From the February 2013 issue.
Few professionals know state and local taxes (SALT) as well as Andrew Johnson. Not the 17th President of the United States, of course, but the Texas CPA who specializes in helping business clients stay compliant with state and local taxes throughout the country. Did I mention that he's also a rancher?
Andrew and fellow CPA Jerry Peisner founded Dallas-based Peisner Johnson & Company, LLP (www.PeisnerJohnson.com) in 1992. Both had worked in the SALT subpractice at Arthur Anderson, which Jerry led. What some may see as uncommon, the firm doesn’t offer individual or business income tax preparation, planning, write-up, financial audits or other traditional accounting services. Instead, they focus exclusively on sales and use tax issues for businesses of all sizes.
Although others at Arthur Anderson at the time considered state and local tax somewhat of a step backward in terms of their careers, Andrew says that he and Jerry saw a broad need for the specialty, especially as more and more businesses were facing multi-state taxation issues.
The rapid development of e-commerce a few years later further added to the number of businesses who have to deal with increasingly complex and varying tax laws, as well as determining where they have a sales, use or property tax obligation, or nexus.
“Nexus can be an unknown factor for many business owners and managers, and state and local laws are rigorous enough that failing to comply with those laws can easily bankrupt a business,” he said. “Businesses often have nexus in more places than they think, and the biggest tragedy is when they later face an audit for failing to collect and remit the taxes they should have collected from customers. That’s money that the customers probably would have willingly paid, but now the business owner may be faced with it coming out of their own pockets, with additional penalties.”
Businesses and their management can also face more severe penalties. As Andrew wrote in a recent blog post, as states look to collect failing revenue, more and more of them are cracking down with criminal penalties. One Florida restaurant owner even faces up to 30 years in prison if convicted of the felonies he has been charged with.
That’s why the firm’s core offerings include getting companies registered where they're required to do so, helping them set up a system to collect the necessary sales taxes, and providing sales tax return compliance. The practice also represents clients during audits.
The firm started with a pretty big first client, doing sales tax work for Dr Pepper/Seven Up, Inc, before it was acquired by later parent companies. Since then , the practice has grown to serve hundreds of business clients, and has a staff of nearly 25. This makes Peisner Johnshon the largest CPA practice that limits their client services to state and local taxes. They process thousands of returns every month and have clients in a broad range of industries, including contracting, healthcare, manufacturing, property management, entertainment, transportation and others.
Over the past 20 years, both of the firm’s partners have recognized the integral role that technology plays in both the success of their practice, and in that of their clients. As a result, the firm scored a 375 on CPA Practice Advisor’s Productivity Survey (www.CPAPracticeAdvisor.com/productivity). The survey is a free online tool that helps professional tax and accounting firms measure how effective their workflow practices and technologies are, and benchmark them to similar practices.
Andrew notes that another issue that often affects even small businesses is that they often don’t understand what they have to pay taxes on and collect on. As an example, he cited a former client who was a pool contractor and had failed to pay taxes on many of the supplies their service sold to its customers. Service-based businesses also frequently fall into trouble when they don’t realize that some jurisdictions tax those services similarly to a product transaction.