Why you should work with a state and local tax (SALT) consultant
by December 21, 2023
Please note: This blog was originally published in 2021. It’s since been updated for accuracy and comprehensiveness.
You may think you only need salt if you’re eating in a restaurant that fails to season their food properly, but with sales tax regulation changing constantly, it’s helpful to utilize a different kind of SALT — a State and Local Tax Consultant. These experts can be helpful in managing sales tax compliance for your business. Let’s talk about what a SALT can do for you and how an automated sales tax platform like TaxJar fits into the equation.
How a SALT can help your business
A SALT partner is a role often found within a tax advisory firm. Here at TaxJar, we sometimes refer to them as the therapists of the sales tax world. They utilize special knowledge and training that sets them apart from other consultants like bookkeepers or CPAs, including their deep understanding of state and local taxes. It may sound counterintuitive, but a SALT uses their expertise to help form a comprehensive, holistic tax strategy. They help achieve that by:
- assigning product tax codes
- registering your company in states where you have nexus
- filing in a state
- drafting Voluntary Disclosure Agreements (VDAs) and reverse audits
The benefits to working with both a SALT and TaxJar
TaxJar is an intuitive platform that automates sales tax compliance for over 20,000 businesses. But TaxJar’s best-in-class technology is only as useful and accurate as the information fed into it. A CPA may help your company with accounting, but a true tax advisor is familiar with the state and local tax space, and is able utilize TaxJar to its fullest capabilities. Without the oversight of someone who understands not only how the TaxJar solution works — but exactly what should happen from point of sale to filing a return — it’s easy to make mistakes.
Assistance with state tax registration
Registering for a state tax permit can be a logistical headache, as each state has its own unique process. A SALT partner can take it off your plate entirely by registering your business. Beyond that, there are multiple business decisions to make around registration. Goods or services that are taxable in one state may not be in another, and a SALT partner can assist with that.
Product taxability research and verification
There is a lot of nuance in product taxability from one state to the next, and while TaxJar’s automated solution will help you classify the taxability of your products, a SALT can guide you through the more complex product taxability questions unique to your business.
On top of that, there are added complexities in states like Louisiana and Colorado (both of which have home rule jurisdictions) that go well beyond the taxability of a single item. A SALT will help you navigate the maze.
VDA and reverse audit recommendations
If your business should have been collecting taxes in a state and has not registered yet, the SALT can help you draft a Voluntary Disclosure Agreement to potentially avoid penalties and interest, and assist in getting set up to collect and remit moving forward. A SALT can also help your company with a reverse audit if it has inadvertently paid sales tax on a product that shouldn’t have been taxed (or had an exemption); in that case, the consultant can seek to reclaim tax funds that have already been paid out.
Engaging with an expert like a SALT can provide your company with an additional level of assurance that your sales tax compliance is being handled by someone who understands the multi-state tax implications of e-commerce in the modern era.
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