The states are struggling with short and long term budget pressures, this much we know. Legislators in the Commonwealth of Virginia have dreamed up a novel approach to ... well, we aren't sure how much this will help relieve the fiscal reality faced in the Old Dominion, but it creates some headaches for large Virginia sales tax vendors.
The nutshell version, from the linked article, is that the state's fiscal year end is June 30, so accelerated sales tax payments from Virginian sales tax vendors will make the 2009-2010 fiscal year finish in the black. Of course, eventually the accelerated payments will end and the state will have to budget for 11 months of collections, but that won't happen until 2021 when the program is set to end.
In the meantime though, at least one group of Virginia stakeholders is glad about the budgetary switcheroo:
" (Gov. Bob) McDonnell said this week that he's optimistic the state will end this fiscal year with a surplus that's significant enough to trigger a 3 percent bonus for state employees. The one-time cost would be $83 million."
Granted, the class of mandatory early remitters is relatively small (about 1000 as per the article) compared to the entire class of Virginia sales tax vendors. However, the mandate presents significant sales tax compliance challenges.
We would guess one significant challenge is: how to find the cash to remit since the cash being remitted has not been collected from customers yet!
Yeah, that stings enough, but also consider the additional bookkeeping tasks involved with reconciling June filed-as sales with actual June sales. Even vendors seeking a hardship exception to the accelerated sales tax payments must provide extensive documentation ahead of time to avoid penalty.
But the state will give a vendor a break under certain circumstances:
" A Dealer who would otherwise be required to make an accelerated sales tax payment, but is no longer in business, will not be required to make the accelerated sales tax payment " Guidelines, Page 3.
The nutshell version, from the linked article, is that the state's fiscal year end is June 30, so accelerated sales tax payments from Virginian sales tax vendors will make the 2009-2010 fiscal year finish in the black. Of course, eventually the accelerated payments will end and the state will have to budget for 11 months of collections, but that won't happen until 2021 when the program is set to end.
In the meantime though, at least one group of Virginia stakeholders is glad about the budgetary switcheroo:
" (Gov. Bob) McDonnell said this week that he's optimistic the state will end this fiscal year with a surplus that's significant enough to trigger a 3 percent bonus for state employees. The one-time cost would be $83 million."
No word in the article about just how happy Virginia Sales Tax vendors are to provide the state an interest free loan, mid-recession, to fund bonuses for state employees. (Including the state's team of Sales Tax Compliance professionals, no doubt...)
Granted, the class of mandatory early remitters is relatively small (about 1000 as per the article) compared to the entire class of Virginia sales tax vendors. However, the mandate presents significant sales tax compliance challenges.
We would guess one significant challenge is: how to find the cash to remit since the cash being remitted has not been collected from customers yet!
Yeah, that stings enough, but also consider the additional bookkeeping tasks involved with reconciling June filed-as sales with actual June sales. Even vendors seeking a hardship exception to the accelerated sales tax payments must provide extensive documentation ahead of time to avoid penalty.
But the state will give a vendor a break under certain circumstances:
" A Dealer who would otherwise be required to make an accelerated sales tax payment, but is no longer in business, will not be required to make the accelerated sales tax payment " Guidelines, Page 3.
At least no one can ever say that the Virginia Department of taxation doesn't have a heart, or a sense of humor.
The take away? Large Virginia vendors must comply and pay up. What else can we say?
Big Picture, vendors of all sizes and from all jurisdictions must recognize that budgetary shenanigans may be another source of sales tax compliance complexity.
The take away? Large Virginia vendors must comply and pay up. What else can we say?
Big Picture, vendors of all sizes and from all jurisdictions must recognize that budgetary shenanigans may be another source of sales tax compliance complexity.
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