Notice Management
Michael J. Fleming is the founder and president of Sales Tax and More, a full-service consulting and solutions firm with a passion for state tax. He is one of the country's leading authorities on sales tax issues such as consulting and research, registrations, returns, nexus, drop-shipping, eCommerce, and service providers.
Michael is a renowned writer and speaker, and he regularly presents on webinars. He is also the host of the Sales Tax and More Podcast, where he shares his wisdom and learnings with his audience in order to help them navigate the tricky world of taxes.
In this episode…
Mike Fleming and Ellie Moffat talk about notices and what is involved with notice management.
Here’s a glimpse of what you’ll learn:
What is a notice? Why would someone get a notice?
Why is it important to manage notices?
What is notice management and who should handle it?
What’s involved in notice management? What are you expected to do? What is your third party provider going to do for you?
The Discovery Effort
Connect with Michael
Episode Transcript - Audio Version
[00:00:00] Welcome to Sales Tax and More, your go to resource for all things state tax related. Now, here is your host, Michael Fleming.
Mike Fleming here, founder of Sales Tax and More, and today's co host of the Sales Tax and More podcast, where we talk about everybody's favorite topic, which is of course, sales tax. And today we're going to talk about notice management. But first, before we get started, let me introduce you to my co host Ellie Moffat.
Hey everyone. Thanks, Mike. It's really great to be here. We're really happy to have you here. If you like what you hear today, if you like our podcast, please like and subscribe so that
[00:01:00] we know to keep producing it. And Sales Tax and More, we are a full service consulting and solutions firm. We have a really great team here of experienced tax professionals who are very dedicated to fulfilling your state tax
and related needs. So we do a lot of sales tax returns, sales tax registrations, consultations, research, and like our name states, more. So if you have questions about our services, if you'd like to work with us, please reach out. We'd love to hear from you and we'd love to work with you as well. So Mike, what is a notice? Why would someone get a notice? Good questions. All right. So notices are communications from the state. And, these communications could be about filing frequency changes. It could be because the state thinks that you didn't file a return or that you filed the return, but you, didn't pay, them their money.
It could be about late penalties. It could be about interest. It
[00:02:00] could be, nexus questions. I mean, notices are just communications from the state. It could literally be about anything. They sometimes are mailed the old fashioned way, snail mail, either to your mailing address or to your physical address.
Why states even ask for a mailing address when they don't often mail things there is beyond me, but sometimes they'll go to the physical address. Or the state may just upload it to the online state account. So a couple of different places where the state could put them, but sum it up, make it all, short.
It's a communication from the state. So we told everyone, this is about notice management. We know what a notice is. Why is it important to manage notices? Why are we doing this podcast? Well, you want to manage notices because you want to limit your exposure. I mean, if there's a filing frequency
[00:03:00] change, say from an annual to a monthly, you don't want to find out about it when you go to file the next annual return and you're missing 11 monthly returns or 12 monthly returns throughout the course of the year.
So, and, you know, you could go from quarterly to monthly. You can also go the other way and have to file less returns. So, that's one reason, you know, when you miss returns, There's penalty and interest involved in that. It could be about, penalty. It could be about interest, could be about missing returns.
And if you don't handle these things, they tend to grow and get worse. Your exposure grows. And when we talk about exposure, we usually are talking about money, penalty and interest. So it's important to stay on top of these notices, sometimes the state will go out and end up closing your account, or give you a jeopardy determination, issue liens or whatever, if
[00:04:00] you're not paying attention, to these notices, they can also spark audits, depending on what the notice was about.
So, very important to, to number one, review your notices, and number two, to then go ahead and take whatever action is appropriate to clear that notice. So then what is notice management and who should handle it? Great questions. And notice management, it depends on who's defining it.
When we talk about notice management as part of our sales tax return services, we'll go out to the online accounts and we'll, see what notices are out there. We generally use us as your mailing address. So we review all those notices and we go ahead and clear all of these notices. Or if we need help from you, we'll let you know, hey, this is
[00:05:00] not information that we have.
Here's what the state is asking for. So when we talk about notice management, it's the reviewing of the notices all the way to the clearing of the notices. And so long as that was not a client caused notice. There's no fee for that. We do that as part of our service. If it's a client cause notice, I mean, if the client doesn't send funds to pay their taxes on time, then notices are generated and late fees are involved and, there, we do charge a fee for that.
But that's a client cause notice. Otherwise we handle everything. Now, some of the software companies that do returns, number one, they often don't even check the online accounts. So there may be notices out there forever. A lot of times this pops up when there are frequency changes and, you know, no one knows there's a frequency change because the software company is not checking this.
[00:06:00] And next thing you know, you get a bunch of back returns and a bunch of penalty and interest. And of course, the software company is not going, to absorb any of that. So, you know, we were talking about what notice management is. So, the software companies think notice management usually is, Hey, you got a notice, go and handle it.
Go and fix it. So their notice management is just notifying you that you've got a notice in most instances where someone's got to be fixing it. And we believe notice management should be not only reviewing it, but also fixing it. If you're doing this on your own, someone there should be checking the online accounts in each state.
