale Certificates) for all of Sandberg’s Texas customers. According to Sandberg, this is the first time the furniture manufacturer has ever been audited by another state to produce proof of customers’ status as resellers. Texas requires that suppliers get certificates signed by resellers in Texas and must keep original signed certificates on file in order to prove exemption from paying state tax on purchases. Failure to produce signed certificates can result in possible liability for unpaid sales tax that could be billed to suppliers.

   CMA is bringing this matter to the attention of all of our members because of its potential to affect any member with customers in the State of Texas. Also, this action suggests that other states may engage in similar audits in an effort to generate additional tax revenue.

   I would like to extend CMA’s appreciation to Sandberg Furniture for alerting us to this potentially serious situation, and allowing us to share this information with all of our members so they can be prepared.

   Has anyone else experienced this from Texas or any other state?

   Posted 1 year ago #

2. F Scott Wilson
   Member

   Reputation:279

    

   I haven't seen this done across state lines, but it makes sense, since the states are in the same deep financial swamp as many of our customers. This is about generating revenue, so it's likely that any such cross-state audits will find exhorbitant fines aplenty.

   Posted 1 year ago #

3. pop232
   Member

   Reputation:7

    

   I have heard about approx 4 years ago. I worked at a company where the state board requested from us copies of resale certificates. I had to make sure every certificate was valid and the certificate belonged to that customer, because we had a few customers using the same resale number for their friends business. It would be in every company best interest to start getting a copy of their customer certificate and verfify with the state it the certificate is valid, and keep on file just in case. If not your company will be left holding the tax bag. I think the state of CA will start doing the same thing for every business to generate cash for the state as well. This will catch on for every state eventually.

   Posted 1 year ago #

4. DMarc CBA
   Member

   Reputation:80

    

   Several years ago a speaker from the SBOE in California told us they have offices in several other states specifically for that purpose and likewise other States can audit here. In light of the budget difficulties of recent years it's not unusual to expect that this type of activity would be stepped up and more companies will become aware of it.
   We've been diligent about resale certificates and verifying them for many years because of the many horror stories I've heard. The auditors have a lot of leeway and what one would overlook another may pick apart, you never know which one you will get. Some customers find our diligence annoying, particularily if they are trying to get away with something ie fraudulently using someone elses' resale or when their business structure changed and they've been avoiding the necessity to close out the old one and open a new one, or simply because "no one else does". If we have nexus we try to do the right thing, then it is up to Senior Management follow through on the actual tax payments due.

   Posted 1 year ago #

5. icollect
   Member

   Reputation:9

    

   After having lived through the California state tax audit, I implemented the policy for all resale accounts by where our clerk would access the SBOE website and print out the proof and file it as back up with the certificate as all too often when the branch people got busy, "any" certificate was valid in their eyes.

   Thankfully, the auditor assigned to us by the state was somewhat disenchanted with "the Govenator" and went out of his way in allowing me amply time to collect missing info and we escaped virtually unscathed.

   As all states as well as our Federal government are hurting for revenue, I think these types of cross line audits will continue to raise, as well as escheatment audits etc. It's unfortunate but both can be a source of "found money".

   Posted 1 year ago #

6. DMarc CBA
   Member

   Reputation:80

    

   We also learned not to be too overly eager to help. We pulled all the files they requested and made it as easy as possible for the auditor (knowing we had done our due diligence and verified everything), he was out of here in no time.
   Now I'm guessing they may have a certain amount of time to SPEND on each audit and it appeared that every couple months he would come up with another list of items on the GL side that were discrepancies and each time we would show them where this or that had already been accounted for. They came back several times trying to find something of relevance to ding us for. Next time we'll let him pull the files and dig himself until he uses up his allotted time so they don't come back repeatedly nitpicking.

   Posted 1 year ago #

7. JC
   Member

   Reputation:34

    

   I just wanted to mention that we are also a CA business that has always collected CA resale certifications and verified they were valid. Unfortunately we also had the TX auditors visit us last week, we survived the audit with a very small fine however we did learn that they actually have over 20+ TX employees that work in an office in Cerritos. We understand that they will be reviewing West Coast businesses that do business or ship to TX. A few of my colleagues in the outdoor furniture industry have also been hit with this audit.

   Last week we received a letter from MO requesting resale going back to 2005 so this appears to be a sign of more letters that are forthcoming. Considering my company has retailers in 49 states we will need to really go through our records to ensure we are in compliance.

   Posted 1 year ago #

8. JC
   Member

   Reputation:34

    

   I've been looking for a vendor or service that will help us monitor the resale certifications. Anyone have any input? I am currently looking into ISSI Certificate Management Solution

   Posted 1 year ago #

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