Another sales tax software question

[equinecpa]

I resell Intuit Online payroll services to a couple of my clients. Intuit charges me sales tax. I charge my customer sales tax on my invoice to them. Should I be able to claim back the sales tax paid? I asked Intuit if I could provide a sales tax # since I'm a reseller and they responded that they are providing a "right" to use software which is considered tangible personal property and is taxed as an ASP model and not the conventional payroll service model.

My question. I'm in Texas am I wrong to be charging my customers sales tax for the use of the software? Seems that there is an awful lot of sales tax being collected on one sale...

[Snaggletooth]

Most States

would exempt you from having to pay Intuit, but require you to collect and remit the tax charged to your customers. I say most states because I've seen several of them but not Texas. The state shouldn't make money twice. I think if you applied for a resale certificate and sent evidence of it to Intuit, they would have to honor it.

[Black Bart]

...taxed as an ASP model and not the conventional payroll service model.

I don't understand this -- what's ASP and what are they saying?

My question. I'm in Texas am I wrong to be charging my customers sales tax for the use of the software? Seems that there is an awful lot of sales tax being collected on one sale...

Don't see anything wrong with you charging the tax, but as Snag says, it's only supposed to be paid once (they shouldn't be charging you tax since you're a reseller) -- at least that's the way it is here. If it gets paid twice we can file for and get a refund from the state. I'd think most other states would be the same (unless that ASP is some other kind of tax).

[S T]

QuickBooks Pro

Intuit, I am a QuickBooks Pro Advisor, and sign on and that ships directly to my Client. They pay the bill, I don't!

On payroll service, that I perform, I pay Intuit, and then I charge a fee (absence sales tax) as a service to my client. Not "online Payroll Services"

I agree with BB, what is Intuit's explanation of "ASP"

So I never am involved in Sales Tax with these transactions.

Online Services I don't think need to charge sales tax, but then we have had many threads about this recently, so now I am not really sure. Is an Online Service a "tangible" I thought with computer software, you had to receive a "CD Disk"

I would think you could just take your total online cost including sales tax given to you by Intuit, and pass on to the client and not charge "another" sales tax charge. I just record my Intuit Charges as a cost in my accounting if I paid it, and then receipt in the amount received by the Client - so it washes. Although I am not "reselling" online Services.

Unless, you are trying to make a few $$ - and then are you reselling a "product" such as a "CD" or just your "service". Not sure.

Sales Tax now is becoming a very big issue!

Sandy

[equinecpa]

Quote from Intuit

Here's the whole reply from Intuit

"Although you are charging your clients sales tax, we are still required by law to charge you sales tax for use of our software. Intuit Online Payroll, formerly PayCycle is not providing a service, but the right to use a prewritten software application. The software is provided as a web based "Application Service Provider/ Software as a Service" application (ASP or SaaS). The States tax prewritten software as tangible personal property, whether or not the customer receives a tangible copy of the software; downloads the software; or uses an on-line ASP or SaaS version of the prewritten software. Please note that both KPMG and Deloitte agreed that the taxability should be based upon an ASP or SaaS model and not the conventional payroll service model."

I do mark up what Intuit charges me by a small amount because clients contact me with their questions when using the service. I charge my customers sales tax because I believe the TX sales tax code says this is a taxable service. I'm not sure why intuit doesn't treat this as a resale situation -as it's obvious who is using the software, my clients and not me.

I hate sales tax there needs to be some conformity between states. It's impossible to know each states rules yet as the internet takes off I find I"m beginning to know the consequences of doing business in each and every state.

[Black Bart]

Pretty much

Here's the whole reply from Intuit. "Although you are charging your clients sales tax, we are still required by law to charge you sales tax for use of our software. Intuit Online Payroll, formerly PayCycle is not providing a service, but the right to use a prewritten software application..." I'm not sure why intuit doesn't treat this as a resale situation -as it's obvious who is using the software, my clients and not me...

typical governmental trickery/mumbo-jumbo. When "regular" tax rules aren't bringing in enough money and public resistance prevents a rate increase, simply redefine the rules, that is, instead of only actual product use being taxable, make the "right" to use taxable as well (I suppose they could tell a retailer "You have the RIGHT to wear these blue jeans BEFORE you sell them if you want to").

You know, if you looked at these things long enough and they talked long enough, you can almost hear people saying "Why, yes, yes, I can see that now...black really IS white isn't it?"

[JohnH]

typical governmental trickery/mumbo-jumbo....
You know, if you looked at these things long enough and they talked long enough, you can almost hear people saying "Why, yes, yes, I can see that now...black really IS white isn't it?"

Bart: It already happens - predictablly, regularly, and on a grand scale.

[Black Bart]

You know, John,

Bart: It already happens - predictablly, regularly, and on a grand scale.

there's something disturbing about the growth of the "anything goes" attitude of goverment officials when they're raising money nowadays. Not so many years ago, the revenue-raising ploys had to be related to reality, have some semblance of the possible, or at least present an appearance of normalcy. Now everything is done in such a blatant, raw money-grabbing manner that they don't even bother with face-saving facades -- it's basically just "Give me your money!"

I'm thinking, for instance, of IRS' alteration of the automobile depreciation method a few years back. The cost of new cars got so high that, even spread over five years, IRS felt they were losing money by allowing the undepreciated balance of the trade-in on a new car to be added to the boot and written off at the quick first few years rate rather than the slow rate normally taken at the remaining end of a car's life. So, what did they do? They said, in effect, "Yes, we know you no longer have that trade-in, but it's costing us too much money -- just pretend you still have that car and continue to depreciate it at the old slow rate. Of course this is not based in objective reality and it's a bookkeeping nightmare keeping track of things that aren't there, but so what? We'll make money off of you in this absurd fashion."

And so it goes -- sort of like the sales tax thing, that is, "Let's keep spending money until we HAVE to have a sales tax to keep from bankrupting the country."

[JohnH]

As far as I can see, that's the general idea behind the notion that it's government's job to "spread it around a little".