While businesses can always ask the Departments of Revenue directly for answers, telephone answers are not binding on the state. In most cases, even written responses to emails may not be binding if they feel that adequate factual information was not properly provided to them with the question. Additionally, if proper factual information is provided and you do not agree with the answer, you cannot really ignore their answer. If you do not follow their guidance, you could be subject to negligence penalties if the issue is identified and tax is due during a subsequent audit by that Department.

Therefore, it is always better to have a third party state and local tax professional review the facts and provide guidance. In some cases, they can request an anonymous ruling on the business’ behalf based upon the business’ specific facts. If the answer is favorable, the anonymous ruling can usually be converted into a named ruling which becomes binding. If the answer is not favorable, then the ruling stays anonymous and does not become binding upon the company.

Often, a taxability matrix can be created to help address a single product issue in multiple states or address multiple product purchases in a home/base state.

For more information call (920) 450-1411.