Use Tax

[DonB]

Colorado has added a use tax reporting line on it's 2015 Individual Return. I am interested how tax pros in other states handle this with their clients. I have read the reporting rate is 1 -2 % in other states. Do you rely on a questionnaire, or verbally ask about this, or some other way?

[Dusty2004]

I ask

I ask if they purchased any items without paying sales tax on it.

Dusty

[Rapid Robert]

It's on my yes/no questionnaire. Doesn't Amazon collect sales tax now for many online purchases where they didn't used to several years ago?

[David1980]

Doesn't Amazon collect sales tax now for many online purchases where they didn't used to several years ago?

I live near Amazon HQ and not all purchases through Amazon charge tax. It depends on whether I'm purchasing a "Sold by Amazon" or a "Fulfilled by Amazon" listing. Buying something from a third party, even if the goods are sitting in Amazon's warehouse and Amazon is the one shipping it to me doesn't always have sales tax (depends where the seller is I suppose). Looks like for purchases actually sold by Amazon they're charging the sales tax in 27 states now. https://smile.amazon.com/gp/help/cus...-no-redirect=1

In Washington, we all ignore the state use tax and pretend it doesn't exist. The exception being when you register out of state cars. I suppose if we had an income tax filing perhaps the state would actually collect some.

[DaveO]

I ask and I note that I have paid the tax each year. In Nebraska reporting of any amount will close that year for audit years sooner that if nothing is reported.
As part of the ACA all third party payer transactions are now reported (1099-k). It is just a matter of time before the IRS mines this data for purchases and returns it to the states. I remember when this happened after the tobacco settlement when the state just sent out bills for the tobacco tax.

[tpnl]

We ask . . .

The use tax question was required to be answered on the Ohio return last year. So we ask if there were any purchases made that sales tax was not paid and should now be reported and paid to the state of Ohio. Everyone -- so far -- has said no.

[ATSMAN]

Just curious how many taxpayers raised their hand and paid the use tax. We have one in MA too and I can recall only 1 or 2 taxpayers who paid it because they purchased big ticket items online without paying any sales tax and the credit card companies supposedly notify the state DOR!

[mastertaxguy]

State use tax declaration

1. Our office has a specific line on our "pre-season" questionnaire about that for our state (Michigan) and neighboring states if they have to file a return (like Ohio).
2. We ask the question again and document the answer during the personal appointment/interview.
3.That issue, and things like attestation of mileage and expense logs, etc. are part of our engagement letter copy that clients sign and we keep.
4. We have had some clients (schedule C and other individuals) received MI Treasury letters demanding use tax payments on items bought on line/out of state/Amazon/etc. Responses to those letters (audits/examinations) are a pain. How state treasury officials get such information is another issue.
5. We also ask about other out of state purchases, like tobacco products, as that (cigarette taxes) was a hot button issue in Michigan a few years ago.