Increasingly more hoops to jump through

[Snaggletooth]

Now that electronic filing has become the norm, some of the states are requiring preparers to jump through more and more hoops for the "privilege" of electronic fiiing. As if the benefits of electronic filing accrue only to preparers.

My latest rant is Alabama. They expect preparers to ask taxpayers if Alabama residents have imported stuff from out-of-state without sales tax. And they think the taxpayers are going to volunteer that there were such purchases. Some taxpayers don't even know what they're talking about. There are other stupid questions also, such as "HOF Status". They think these questions are going to result in millions of dollars in revenue - just shows how out-of-touch they are.

I believe preparers should begin inundating Alabama with paper returns. Then we'll see how many millions of dollars are happening.

And by the way, the solution to their imported sales tax problem is to get PayPal, EBay, and others to begin charging tax just like Amazon had to do. This would bring in infinitely more money than these stupid questions.

[ATSMAN]

Alabama is just doing what other states particularly in the North East have been doing for a long time. Yes when I file a state return in CT,NY, MA I have to ask those questions and some!

That is the way things are going to be my friend so get used to it. States are seeing a drastic decrease in tax revenues and they will now squeeze the last dollar!

[rbynaker]

Other states have been doing this for a while now. CA even has a "standard" amount you can use based on your income. VA has had use tax on their returns for a long time but they made it a mandatory entry a few years ago. I have a standard copy/paste blurb for this:

Use tax is what you're supposed to pay if you purchase something and didn't pay sales tax. Did you buy any tangible property online/mail order in 2020 on which you were not charged sales tax? Most of the major retailers do now, even Amazon.com started a few years ago. Sometimes if you buy something from a third-party through the Amazon Marketplace they won't charge tax though. The VA "Wayfair" law went into effect on 7/1/2019 so practically everyone should be collecting sales tax now but there may be some ebay sellers who are not in compliance. Let me know the total purchases for the year with no sales tax. Note there are two different rates in VA. Food is taxed at 2.5% (so Blue Apron, Plated, Hello Fresh, etc.). Other tangible property is taxed at 6% here in NoVA. Anything digital is tax free for now (downloaded movies, apps, etc.) but they're always kicking around new ways to raise tax revenue in Richmond.

Since the VA "Wayfair" law went into effect in 2019 they caught everyone who wasn't charging me sales tax (including TheTaxBook!)

I didn't dig into the AL laws but did a quick Google, looks like AL has a $250K threshold for sellers:

https://revenue.alabama.gov/2018/07/ador-announces-sales-and-use-tax-guidance-for-online-sellers/

I've made a note for next year to update my organizer questionnaire to try and consolidate all of the "questions that have to be answered on a tax form" in one place. We've had foreign accounts/trusts on Sch B forever but now we have the virtual currency box, the 1099 boxes on C and E, the state sales/use tax question (many states have a check box to affirm that there is no tax due).

Rick

[Rapid Robert]

Now that electronic filing has become the norm, some of the states are requiring preparers to jump through more and more hoops for the "privilege" of electronic fiiing. As if the benefits of electronic filing accrue only to preparers.

No need to feel persecuted. Taxpayers who prepare their own returns have to answer the same questions, and the questions have nothing to do with efiling.

And by the way, the solution to their imported sales tax problem is to get PayPal, EBay, and others to begin charging tax just like Amazon had to do. This would bring in infinitely more money than these stupid questions.

Paypal does not sell anything, it is more like a bank, so it would not be subject to any sales or use tax requirements. And as for "EBay and the others", the same rules that apply to Amazon already apply to them. Remember the name of the court case was Wayfair vs. someone, and Wayfair is obviously not Amazon. Do you really think that the court said only Amazon had to collect out of state sales tax?

"update my organizer questionnaire to try and consolidate all of the "questions that have to be answered on a tax form" in one place."

Yes, I did that last year, and it helps. Just like my clients, I was tired of sifting through several pages of questions to find the "required" ones. I now have all the mandatory questions right up front, followed by what I tell my clients are "memory jogger" questions (implying that they are optional, but if a problem occurs regarding missing info on the return, I can always show them that I asked about it). If I'm talking with them, I mention the real-life example of when I asked a client once if they had any gambling winnings, and they suddenly remembered a W-2G form they had received a little over a year before. One who only gambles when on vacation could easily forget a winning jackpot by the time filing season rolls around.

[Rapid Robert]

Just be glad your state has not yet started (or has it?) what CA is doing. You now must list on the tax return your county of residence (& "physical" address) , so that FTB can provide data for potential jury duty lists to the county courts. You already have to provide an address on the tax return, so for most it is not a big deal.

[BOB W]

NYS has required that info for as long as I can remember and I started in 1975.

[Snaggletooth]

Good Discussion. I guess I'll have to live with it and charge more to customers for jumping thru hoops.