Use tax

[Questionguy101]

Our tax software company has just notified us that they will start charging sales tax on the tax program next year. No problem there.

But they also said they will be collecting information about our use tax payments in prior-year (when they did not charge for the sales tax).

Honestly, we have not filed a use tax return and paid for the use tax in the previous years. We didn't intentionally try to avoid doing it (it's only less than $100 each year anyway) though. That idea just have never came across my mind.

My question is that why would our software company collect the information of our use tax payment in prior-year? What do they need the information for? Maybe they are collecting the information and then pass it to the sales tax department of the respective state of their clients?

Another question is that how serious is the situation going to be? What possibly is the sale tax department in our state going to do to us?

I am kind of worried now.

[Bees Knees]

My question is that why would our software company collect the information of our use tax payment in prior-year? What do they need the information for? Maybe they are collecting the information and then pass it to the sales tax department of the respective state of their clients?

They might be involved in a sales tax audit themselves. Or, some state requiring them to collect sales tax may have asked for the information.

[Jesse]

Are they asking you for information or informing you that they will be passing the information on prior purchases to the state dept?

I would guess they are collecting the information internally to pass it to the sales tax department of the respective state of their clients. This may be forewarning to you to get in compliance? You might want to check with your state taxing authority and file any necessary reports and pay before penalties and interest continue to add up. What State are you in?

[Questionguy101]

Are they asking you for information or informing you that they will be passing the information on prior purchases to the state dept?

I would guess they are collecting the information internally to pass it to the sales tax department of the respective state of their clients. This may be forewarning to you to get in compliance? You might want to check with your state taxing authority and file any necessary reports and pay before penalties and interest continue to add up. What State are you in?

We are in California>

If we want to pay the use tax back now, how many years do we have to do back? Is there a statue of limitation in California?

I also heard someone in another forum said we should also have charged our clients sales tax on preparing Form W-2s, 1099s, etc. Is that true? The idea to charge sales tax on accounting or tax service has never crossed my mind. I am totally confused now,

[Jiggers]

Sales tax, depends on state law

We are in California>
I also heard someone in another forum said we should also have charged our clients sales tax on preparing Form W-2s, 1099s, etc. Is that true? The idea to charge sales tax on accounting or tax service has never crossed my mind. I am totally confused now,

Depends on state law.

[thomtax]

I had read previously, in news articles, that greedy California is going after companies that sell into their state and demanding a list of customers that had items shipped to them without sales tax being collected. Then they are going back to the customers and demanding use tax. For some companies that purchased large equipment, this is amounting into tens of thousands of dollars.

LT

[DTS]

Sales and use tax

Thomtax is correct. One of our customers received a letter from BOE wanting back sales tax on cigarettes she ordered online from on out-of-state vendor for years. I don't remember the situation exactly, but seems they had the number of cartons or dollar amounts from this vendor and we had to prepare a sales tax report for her to submit.

I think some of this was a fishing expedition and they left the impression they knew the correct dollar amount, but wanted you to report the amount! We tried to find out what info they had, but were unable to. The last word spoken from them was "we will get our money".

We filed the report and that was the end of it.

Dennis

[DaveO]

May be prelude to broader collection effort

Nebraska had a tax amensty a while back and used the money that came in to hire and train more auditors. They are auditing sales and use tax in particular. The audits for sales and use tax of small contractors has been brutal. The legislature passed an ill fated, now repealed, tax on certain contruction services. It was the most confusing bit of garbage I'd ever seen, nearly impossible to comply with. They are in the process of enforcing the now repealed tax over the last five years.

I did have a client come in with a bill from the state for tobacco tax from on-line purchase of cigarettes. The requirement for on-line retailers to turn over their customer lists and sales records was included in one of the tobacco settlements.

[gkaiseril]

Salse and Use Tax

Many states have a "Sales and Use Tax".

The "Sales Tax" is for items purchased from vendors within the taxpayer's state of residence and they collect the "Sales Tax" for the sate.

The "Use Tax" if for items purchased form vendors outside the taxpayer's state of residence and brought, shipped. or otherwise relocated to the taxpayers state of residence and being used within the state. This tax is to level the playing field for local vendors. The taxpayer is responsible to pay the "Use Tax" to the state. An exception is for motor vehicles in that the state or county can collect the use tax at the time a license is brought for a car brought into the state from another state and the taxpayer is acquiring a new state license plate for the car. This use tax also applies to Internet sales since the "no Internet tax" is a federal law that applies to access to the Internet and not any businesses transacted on the Internet.

Some states like Illinois have a separate use tax form for the sale tax and other states are including the collection of the use tax as part of the individual or other income tax form.

Carefully read the rules as there maybe a credit allowed for 'Sales or Use Tax" paid to the other state which can lower the tax liability.

If your are really "lucky" you can live in Chicago Illinois and you not only get to pay the "Use Tax" on car brought out of state or out of Cook County or the City of Chicago, and you will get Cook County and the City of Chicago billing you for each of their additional "Use Tax" above the State of Illinois' Use Tax.

In the past Illinois has sent out the "Use Tax" form with the income tax package, but the passing of the package mailout this has gone by the wayside. Somtimes there are Illinois State Troopers at the Illinois Indiana state line collecting the cigarette tax on cartons of cigarettes brought in Indiana being brought back into Illinois.

Times are tough and the states are looking for every penney of revenue.