SOURCE: Sabrix, Inc.

August 19, 2009 08:00 ET

Sabrix Study Finds That 95 Percent of Companies Surveyed Underestimate Their Sales Tax Liability

Aggressive State and Local Audits Expected to Make Sales and Use Tax Top Priority for Companies of All Sizes

SAN RAMON, CA--(Marketwire - August 19, 2009) - Sabrix, Inc., a leading provider of transaction tax management for companies of all sizes, today revealed results from recently conducted nexus studies, which found that 95 percent of companies surveyed underestimated their nexus footprint. Nexus determines what business activities create sales tax liability in a state. The Sabrix studies were conducted in Q3 2009 with companies ranging in size from $3-170 million in revenue and across a wide range of industries including chemicals, consumer products, high tech, healthcare and life sciences, and professional services.

The study also found that 85 percent of participating companies underestimated the number of states they needed to register in by more than 50 percent. Mid-sized companies with customers all over the country were most likely to underestimate and carried significantly more risk of audit exposure, while smaller companies, who usually do business in a few states also underestimate, but have lower non-compliance risk

The findings follow recent news announcing increased demand for Sabrix's sales and use tax solutions despite the tough economy. (see: http://www.sabrix.com/2009/08/sabrix-announces-increased-demand-for-its-sales-and-use-tax-solutions-despite-tough-economy/).

"We are seeing more and more inquiries for Nexus studies and our outsourced sales and use tax service in general as companies turn to experts to help them navigate the dynamic and complex market and quickly get compliant," said Carla Yrjanson, Sabrix's Vice President of Tax Research.

According to the Sabrix studies, companies typically overlook:

--  Independent contractors -- in most states, all it takes to establish
    nexus is an agent acting on behalf of the company.
--  Services -- performing services in a state -- whether a single service
    in a year or 500 -- can create nexus.
--  Trade shows -- spending a single day at a show can create nexus even
    if the company does not sell anything (e.g. it is strictly informational).
    

"Nexus determination is inherently complex so the survey findings aren't necessarily surprising," said Yrjanson. "But what is potentially concerning for companies is how quickly and aggressively revenue-hungry states are tightening up their sales and use tax auditing procedures given the current state of the economy. Thus, companies who are unknowingly out of compliance face increased risk of audit, penalties and interest making sales and use tax a top priority for companies of all sizes."

California, for example, recently conducted door-to-door visits to over 74,000 businesses in over 130 zip codes as part of the "Statewide Compliance and Outreach Program" (SCOP). Dozens of other states are in the process of creating similar programs.

"In addition, online sales is another issue further complicating sales and use tax," added Yrjanson. "In New York, for example, the 'Amazon tax' already claims sales tax nexus through its affiliates and we expect other states to do the same."

For more information on the Nexus studies results, or to find out how to conduct a Nexus study for your company, contact Sabrix at (866) 472-2749 or sales@sabrix.com.

About Sabrix, Inc.

Sabrix, Inc. is a leading provider of transaction tax management for companies of all sizes, enabling finance, tax, and IT professionals to achieve accurate, timely, and cost-effective compliance for sales tax, use tax, Value Added Tax (VAT), excise tax and industry-specific taxes and fees. The Sabrix Application Suite™ serves global enterprises such as Amazon.com, BASF, Cisco, DTE Energy, IBM and York International. The Sabrix Application Suite seamlessly connects to all financial applications requiring the determination, calculation, and recording of transaction taxes. The company also offers the Sabrix Managed Tax Service™ (MTS), an outsourced transaction tax compliance service that helps finance departments of small-and-medium-sized businesses eliminate the hassle, control their audit exposure, and reduce the total cost of sales tax, use tax, and VAT compliance. Sabrix MTS seamlessly integrates with a company's existing accounting and e-commerce systems, and, similar to outsourced payroll services, operates as a trusted extension of a company's finance department to address tax compliance from start to finish: address validation, tax rate maintenance, tax determination and calculation, returns preparation and filing as well as audit research and documentation. For more information, please visit http://www.sabrix.com.

Sabrix, Sabrix Application Suite, Sabrix Managed Tax Service and Sabrix MTS are trademarks of Sabrix, Inc. All other company and product names are trademarks or registered trademarks of their respective holders.

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