restaurant.com gift certificates

[Black Bart]

Okay,

...I have bought books of discount coupons and never thought about recognizing gain for the ones I redeemed...

I take it all back and herewith pronounce you a regular guy (sorry -- like Zee said; everybody to his own opinion).

...neither I nor any of my clients are merchants required to collect and remit sales tax. Would we have a consensus on this board that NC is unlikely to raise at audit the issue of whether we pay sales tax on items other than those for which we keep receipts which we presumably only do when we intend to write off the items on our Federal taxes?

This thread just gets interestingER and interestingER. About this consensus; are you just asking? Or are you making the argument that there's no question a state revenue auditor would check items unrelated to business?

[JohnH]

JohnH, and anyone, neither I nor any of my clients are merchants required to collect and remit sales tax. Would we have a consensus on this board that NC is unlikely to raise at audit the issue of whether we pay sales tax on items other than those for which we keep receipts which we presumably only do when we intend to write off the items on our Federal taxes? .

I've never been through an individual income tax audit for NC, so I can't answer your question directly. All my NC individual audits have been piggybacks off Federal adjustments. However, my answer to your question would be that the issue of use tax would definitely come up in an individual tax audit. After all, there is that pesky line 17 on the NC D-400, and auditors do use checklists. Here are a couple of links to the official position on the subject:

http://www.dor.state.nc.us/taxes/sales/use.html\

http://www.dor.state.nc.us/faq/use.html

When this line suddenly appeared on the returns back in 1999, I assumed that it was the first shot across the bow and that NC would gradually increase the pressure to complete that line as a means of enforcing a stealth tax increase. If you remember, there was originally a table forcing you to put something there, but then they bowed to pressure and removed the table requirement, but not the line. I assumed they'd revisit it at some point, maybe even requiring an entry on the line even if it's zero. That hasn't happened yet, but with the current economic/budget crisis in this state I wouldn't be surprised if they resurrect it.

In any event, I have a very small number clients who dutifully give me voluntary figures on their internet purchases, and if they give me the info I do compute the tax & fill in the Consumer Use Tax on their NC D-400. With everybody else, I basically follow a "don't ask, don't tell" approach.

[DaveO]

This is where I was going with my earlier post. Once it's on the tax return and an entry is required then we are attesting to that fact when we sign the return and are obliged to make reasonable inquiry.

NE hasn't been harassing individuals over unpaid use tax on internet purchases so far, unless it happened to be tobacco. A couple years ago they sent bills of up to several thousand $$ to people who bought low tax smokes over the internet. This reporting was required of the online sellers in one of the tobacco lawsuit settlements. All they need to do is crack Amazon or Ebay and start sending the bills out.

In a recent audit the agent noticed some paypal fees and demanded to see all the clients paypal receipts. I was able to show the amounts recieved were for local sales and it blew by. I believe in proactive education of clients regarding future tax increses and privacy invasion. Maybe they will listen and write their congress critters.