{"id":6518,"date":"2026-08-04T17:27:06","date_gmt":"2026-08-04T15:27:06","guid":{"rendered":"https:\/\/leyton.com\/us\/?post_type=article&p=6518"},"modified":"2026-08-04T17:27:07","modified_gmt":"2026-08-04T15:27:07","slug":"what-sales-tax-risk-really-looks-like","status":"publish","type":"article","link":"https:\/\/leyton.majjane.dev\/us\/insights\/articles\/what-sales-tax-risk-really-looks-like\/","title":{"rendered":"What Sales Tax Risk Really Looks Like\u00a0"},"content":{"rendered":"\n

Sales tax<\/a><\/strong> compliance has become one of the fastest-changing areas of state taxation. New nexus standards, expanding taxability rules, and evolving exemption requirements have made it harder for businesses to know whether they are collecting, remitting, and paying sales tax correctly.\u00a0<\/p>\n\n\n\n

Avalara’s\u00a0Executive’s Guide to Sales Tax Risk<\/em><\/a>\u00a0<\/strong>reinforces what we see every day.\u00a0Nearly half\u00a0of accounting professionals believe that, if their company were audited today, an auditor would\u00a0identify\u00a0sales and use tax errors. The report also found that companies spend more than $150,000 on average just managing a sales tax audit, before any\u00a0additional\u00a0tax, penalties, or interest are assessed.\u00a0<\/p>\n\n\n\n

Over the past year, I’ve worked with businesses at every stage of the sales tax lifecycle. Some were expanding into new states. Others were preparing for an audit. A few simply wanted to understand whether they had a sales tax problem. One thing has been consistent across all of those projects. Most companies aren’t intentionally getting sales tax wrong. They simply don’t know where the risks are. <\/p>\n\n\n\n

Start by Understanding Where You Have Nexus<\/strong> <\/h2>\n\n\n\n

Every compliance process should begin with one question: Where am I required to collect sales tax? <\/p>\n\n\n\n

Many businesses still assume sales tax obligations begin only when they open an office or warehouse in a state. Today’s rules are much broader. A single remote employee, an independent contractor, inventory stored with a third-party fulfillment provider, or exceeding an economic nexus threshold can all create a filing obligation. On their own, those activities don’t seem unusual. Put them together and they can create sales tax exposure a business never expected. <\/p>\n\n\n\n

Avalara’s survey found that 85% of companies engage in activities that create nexus in multiple states. That aligns with what we’ve seen during Nexus Studies. Businesses are often surprised by where they already have filing obligations. <\/p>\n\n\n\n

If You Have Historical Exposure, Don’t Wait for an Audit<\/strong> <\/h2>\n\n\n\n

We’ve had clients assume that if an audit finds a problem, the company simply pays the missing tax. In reality, the assessment usually includes tax, penalties, and interest. Many states also use sampling and projection methods. If an auditor identifies $50,000 of under-collected tax in a one-year sample period, that amount may be projected across several years, significantly increasing the assessment. <\/p>\n\n\n\n

When historical exposure is identified before an audit, a Voluntary Disclosure Agreement (VDA) can often reduce the lookback period and eliminate penalties before the state contacts the business. Addressing the issue proactively provides more flexibility than responding after an audit notice arrives. <\/p>\n\n\n\n

Registration Is Only the Beginning<\/strong> <\/h2>\n\n\n\n

Registering in a state isn’t the finish line. As the business grows, its sales tax footprint changes with it. New employees, new customers, and new product lines can all affect where tax needs to be collected. <\/p>\n\n\n\n

That’s why we encourage our clients to revisit their sales tax position periodically. Ongoing compliance means filing accurate returns, monitoring nexus, and reviewing product taxability. <\/p>\n\n\n\n

Don’t Overlook the Purchase Side<\/strong> <\/h2>\n\n\n\n

One area that’s often overlooked is the purchase side. We’ve worked with companies that were collecting sales tax correctly but still overpaying thousands of dollars because vendors are charging sales tax after the business qualified for an exemption. <\/p>\n\n\n\n

Avalara also reported that roughly 25% of the companies do not maintain a system for tracking exemption certificates. That creates audit risk and often leads to avoidable tax costs. <\/p>\n\n\n\n

We’ve also had clients that were self-assessing use tax on purchases that were exempt. In many cases, the accounting team applied use tax as a precaution because they weren’t confident about the exemption rules. After reviewing the reconciliation process, we identified transactions that should never have been taxed. <\/p>\n\n\n\n

For taxes that have already been paid, Leyton SALT team can help recover those amounts through vendor refund requests or formal state refund claims.  <\/p>\n\n\n\n

Looking at the Bigger Picture<\/strong> <\/h2>\n\n\n\n

Sales tax risk does not always come from one big mistake. More often, it builds over time. A business expands into a new state. A remote employee is hired. An exemption certificate expires. Together these overlooks can become expensive. <\/p>\n\n\n\n

At Leyton, that process often starts with a Nexus Study. From there we help clients evaluate VDAs when historical exposure exists, register in new states, establish an ongoing compliance process, review exemption certificates, evaluate use tax procedures, and identify refund opportunities through reverse sales tax audits. Looking at the full sales tax lifecycle gives businesses a clearer picture of both their risks and their opportunities.<\/p>\n","protected":false},"excerpt":{"rendered":"

Sales tax compliance has become one of the fastest-changing areas of state taxation. New nexus standards, expanding taxability rules, and evolving exemption requirements have made it harder for businesses to know whether they are collecting, remitting, and paying sales tax correctly.\u00a0 Avalara’s\u00a0Executive’s Guide to Sales Tax Risk\u00a0reinforces what we see every day.\u00a0Nearly half\u00a0of accounting professionals […]<\/p>\n","protected":false},"author":72,"featured_media":6522,"menu_order":0,"comment_status":"open","ping_status":"open","template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[429,431],"tags":[455],"expertise":[374],"class_list":["post-6518","article","type-article","status-publish","format-standard","has-post-thumbnail","hentry","category-state-local-tax-salt-en","category-state-and-local-tax-salt-en","tag-salt-en","expertise-state-and-local-tax-salt"],"acf":[],"yoast_head":"\nWhat Sales Tax Risk Really Looks Like\u00a0 - Leyton United States<\/title>\n<meta name=\"description\" content=\"An executive guide to understanding sales tax risk, navigating multi-state nexus, handling audits, and recovering overpaid tax dollars.\" \/>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What Sales Tax Risk Really Looks Like\u00a0\" \/>\n<meta property=\"og:description\" content=\"An executive guide to understanding sales tax risk, navigating multi-state nexus, handling audits, and recovering overpaid tax dollars.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/leyton.majjane.dev\/us\/insights\/articles\/what-sales-tax-risk-really-looks-like\/\" \/>\n<meta property=\"og:site_name\" content=\"Leyton United States\" \/>\n<meta property=\"article:modified_time\" content=\"2026-08-04T15:27:07+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/leyton.majjane.dev\/wp-content\/blogs.dir\/4\/files\/2026\/08\/USA-Website-inside-pictures-71-1024x349.png\" \/>\n\t<meta property=\"og:image:width\" content=\"1024\" \/>\n\t<meta property=\"og:image:height\" content=\"349\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"1 minute\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/leyton.majjane.dev\\\/us\\\/insights\\\/articles\\\/what-sales-tax-risk-really-looks-like\\\/\",\"url\":\"https:\\\/\\\/leyton.majjane.dev\\\/us\\\/insights\\\/articles\\\/what-sales-tax-risk-really-looks-like\\\/\",\"name\":\"What Sales Tax Risk Really Looks Like\u00a0 - 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