Tuesday, April 21, 2015
HMB's David Hughes Quoted in Law360 Article on Avoiding Sales
5 Ways Retailers Can Avoid the Sales Tax Litigation Blitz
By Ama Sarfo
Retailers like Wal-Mart Stores Inc.
and Target Corp. are feeling the heat as consumers in states across
the country increasingly file sales tax class
actions accusing them of things like charging full sales
taxes on discounted items or shortchanging taxes on
When a retailer is unclear about how certain items should be taxed
or how discounts and refunds should be handled for
taxing purposes, it can be helpful to get a private letter ruling
from state or local tax authorities. However, there are caveats,
Hughes of Horwood Marcus &
Berk Chtd. says rulings are a strong defense against
consumer fraud class actions, as retailers can
counter that they acted under a jurisdiction's advice. However, it
may be impossible or impractical to get a ruling in every sales tax
jurisdiction where a retailer operates, he adds.
"The challenge, if you're talking
about national retailers, is that they're collecting tax in
hundreds, if not thousands, of jurisdictions," Hughes points out.
"In some of these jurisdictions, taxes are administered at the
state level, so a state ruling may suffice, but there are
practicality concerns, so retailers have to pick and choose
...When it comes to sales taxes,
retailers need to conduct their self-assessments with razor-fine
combs in order to catch easily preventable issues their computer
systems are missing, Hughes says.
"Retailers need to make sure they aren't missing low-hanging
fruit...Are there items that are clearly not taxable because of
exemptions, discounts or coupons? And retailers need to identify
those times clearly and ensure their point-of-sale systems are up
to date," Hughes says. "You don't want to get burned by a
black-and-white issue that you simply got wrong."
...There is no one-size-fits-all
approach to sales taxes, and the faster that retailers embrace that
philosophy, the better off they'll be, attorneys say.
It's understandable why national retailers would want to find
blanket approaches to their sales tax strategies, but what they
really need to do is undertake a deep dive into each jurisdiction
where they do business, Hughes says.
"I would be hard-pressed to come up with any one item you can
assume is always taxableor not taxable," Hughes says...
To read the full article, visit the
Copyright 2015 Portfolio Media,