A Comprehensive Source Advisors Case Study
Based in New York, this Company is a leading global distributor of healthcare products and services. With a wide range of products delivered through multiple business units, and a vast workforce, their operations are extensive. This case study examines the Company’s IT expenditures and the efforts by Source Advisors to ensure accurate tax payments and refund opportunities for overpayments.
As a leading provider, this Company supplies medical and dental products to healthcare professionals nationwide from their strategically located distribution centers. Operating through diverse business groups, they offer an extensive product range. Their team, numbering in the thousands, includes a substantial national sales force. While 25% of their workforce is based in New York, the remaining 75% is spread across other regions.
The Company’s corporate headquarters and several departments, including Information Technology (IT), are located in New York. This IT team handles the provision of workstations, complete with essential software, for all employees. Given its New York base, the majority of IT purchases are billed to, delivered to, and subsequently taxed under New York’s sales & use tax. For electronic deliveries, such as software or information services, vendors apply the tax rate corresponding to the billing address.
Source Advisors’ main objective was to thoroughly review the Company’s IT expenditures and sales & use tax payments to ensure compliance with New York State tax laws. The aim was to identify any overpayments, particularly where New York sales tax was incorrectly applied to out-of-state software uses.
For Example: When a new employee joins, they receive a fully-equipped computer from the New York IT team, which is then shipped to their location. This process raises a notable point: the Company may be eligible for an out-of-state software tax exemption. This exemption pertains to situations where the software user resides outside the state of the software’s delivery or usage. Consequently, the Company should only pay New York sales & use tax for software used within the state. However, they’ve been incurring extra costs by paying New York sales tax even for out-of-state software usage.
It’s worth noting that many states offer such exemptions, although the criteria and specifics can vary based on individual state regulations regarding software taxation
In the most recent cycle we have secured $3.2M in refund for the Company. No vendor is willing to go through the leg work in determining where all the individual users of its products and services are located as such this is a recurring opportunity that will continue to present itself until there is a material change to the tax law.
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Our industry experience with state and local taxes has helped businesses claim billions of dollars in tax credits and incentives.
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Our 40-year history of achieving substantial tax credit savings for clients across various industries is a testament to our commitment and expertise.
Source Advisors has a network of national accounting and sales & use tax experts. By extension, clients have access to assistance in every region regarding state, county, and local tax issues.
Our dedicated support team is readily available to guide you through every step of the process, ensuring a smooth and stress-free experience.
Our recommendations stand in full compliance with tax legislations, offering clients unmatched peace of mind.