Understanding Tax Exemptions and Taxables
Top compliance challenges for purchasers
Businesses pay a significant amount of sales taxes on capital inputs and expenses. In a report released by Council on
State Taxation in October 2020, businesses paid over US$700B in state and local sales taxes, comprising approximately
21.3 percent of total state and local tax revenues collected.
Complexities by purchasers-who are obligated to remit use tax where sales tax is not collected - include:
―
Ensuring sales tax was collected at the correct rate and the correct jurisdiction on taxable purchases
-
Following the Wayfair v. South Dakota decision, more sellers are registered to collect tax in multiple jurisdictions,
but it does not necessarily mean that those sellers are properly calculating sales tax.
Ensuring no tax was collected on exempt purchases
This is a major issue for manufacturing, telecommunications, health care and other industries that have
exemptions based on how a product is used.
- Where sales tax is erroneously collected, purchasers must pursue claims for refund from the taxing authority. In
some jurisdictions, the purchaser must pursue the claim through the seller that collected tax-in other
jurisdictions, the purchaser can pursue the claim directly.
KPMG
© 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.
19View entire presentation