September 18, 2003

Effective Use Tax Rate Agreements Are Gaining Popularity Among U.S. Companies

Edison, NJ... Effective Use Tax Rate Agreements (EUTRA), also known as Sales and Use Tax Compliance Agreements are providing companies with many advantages over the traditional approach of performing an annual sales & use tax refund review.

"It is a win/win for the taxpayer and the state. Taxpayers save on the expense of performing annual sales & use tax refund reviews. The State saves resources by not having to come out and perform an audit," says Joe Thiel, Vice President, Tax Services at The Gelber Organization, a consulting firm that specializes in Multi-Sate Taxation and profit enhancement.

EUTRAs are formal agreements between the Division of Taxation and the Taxpayer. EUTRAs allow the use of an "effective tax rate" to calculate sales and use taxes owed on purchases. EUTRAs generally have a term of three years or less. Conditions under which the agreement may require modification or termination are agreed upon by both parties. Upon request to enter the program, the Division will determine if the taxpayer is qualified to participate and then conduct an audit to establish the "effective tax rate."

""Many states are now offering EUTRAs to taxpayers. We've been managing more and more EUTRAs on behalf of our clients. Although it does require some additional upfront negotiation, the benefits to the taxpayer make it all worth while," adds Thiel, a former New Jersey State Tax Official himself.

These benefits include:

• Eliminating the need to pay the sales tax at the time of purchase or compute and remit the use tax on a transaction-by-transaction basis.
• Predictability and consistency of approach in tax reporting
• Development of cooperative relationship with Division of Taxation
• Reduced Audit costs
• Increased confidence in reported taxes
• Increased accuracy in sales and use tax budgeting and more certainty and consistency of sales and use tax expenses.

For a free report on the eligibility requirements and advantages of Effective Use Tax Rate Agreements, contact Joe Thiel at 732-417-4400.

The Gelber Organization is a consulting firm of Certified Public Accountants, former senior state tax officials and other tax professionals with particular expertise in the highly specialized field of State and Local Taxation. The firm was founded in 1990 by Arthur Gelber, a Certified Public Accountant, and practices in all fifty states. Its clients include Fortune 500 firms, as well as mid size firms in many different industries, including the pharmaceutical, technology, utilities, retail, transportation and financial industries.