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Sales and use taxes, part 2: Problems that businesses can face

In the first part of this post, we discussed some of the common questions that businesses often have about sales and use tax compliance.

As we noted, such taxes do not only apply to sales. They can also apply to leases and rentals, and to some types of services as well. Such taxes are especially important in Texas due to the absence of a state income tax.

In this part of the post, let’s look at some of the issues that can arise for businesses and how a lawyer can help resolve them.

Taxes that are collected but not paid over – Sometimes business owners run into cash flow problems that make it difficult to both make payroll and pay over sales and use taxes to the state.

This is an entirely understandable and not uncommon scenario. If you are in this situation, however, it’s important to get the advice of a knowledgeable tax attorney. This is important because, as a business owner, you could potentially face personal liability for taxes that you didn’t pay to the Comptroller of Public Accounts.

The rationale for such liability is the same as for the trust fund recovery penalty at the federal level. It’s a way of holding responsible parties accountable for taxes that should have been paid over.

Uncollected taxes – Another problem business owners can run into is failing to collect the required amount of sales and use taxes. This can easily happen in small businesses that do not have the personnel to create efficient record-keeping systems.

If you have run into these sorts of problems, you are in a sticky situation. An experienced tax lawyer can help you negotiate with tax authorities to seek a fair resolution.

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