Nexus Study & Voluntary Disclosure Agreement Representation – TaxMatrix Case Study

Company Profile:

A New York based law firm with offices in twelve (12) states and annual revenue in excess of $1B.

Situation:

The client’s former tax manager had only registered the firm in New York and California. Based on the physical offices and activities in another ten (10) states, the firm had nexus for sales tax purposes which translated into material exposure for unpaid taxes and interest and penalties.

Scope of Services:

  1. Multi-State nexus survey to confirm exposure
  2. Evaluate state income and franchise tax implications
  3. Overpayment review in all states to attempt to offset any potential penalties
  4. Improve methodologies and tracking to ensure complete coverage

Solution:

  1. In depth knowledge of the Client tax program and activities in all states
  2. Ability to quickly and thoroughly perform a comprehensive audit of all sales and use tax
  3. Knowledge of state specific voluntary disclosure guidelines to mitigate exposure
  4. Identify compliance root causes
  5. Overpayment and state income/franchise tax review

Success:

  • $540,000 recovered in headquarter state of New York
  • Limited exposure through series of voluntary disclosures in all operating states