Sometimes, It Doesn’t Even Matter
Now, back to my -D sales tax filing story. For three years, as I mentioned, I had been filing my telecommunication sales taxes under what I thought were proper filing guidelines. After all, I was following the guidelines as outlined on the FTC’s web site and I had even talked to an FTC representative at the federal level to verify I was filing properly. As I always do, I had recorded the name of the person I had talked to, the date I talked to him, the department he was in and his contact information, so I was covered, or at least I thought I was.
One bright, warm sunny day, (I remember it well, because again, I was in Seattle, it was a Friday, the sun was out, it was above 75 degrees and it was Friday – and nobody in Seattle works when the stars align like that), I received a phone call from a very cordial and polite (not really) individual from the FTC, informing me that I had not paid my taxes correctly for over three years and that I was now officially under investigation for tax evasion.
When the shock subsided, I asked what that meant and what I needed to do to correct the situation. The horror of my situation settled in after he told me, at the least, I would be investigated and could end up being charged with tax-fraud and could be fined thousands of dollars or; at worst, I could be found guilty, assessed fines and penalties, have my business liquidated and possibly spend up to five years in prison. I commented that I had all my notes (names, dates, emails and faxes) from my conversations with the person at the FTC who originally told me I was okay to file this way, but that didn’t matter. To make a year-long horrifying story short, I ended up getting off “easy” – paying over $120,000 in fines and penalties and receiving a year and a half jail sentence, which was soon after, commuted to probation. Why do I tell this story? To make you aware of the seriousness of properly filing your taxes. More importantly, to point out, that if I had been using a tax service, such as Avalara or Tax Cloud, to collect, manage and submit my sales tax, at the very least, I probably wouldn’t have gotten into this situation in the first place. Even better, I would have had the expert support and backing of my tax vendor, with all their legal prowess and expertise behind me.
At best, many providers will support you through this type of nightmare, lending their expertise, clout with the tax agencies and sometimes, even their legal support, to help protect your situation. Looking back, either way, using a full service sales tax provider would have placed me in a much better position through the entire experience.