Someone needs to be reviewing the mail. Someone who has, knowledge of the sales tax filing process, and the ability to go ahead and respond to these notices. So depending on who's doing your sales tax
[00:07:00] returns, you know, is going to influence the answer of who should be handling this because most notices
are a result of the sales tax return filing process. They're about missing returns. They're about interest penalty. They're about returns that may have been filed incorrectly. And even if you're doing everything perfectly, states are not always very efficient. I mean, you could be looking at an online confirmation that you submitted the return and that you paid the money and the state saying, well, we got the return, but we never got the money.
So, some of this, you know, no matter how good you are, the states, are not too good. So there are going to be notices, even if you're doing this in house and you're 100%, accurate at doing everything, the states are still going to send you notices. And filing frequency changes, et cetera, are not related to, perceived mistakes in the filing process. But most
[00:08:00] of these notices are going to be related to the returns filing process. So someone who's in that, process is usually the one who's going to handle this. And I just want to repeat something that you were saying here, Mike, just one more time, because I think it's important if you're outsourcing and your notice management, you need to make sure you understand what notice management means to the person you're outsourcing it, because it means something different everywhere.
Right, Mike, is that? Yeah, absolutely. Just to Perfect summary, you know, the software companies notice management is, you know, taking a look at, you know, if they're your mailing address, taking a look at the notices and letting you know that you have a notice, and then you got to go out and correct it where for us and companies like us, we're not the only ones that do this, but you got to ask, what is notice management?
What is your responsibility? We try to keep it as hands off as possible for you. And try
[00:09:00] to do everything from start to finish, you know, every once in a while, we're going to need some additional information from you in order to, you know, correct, whatever the notice is about. But our goal is to have these notices, fixed, you know, before you even know about them.
That's how efficient we want to be at this. And like I said, a lot of times it's just, you know, showing the state, your online confirmation, showing the state, a canceled check, you know, states aren't very efficient. Sometimes you just got to show them the documentation that you have showing that it's actually been paid.
And when there are filing frequency changes, part of our service here is to go out and try to get your penalty waiver and interest waiver because if they mailed it to you, it's a lot harder to do that. If they uploaded it to your online account, it's a lot harder to do that. But those are the ones we can find.
It's the ones where you never got a notice. And a couple of
[00:10:00] states have done this recently. The state of Maryland in particular, they just never got sent, and there were a lot of filing frequency changes, so we're getting, all of the penalty and interest waived, or, so far we've been successful, with our clients here.
So, what's involved in notice management? What are you expected to do, and what is your third party provider, going to do for you. I think it's an important question. If you think that you have it all taken care of, a lot of these salespeople out there said, don't worry about it.
We got it all handled. All you got to do is sign up with us and everything else is, going to be taken care of. That's just not the case, unfortunately. So you've got to stay on top of these things. Very few software companies will go out and check your online accounts. Company like Avalara doesn't even utilize your online accounts a lot of times, so they're never in there.
So you've got to have someone else who's going in there, someone like,
[00:11:00] you know, yourself, , who can actually, stay on top of these, potential notices. All right. And, thank you so much, Mike. Anything else you want to add in about this, about anything else? No, just that notices are important because that penalty and interest can add up quickly, especially if you have large tax amounts.
So you definitely want to stay on top of this. I also want to take this opportunity. Here's a little sales plug. You know, when times get tough for the states, they have less, state income tax. They have less sales tax, less payroll tax. So their revenue is down. And what these states do is either increase compliance efforts or they try to look for new taxpayers.
That's called the discovery effort. You know, they're looking for people they think should be paying taxes in their state. So, they often hire additional auditors.
[00:12:00] So, we've been seeing more audits than we have, and we expect to see more as we're going into 2025. So, we offer sales tax audit defense, and one of the things that we've just rolled out is an annual, you know, it's a flat fee.
And it's an annual audit defense. So, any audits that you get between now and the end of 2025 or would all be included in this flat fee here. So if you're interested in something like that, protecting yourself, for any audits that do show up from now to the end of 2025, give us a call.
And, we'll have, one of our people explain the program to you and whether it works, for you. I mean, if you're only gonna, if you don't expect to be audited, or if you expect one audit, probably, not the best program for you, but if you expect, two or more audits during the year, then, this is a great savings.
[00:13:00] So, sorry for that, little bit of an infomercial layer, but, I think it's a great service and we've got a lot of people taking advantage of it. Yes. Thank you so much, Mike and Mike mentioned that you could call us. You can also just reach out directly to me at my email. That's E Moffat, E M O F F A T at sales tax and more. com. You can also get on our website and use our contact page and reach out to us that way and see more of our information, more of our free resources, more of what we have out there. Our website is sales tax and more. com. And Mike, thank you so much for today. Again, I want to put out a reminder for everyone, please like, and subscribe to this podcast.
That helps us out a lot. And thank you so much. Thank you everyone. And we hope to see you on the next episode of the Sales Tax and More podcast.