Taxnexus.net – Follow Up
Taxnexus.net – Follow Up – after a bit of additional digging, we have identified a number of follow-on questions and observations for TaxNexus.
Community – the site announces “Join the Taxnexus Community to discuss cannabis tax compliance regulations” However, if one attempts to join the TaxNexus Community you get
Perhaps they might wish to wait for the Community to be built and functional before making an announcement.
We observe that Taxnexus has is seeking tax return preparers to begin building a community of professional preparers that will use their software to prepare and presumably file cannabis related tax returns under the preparer’s own signatures [doh…that would be the proper way to deploy the product]. The question which we are seeking to understand the answer to is whether that means that the Situs and Returns products will facilitate the generation of cannabis tax returns which are intended to be either self-prepared by taxpayers [which takes us back to the burning question of whether a taxpayer ought be preparing their own returns given the complexity of the rules] or making the software available to qualified return preparers who at least have the credentials to sign these returns [we aren’t going to touch the question of whether they have the education, experience, and competence to do so.
We next focus on whether TaxNexus intends to file returns for taxpayers as a paid preparer and the question of whether CDTFA would permit them to do so under their regulations governing paid preparers. We submitted a request for written guidance on that point.
We need to be clear and reiterate that we believe that the TaxNexus products have significant potential to fill a need in the cannabis industry that Avalara seems to have made a deliberate decision to abrogate. However, the manner in which they configure the product and roll it out is going to have a very significant impact on their success. They would be well advised to add individuals with actual tax compliance and return filing expertise to their team, and that very likely means CPA or Enrolled Agent and not an attorney that lacks actual experience preparing returns.
Finally, we add a significant caution with respect to any practitioner subject to AICPA SSTS and Professional Standards with respect to required disclosure to clients if a commission or referral fee is accepted. The TaxNexus site contains the statement
Unlike the real Army, we want our recruits to be well paid. You may include “Powered by Taxnexus” as part of your overall services package, or you can encourage customers to subscribe to Taxnexus directly. In either case, you will receive compensation in the form of wholesale pricing or via sales commissions.
We are rooting for TaxNexus to succeed, but, have concerns that to do so, they really need to get their act together.
If anyone is wondering, their leadership team includes:
Bill De Zenzo, VP of Business Development
Jasmine Davaloo, Esq. Chief Counsel
Our next article in this series is going to explore the specific information which is required to be included in the receipts provided to a customer by a retail dispensary, together with suggestions for additional information that they should consider providing.
Taxnexus.net – Follow Up