What's Happening?
EisnerAmper, a leading business consulting group, is utilizing forensic accounting to uncover significant sales tax overpayments by corporations. William Flick, Managing Director at EisnerAmper Advisory Services, highlights that many companies, due to complex
and often contradictory sales tax laws across various jurisdictions, end up overpaying sales taxes. Forensic accounting can identify these overpayments, leading to potential refunds. Flick provides an example of a corporation that, due to a misunderstanding of Pennsylvania's sales tax laws on labor, overpaid taxes on landscaping services. By reviewing past payments, companies can recover these overpayments and improve profitability.
Why It's Important?
The discovery of sales tax overpayments through forensic accounting can have a substantial impact on a company's financial health. With corporate EBITDA typically ranging from 6-10%, recovering overpaid taxes can significantly enhance profitability. This practice not only aids in immediate financial recovery but also encourages companies to adopt more accurate and efficient tax management practices. It highlights the importance of understanding and navigating the complex tax laws that vary across jurisdictions, which can be particularly challenging for companies operating in multiple states.
What's Next?
Companies are likely to increasingly adopt forensic accounting practices to review past sales tax payments and ensure compliance with current laws. This could lead to a broader industry trend of more rigorous tax management and auditing practices. As businesses become more aware of the potential for overpayments, there may be a push for clearer and more consistent tax regulations across states to reduce the complexity and potential for error.
