Learn from Uber & Make Sure to Register for Sales & Use Tax

Uber and Lyft are both under fire in Rhode Island after not registering for sales and use tax. Both companies have been charging sales tax for their services but aren’t registered, let alone remitting sales tax to the state. Uber has spoken with reporters about the issue, stating that because of “ambiguities” in the law they’ve been temporarily holding on to sales tax with the intention to remit at some point in the future. Lyft has yet to comment.

Collecting sales tax without registration or remittance usually spells trouble. In fact, can be considered a felony. If your business does transactions of any kind, be sure that your business has looked into sales and use tax liabilities and is complying with the law, even if sales tax laws are confusing or difficult to apply.

Don’t Let Confusing Sales Tax Rules Stop Compliance

There’s a high potential that Uber and Lyft will both be audited by the State of Rhode Island for unpaid sales taxes, especially since both services are already under a lot of fire. The one thing Uber did right in this situation is consult with Revenue officials to best determine how to handle sales tax for part of their services. When rules are ambiguous, your business should always approach the state’s officials to get an opinion. However, it’s not excuse to not comply with sales tax laws.

Auditors don’t care if you think sales tax laws are confusing or ambiguous either—all they care is that the state is getting the right amount of
sales tax in a timely fashion for your business’ transactions.

Keep in mind that if your business doesn’t have sales tax liabilities, there’s the potential you have use tax liabilities and still need to register. If your business buys products online from a retailer that doesn’t charge sales tax, for instance, you need to remit use tax for those purchases.

What To Do When Sales Tax Compliance is Too Confusing

If you’ve done your best to understand how to comply with sales tax laws but you’re still unclear how your business needs to handle sales tax, here’s some steps you can take to get answers.

  1. Bring in outside help, like sales tax outsourcing. They’re specialists in sales tax and can help your business comply with confusing sales tax laws. In all likelihood, they’ve done it before for a business with a similar situation and know the ropes.
  2. Contact your state authorities for an official opinion. Often times sales tax offices will provide guidance on confusing or unique sales tax problems. If you’re in doubt, contact them. After all, they want you to comply with laws and remit so it’s in their best interest to help you do that.
  3. Do the best you can. While there’s the potential you’ll get audited, if you don’t have the time or resources to dedicate to compliance, you can bite the bullet and try to make it work. Just be aware that you might get it wrong. Half wrong is often better than all wrong in sales tax.

Sales tax can be quite difficult in certain industries or when your business is in the business of challenging the status quo, like Uber and Lyft. But it’s no excuse for not doing sales tax right.

Latest Articles

5 Things to Look for in Sales Tax Software

5 Things to Look for in Sales Tax Software

After decades of controversy, the Supreme Court agreed that remote sellers, such as ecommerce shops, should pay sales tax to states and cities just as businesses with a physical presence do. One of the reasons: they figured that sales tax software would...

read more
Hotel Tax Hit Will Have Consequences

Hotel Tax Hit Will Have Consequences

A recent study by Oxford Economics says that Arkansas will lose $60.8 million in revenue from hotel tax. Bigger states have to expect bigger losses: $1.9 billion for California, while both New York and Florida may seet losses of $1.3 billion. The nation...

read more
COVID-19 Sales Tax Reporting Surprises

COVID-19 Sales Tax Reporting Surprises

Sales tax reporting has been delayed in many states, but sales tax filings are beginning to trickle in and more states are able to make projections. Many states are seeing their sales tax revenues drop to dangerous levels, causing concern about  being...

read more