CreditRiskMonitor expects $1.77 million sales tax liability, restates financials after nexus study
CRMZ•Tax nexus review leads to restatement
CreditRiskMonitor flagged state and local tax nexus exposure, prompting its audit committee to withdraw reliance on prior financial statements.
A review indicated uncollected sales and use taxes in jurisdictions where it had economic or physical nexus. The company said it plans to restate results for affected periods.
Preliminary liability estimates and control weakness
The company’s preliminary estimate is a sales tax liability of about $1.77 million, including interest, and an income tax liability of about $210,000, including interest.
CreditRiskMonitor said it expects the main impact in accrued liabilities, retained earnings, SG&A, interest and income tax expense.
It also identified a material weakness in controls over identifying and monitoring state and local tax nexus requirements, and said a remediation plan is underway.
