Software Tax

[taxxcpa]

Use tax

Most states may require use tax, but in Texas, unless you have a sales tax permit, the state does not require you to pay use tax.
I used to work for the Texas State Comptroller and one of the most lucrative type audits we did was to assess use tax on businesses that had a sales tax permit. It was more difficult to assess sales tax than use tax. If you made a sale and failed to get a resale certificate, an auditor could assess the tax, but if the seller later got the resale certificate, the audit assessment was eliminated.

[S T]

Thanks Snags

Thanks for the info Snags, I was looking more at the explanation of the Sales/Use Tax, not necessarily the viewpoints of that Site. Seems most States are taking the same "viewpoint", sales tax either collected at the Seller's end, or the Purchaser has to file a Use Tax Report and pay

Sandy

[New York Enrolled Agent]

For the first time, an out-of-state tax software company has sent me a separate invoice for sales tax. Drake first went up 10% for the upcoming year, and didn't tell me there would be sales tax assessed on a separate invoice until they received my money for 2010. The tax is in addition to the 10% increase (and is overbilled on top of that).

I don't fully understand your complaint. TN requires the tax to be paid (see below). So whether Drake collects it as sales tax (I don't know the nexus laws in TN) or you pay it in use tax, there is an obligation to pay the tax. IMO, same bottom line!!!!! Am I missing something in TN law?

Tenn. Code Ann. § 67-6-102(60)(A) (2007) specifies that “ prewritten computer software” is tangible personal property for the purposes of the Tennessee sales and use tax.

[thomtax]

It is less than candid if Drake knew this was going to happen, and slipped in their 10% increase without mention. For the user, this is a whopping 20% increase. I was considering a competitor who was ostensibly $300 cheaper. The other vendor is now $400 cheaper and I wasn't told.

This sales tax charge was not instituted with the price increase. Drake charged sales tax last year also, at least in Arkansas, so it was not hiding the 10% increase.

I also thought that Drake should have notified customers of a price increase. That would not have made any difference in my choice, but it's just the way I feel business should be done.

LT

[DaveO]

At least here in Nebraska the fact that Drake conducts training seminars is enough to establish nexus for sales tax purposes. I've had a few clients audited by the state and it's always sales tax they are looking at. The income and employment taxes are glanced at but then the focus is sales and use. If you can't prove the tax was pad on every purchase or prove the item was not taxable they will assess the tax. Even checks to local merchants must be backed up with the actual receipt showing the tax was paid.

[Davc]

I just simply wanted you to know who they are, and what the "Fair" really means when you see it in their title.

Doesn't "Fair" mean that somebody else pays it?

[Snaggletoof]

The difference

[QUOTE=New York Enrolled Agent;104846]I don't fully understand your complaint. TN requires the tax to be paid (see below).

The implication with many of the posts (like the one above) is that this tax is either
a) Sales Tax for Drake
b) Use Tax for me

and that I should be legally obligated to pay for it either way.

I have never argued to the contrary. However, there is no common vehicle provided whereby Use tax can be paid without applying for a Sales & Use tax certificate. Therefore I was NOT paying it. Many states provide a line item on their income tax return for this, but we don't have an income tax here except in unusual situations.

After reading this, I'm sure some will maintain I should out of moral responsibility just send them a check for all internet purchases, out-of-state, etc. even if I don't have a certificate. The law is written by the same body who made it illegal to lasso a fish, even so, I don't argue that I am liable. It's not the first time a state has passed a law without any follow-up to accommodate those to whom it applied.

[JohnH]

I think you ought to pay NC Sales Tax because my wife's a retired NC teacher and we need the money.

(After all, this is all about whose ox is being gored, isn't it?)

[David1980]

However, there is no common vehicle provided whereby Use tax can be paid without applying for a Sales & Use tax certificate.

Actually they do apparently have a form for it, http://www.tennessee.gov/revenue/for...s/r0000501.pdf

My guess is they don't get many. Same situation here in WA, no income tax return, and nobody ever sends in a use tax return (well, I suppose a few must.) But I'm sure it's the same deal even in states that do have an income tax return. Even though there might be a line item on the tax return, who actually uses it.

