"It's Time to Make the Donuts" = "Same as Last Year"
Do you remember the Dunkin Donuts commercial where the baker gets up every morning and walks out the door saying, "it's time to make the donuts"? He would wake-up saying it every morning, completely exhausted until he "runs into himself" coming home (when he is leaving). He was going through the motions, doing the same thing over and over, day after day. Oh, the monotony.
Does your day feel like that? Does your life feel like that? If it does, just say no. Stop the routine. Stop the madness. Make today fun. As my youngest daughter once said, "have fun and don't be bored." My oldest daughter recently said, "be special."
How does this apply to state and local taxes? (I know you were thinking about this). Well, companies often do the same thing, file the same way (or don't file) for several years by following the "same as last year" approach, until one day it catches-up with them. The "same as last year" approach could be said to be the same thing as saying, "its time to make the donuts."
The "same as last year" approach is followed by many businesses across the country. This approach is generally followed because it is easier and more efficient. However, when the company receives an audit notice or nexus questionnaire, the company is generally faced with a rude awakening - a large tax bill with interest and penalties. Not only does this approach create tax risk and exposure, but it creates the ability for a company's cash-flow to be drained rather quickly.
A state tax "diagnostic review" can provide your company with an overview of your company's state tax position allowing you to make informed decisions about when to file and how to file (whether it is income tax, sales tax, franchise tax, gross receipts taxes, etc.). A diagnostic review would mitigate surprises, risk and exposure, and provide peace of mind. As they say, "an ounce of prevention today, is worth a pound of cure tomorrow." Hindsight may be 20/20, but foresight is 21/21 (I made-up this quote, not sure if it works or not, what do you think?)
Make informed decisions with your company's financial future and multistate tax position. Don't fall into a trance. Don't follow the "same as last year" approach. And don't wake up tomorrow saying, "it's time to make the donuts."
Brian Strahle is the owner of LEVERAGE SALT, LLC where he provides state and local tax technical services to accounting firms, law firms and tax research organizations across the United States. He also writes a weekly column in Tax Analysts State Tax Notes entitled, "The SALT Effect." For more info, visit his website: www.leveragestateandlocaltax.com
You can reach Brian at firstname.lastname@example.org.
Because state and local taxes are deceptively simple and endlessly complicated.