Tax Planning & Compliance Flashcards
7 cards from real APP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Tax Planning & Compliance flashcards as text
When a company purchases goods from a foreign vendor and imports them into the US, which tax is typically assessed at the point of entry?
Answer: Customs duty (tariff)
Customs duties (tariffs) are federal taxes assessed on imported goods at the US border, administered by US Customs and Border Protection.
A purchasing professional receives a W-9 form from a new domestic vendor. What is the primary purpose of this form?
Answer: To collect the vendor's taxpayer identification number for 1099 reporting
Form W-9 collects a vendor's name, address, and Taxpayer Identification Number (TIN), which the buyer uses to prepare 1099-MISC forms for applicable payments.
Which of the following purchases is MOST likely exempt from state sales tax in the majority of US states?
Answer: Raw materials incorporated into manufactured products for resale
Most US states exempt raw materials that become part of a product manufactured for resale under a resale or manufacturing exemption.
An organization purchases equipment in State A but uses it primarily in State B. Which state has the right to collect use tax?
Answer: State B, because that is where the property is used
Use tax is imposed by the state where tangible personal property is stored, used, or consumed, not necessarily where it was purchased.
What is the term for the process by which a company tracks and manages its tax obligations across multiple jurisdictions to avoid over- or under-payment?
Answer: Tax compliance management
Tax compliance management involves systematically tracking obligations, filing deadlines, and payments across all relevant tax jurisdictions to ensure accuracy and timeliness.
Under IRS rules, when must a company issue a 1099-NEC to an unincorporated vendor for services rendered?
Answer: When total payments to the vendor reach $600 in a calendar year
The IRS requires a 1099-NEC to be issued when total payments for services to an unincorporated vendor (sole proprietor, partnership, LLC) equal or exceed $600 in a calendar year.
Which document should a purchasing department obtain from a vendor claiming a sales tax exemption based on their resale status?
Answer: A valid resale certificate or exemption certificate
A resale or exemption certificate issued by the vendor proves they intend to resell the goods and shifts sales tax liability from buyer to seller.