What is one of the most frightening encounters you would like to avoid this Halloween? If you ask the Client Services team at Libertas, the answer is simple - missing out on a sales and use tax refund opportunity that is knocking at your door!
It is not only possible, but typical for potential sales tax refunds to be overlooked or forgotten. A common misconception about sales tax refund claims is that they are overly time consuming to compile from a cost-benefit perspective. In reality there are some refund opportunities that are relatively straightforward to put together and available to businesses of any size or industry.
“Claiming a sales tax refund can be a more straightforward process than anticipated.”
maximizing your refund
One of the first steps in determining a potential refund amount is confirming the statute of limitations for filing a refund for your respective state. Statute of limitation laws for refunds establish the time period for how far back a company can go to request a refund of tax overpayment, directly impacting the potential refund that is available.
Typically, most states impose a three-year statute of limitations (SOL) to file a refund claim. For example, California, Florida, and New York are among the states that adhere to the three-year time period. Some states such as Kentucky and Texas have a four-year statute of limitations. Additionally, the statutory language varies amongst the states as to when the SOL period officially begins, whether it starts the date tax was paid, the date tax was due, or the last day of the tax year.
Potential refund opportunities
There are numerous ways that an overpayment can occur. Because each state is different, companies may find it difficult to keep up with the ever-changing laws and guidance, potentially resulting in an overpayment of tax.
An example of this is charges for shipping and handling. Although most states do not impose a sales tax on such charges, some states do include shipping and handling in their tax base. Due to the varying rules, many companies tend to collect and remit sales tax on shipping and handling charges regardless of whether that particular state imposes tax and those charges.
Another example of an area where overpayments are found is related to purchases made that are exempt but where the vendor is not aware the sale to a particular company is exempt based on how the item purchased is used by that purchasing company. The company should be able to provide a sales tax exemption certificate for such purchases where exempt under that state’s laws, but some companies may be unfamiliar with the rules and procedures of the state. If the purchase was made and the tax paid but not due and it occurred within that state’s SOL, a claim for refund can be made.
trick or treat
With Libertas, sales tax refund opportunities are all treat and no trick. If overpayment of tax spooks you, if visions of a missing exemption certificate haunt you, or if you simply have a superstition toward a potential refund, Libertas is here to help you with the scary stuff.