Remaining Compliant During Organizational Changes

Steps Companies Can Take to Ensure Compliance

If your company is undergoing an organizational change, there are certain steps that must be taken to ensure that the business remains in compliance with federal, state, and local tax laws and regulations. Organizational changes can include a new name, new locations, nature of the business, or ownership.

Secretary of State

Organizations that want to establish a new name must first notify the Secretary of State and submit a request to change the name in the articles of incorporation. If the business has previously filed a “Doing Business As” this must be resubmitted to the local government.

Business Licenses

The next step is to update business licenses and permits. This process will vary between states and localities. Information regarding the requirements can be obtained by contacting each Secretary of State’s office and the localities in which your business is operating.

Taxing Authorities

Lastly, the tax authorities must be notified. This can be a time consuming process, especially for companies who have nexus in many jurisdictions.

IRS

The name change must be submitted to the IRS prior to submitting the changes to the state and local taxing authorities. If the company is a corporation, this can be done on the current year income tax return. If this has been filed, the request can be submitted in writing to the address where the return is normally mailed. Typically the IRS does not require issuance of a new EIN (Employer Identification Number) when a business undergoes a name change. IRS Publication 1635 provides instructions on submitting name changes based on entity type (http://www.irs.gov/pub/irs-pdf/p1635.pdf).

States

Once the request to the IRS has been submitted, the business can proceed to making the necessary changes at the state and local level. Each state and local jurisdiction will have specific requirements when submitting a name change.

Throughout the process, it will become apparent that some jurisdictions have a fairly simple process while others may have more stringent requirements. Illinois allows name and tax type changes to be submitted by contacting the Central Registration Division via telephone. While states like California and New York require name and tax changes to be submitted using a state provided document. Typically these documents must be signed by a company officer. Some states such as Georgia, Washington, and Connecticut, require documentation validating that a name change has been submitted to the Secretary of State first.

Simple changes such as updating an address, adding or removing a tax type, and adding or removing a location can be submitted via web. Virginia, Florida, and Texas are among the states that provide the option to submit these changes on the web. If the nature of the business is undergoing a transformation, it is important to remember that this may have an effect on the type of tax the business must file. For example, a business that starts making purchases for use within the business in a given state will now be required to report use tax.

A change in ownership will typically require that a new license be obtained. Washington and Iowa provide applications on their State Department of Revenue web sites. The state of Colorado provides a form to be filled out and mailed in. Detailed information regarding specific requirements can usually be obtained on each state’s website; in some cases it may be necessary to make contact via phone for additional clarification.

Tips for the Taxpayer

Any company undergoing changes within the organization must be aware of how these changes must be reported to federal, state, and local governmental agencies and taxing authorities. While the process can be time-consuming and manual, it is necessary to ensure compliance and timely filing of applicable sales and use tax returns.

If unsure of local requirements, it is best to reach out to each individual agency and taxing authority to confirm that the necessary requirements are being met or to source an experienced tax services provider. Ensuring that a company is in compliance can prevent future issues that can result in penalties, fines, or loss of the privilege to operate in a state or locality.

 

For More Information

If you are interested in learning more about this topic or other tax topics, please visit our Tax Publications under News and Events at www.allynintl.com or contact tax@allynintl.com.

 

How Can We Help?

Allyn’s tax team is staffed with seasoned tax professionals experienced in all aspects of Federal, multi-state, and local tax compliance and consulting for large US and global corporations.  We use that experience to your advantage.

Allyn files state and local sales and use tax returns in every US taxing jurisdiction as well as property tax and license tax returns throughout the US. We can manage your tax compliance and registrations, create a solid tax process, and provide audit defense for your company.

Contact us and we can provide a customized cost-effective solution to meet your company’s needs.  For further information on Allyn Tax services, please contact: tax@allynintl.com.

 

About Allyn International

Allyn International is dedicated to providing high quality, customer centric services and solutions for the global marketplace. Allyn's core products include transportation management, logistics sourcing, freight forwarding, supply chain consulting, tax management and global trade compliance.  Allyn clients range from small local businesses to Fortune 500 firms. Allyn conducts business in more than 20 languages and has extensive experience in both developed and emerging markets. Highly trained experts are positioned throughout North America, Europe and Asia and Allyn regional headquarters are strategically located in Fort Myers FL USA, Shanghai P.R. CHINA and Prague, CZECH REPUBLIC. For more information, go to www.allynintl.com.