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Evade Pay Up

In: Business and Management

Submitted By mdpcatoni
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| E-Vade Pays Up | | Case 14-07 |

| E-Vade Pays Up | | Case 14-07 |

Accounting Seminar
Professor: Evangelina vives, phd, cpa, Jd
March 14, 2016
Prepared by: Maria Catoni
Accounting Seminar
Professor: Evangelina vives, phd, cpa, Jd
March 14, 2016
Prepared by: Maria Catoni

E-Vade Pays Up
Case 14-07 E-Vade Pays Up is an online retailer who offers its products to all 50 states. The company is not present physically in any of the states, but does operate distribution centers in some states across the country and does not collect and remit sales tax on sales made in each state. Recently in a court ruling in State X subject all distribution centers within the state to collect and remit sales tax on all sales within the state. E-Vade has a distribution center in State X, therefore, must collect and remit sales tax on all sales within the state. Evade estimated the total amount $60 million of payable to State X for the past five years which includes $50 million for sales tax due, $6 million in interest and $4 million in penalties as of December 31, 2011. On March 15 of 2011 an amnesty program was approved by governor Needmoney providing incentive to voluntary registration to unregistered taxpayers forgiving all interest and penalties on unpaid taxes and 50% of all unpaid sales tax. E-Vade’s management decides to take advantage of the program and completes registration on June 15, 2012. With the amnesty, E-Vade settles its obligation by paying $25 million to State X. As previously narrated, E-Vade is liable for sales taxes from previous years’ sales. As of December 31, 2011 management was aware of the court ruling therefore it should be determined if any amount of sales tax must be recognized in their financial statements as of that date. Upon the approval of the tax amnesty program and E-Vade decides to participate,…...

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