What is the Nexus Analysis Report (NAR)?

The Nexus Analysis Report (NAR) examines the company's estimated state-wide sales tax exposure under Wayfair. The report summarizes the client's overall exposure and a breakdown by state, including state-specific considerations related to how exposure is determined. This report is firm-branded and can be configured to fit the needs of the client by toggling on and off exposure types and/or state cards.

Additional Notes

• This report uses the state rate and highest combined rates to estimate an exposure range.
• While invalid transactions are excluded from the data set, transaction addresses have not been reviewed for accuracy, and jurisdictions have not been assigned. Because of this, the report may not match other reports in LumaTax. See jurisdiction report results for a more-detailed exposure calculation.
• In some states, multiple tests may be run for the same test period to accommodate past law changes.

What is the Jurisdiction Report?

The Jurisdiction Report goes a step deeper than the Nexus Analysis report to offer increased precision in calculating exposure. It does so through ship-to address validation, jurisdiction & rate assignment, and by scoring the accuracy of address data. This report's exposure findings are the basis of all other reports in LumaTax, including Jurisdictional Tax Summaries.

Additional Notes

• This report only displays exposed states (red), so it does not include at-risk states (yellow), registered states (green), or states with no exposure or no sales tax collected.
• This report will mirror the inclusion or exclusion of states or tax types controlled by toggles turned on/off in the NAR.
• The transactions represented on each state card might not match the NAR state cards if address validation shifted the transactions to another state. For example, a transaction address with Chicago, AZ 60601 would be included in Arizona on the NAR but corrected to Chicago, IL 60601 and included in Illinois on the Jurisdiction Report.

What is the VDA Cost-Benefit Analysis Report?

The Voluntary Disclosure Agreement (VDA) Cost-Benefit Analysis Report helps you identify the best next steps to help your client mitigate potential penalties, fees, and interest resulting from not registering and collecting sales tax.

The report provides state-by-state recommendations for Registrations vs. VDAs based on a client's nexus exposure and individual state considerations, with a detailed analysis of the costs and benefits associated with submitting VDAs, including automated penalty and interest calculations. Additionally, the report provides a look-back analysis that can be useful in preparing VDAs.

Additional Notes

• The exposure amounts in this report are based on the findings of the Jurisdiction Report.
• Lookback periods, penalties, and Interest rate calculations are determined information made available by each state.

What is the ASC 450-20 Contingent Tax Liabilities (Wayfair) Report?

The ASC 450-20 Contingent Tax Liabilities report allows you to accurately report sales tax liabilities on a client's financial statements. This state-by-state report details a client's exposure, displays the likelihood of a loss, and recommends whether to accrue or disclose that loss. Utilize the report's disclosure statements for short-term and contingent tax liabilities and use journal entries (when applicable) to update a client's general ledger.

Additional Notes

• The exposure amounts in this report are based on the findings of the Jurisdiction Report.
• Penalties and interest rate calculations are determined using information made publicly available by each state.
• At this time, toggles turned on/off in the NAR do not influence this report.