[JON]

Sales or Use Tax

What state does not have use tax anymore. If they do not charge sales you pay use. 20 years ago the state did some auditing on sales tax for CPA firms. A friend of mine had his firm audited and they settled on like $10,000. The problem was that back then software and tax library sources were not charging sales taxes. Then it was compounded by his firm had never filed sales/use tax returns. The result settle on something they could go back as far as they wanted. It was a new standard as CPA firms all started filing use tax returns annually. It was corrected also by the fact that almost all tax software and library providers started charging sales tax.

[Black Bart]

Pay up! Yes, indeed!

...there is no common vehicle provided whereby Use tax can be paid without applying for a...certificate. Therefore I was NOT paying it..I'm sure some will maintain I should out of moral responsibility just send them a check...

Why, I don't see how we can even pose such a question -- doubtless those of us possessed of impeccable integrity can do no less that willingly, gratefully, and sublimely inform upon ourselves and render unto Caesar. Regretfully, there may co-exist among this esteemed and august body a few low characters who are shirking their civic duties...hmmm...

As a matter of fact, this thread prompted me to search for an Arkansas use tax form and, while I kinda knew in the back of my mind that such a thing existed somewhere; for some strange reason it just didn't seem interesting enough to ever look it up. This never-before-seen (by me, anyway) form popped up:

http://www.dfa.arkansas.gov/offices/exciseTax/salesanduse/Documents/ConsumerUseTaxForm.pdf

Gosh, what a surprise! It's almost like findin' a unicorn. I've been hackin' at taxes for many moons and have never yet filed one 'uh these for anybody nor know of a single soul who has. I wonder what it is about these things -- is it that people don't feel the need to tax themselves for somethin' they feel like is none of the government's business? Somebody (don't know if AR or TN man) once called and asked me if a case of Cokes (couldn't believe they'd call about such trivia) I bought in Memphis a year earlier was for resale. I hung up on that goofy SOB -- never heard anything else about it.

(After all, this is all about whose ox is being gored, isn't it?)

"Don't tax you, don't tax me. Tax the man behind the tree." --- Sen. Russell B. Long

[Nashville]

Household Name

This never-before-seen (by me, anyway) form popped up:
[url]Gosh, what a surprise! ... nor know of a single soul who has.

Bart has some nerve! The very idea of suggesting AR govt would be so greedy as to concoct a form like TN. The TN form SLS452 was brought from the brink of oblivion to the board's attention (by a non-Tennessean, no less). Arkansas hasn't got around to giving their form a name yet, they just call it a Consumer Use Tax Form. (Actually it might be a CU-1, how creative!!)

Add these two formerly obscure forms to tax lexicon so common that they may now be discussed at the dinner table with Bozo Husband and Bimbo Wife. "Have you sent in our 1040 yet?" "How did your 401k do last week?" "We need to pay in on the kids' 529 plan" "Wanna rent the latest Brad Pitt movie?"

"Snag's staying at home tonight -- he has to send in his SLS452 and isn't happy about it. Cousin' Cornucopia can't come til next week -- she's got CU-1 problems."

[taxxcpa]

Russell Long

Why,
"Don't tax you, don't tax me. Tax the man behind the tree." --- Sen. Russell B. Long

Once I got into a conversation with Sen. Long's brother, Palmer Long, in Tooter's Lounge in Shreveport. At one point he was pounding his fist on the bar as he expressed some of his political thoughts and said, "I ought to run for governor." I told him, "If you did, you would win." No son of Huey Long's could ever lose in LA. The only Long that ever lost an election is once when one Long ran against another Long.

Palmer supported Democrats including Tom Daschle, but later supported Republicans, including donations to J.C. Watts which indicates his view of Blacks changed from some of the comments he made at Tooter's.

[Snaggletooth]

No supportable alternative

Thanks to all who have posted to this lengthy and whiny thread.

The clear-headed thing to do is to simply pay the Drake bill, except enclose a note that the tax rate is 9.5% instead of 11%. Sometimes things hit you from out-of-the-blue and are distasteful, but given a preponderance of all the information in this thread, you just have to do the proper thing.

I also didn't realize Drake was collecting Sales tax for so many states. Apparently this is nothing earthshaking and has been going on for awhile.

Best regards to all...Snag