Sales tax on Tax Prep Software

[Jesse]

I expect all of us will be seeing a whole lot more taxation of internet purchases in the near future. The states have found an easy revenue source...going to the directly to the company's and auditing them.

And w/ the states w/ Nexus I'll bet the State Revenue Departments will be acquiring customer lists to see who's paid use tax and who has not.

[fliszt]

It appears

Minnesota is on top of this too. Many of my C Corp clients have been audited going back as far as several years (I don't remember how many exactly). Lots of sales tax owed due to internet purchases, and magazines where MN sales tax was not charged.

[Zee]

Broad definition of "Nexus"

Yes, "brick mortar" doesn't seem to fit the definition of "Nexus" any longer. I suppose all those sales representatives working from their home will also qualify a company for Nexus. I think as this expands there will be some "backlash", but it won't be enough to stop the momentum...there's too much "easy pickins" in play for State Revenue Departments that need to justify their existence. I'm expecting all Ebay purchases to require sales tax soon.

[JON]

My guess

is the reason they want to know if you paid use tax is as soon as they pay the sales taxes for those years they will send notices to those, who did pay use tax, and tell them to apply for a refund. This has been done in other sales tax audits. It does Drake no good to show the auditor someone may have paid use tax. The audit is for something they made a mistake on and will have to pay. However-the state should not be able to collect twice and any use tax payors are entitled to a refund.

If you are in Minnesota and did not pay use taxes and this is their audit you may hear from them. Sales tax auditors here are claiming they are auditing every business every five years. I have seen more Minnesota sales tax audits than income tax audits, but not all of the business clients get sales tax audits every five years. In the "state of 10,000 taxes", Minnesota, the state legislative session just finished up. The Gov is Republican and the Congress is Democratic and they could not resolve their budget until the last minute. On paper their actions in spending have to show that they are paid for. They had agreed on everything, but were coming up $13,000,000 short in revenue. To accomplish that goal the last thing done was to authorize $7,000,000 for auditing to the Commissioneer of Revenue. For every $1 added to auditing it adds $3 to revenue therefore the $7,000,000 in costs will generate $21,000,000 in projected revenue which gave them a net of $14,000,000 to balance the session. Got it passed and adjourned.

More work for us.

[Zee]

Maybe MN can get Jessie The Body Ventura Back to fight this?

is the reason they want to know if you paid use tax is as soon as they pay the sales taxes for those years they will send notices to those, who did pay use tax, and tell them to apply for a refund. This has been done in other sales tax audits. It does Drake no good to show the auditor someone may have paid use tax. The audit is for something they made a mistake on and will have to pay. However-the state should not be able to collect twice and any use tax payors are entitled to a refund.

If you are in Minnesota and did not pay use taxes and this is their audit you may hear from them. Sales tax auditors here are claiming they are auditing every business every five years. I have seen more Minnesota sales tax audits than income tax audits, but not all of the business clients get sales tax audits every five years. In the "state of 10,000 taxes", Minnesota, the state legislative session just finished up. The Gov is Republican and the Congress is Democratic and they could not resolve their budget until the last minute. On paper their actions in spending have to show that they are paid for. They had agreed on everything, but were coming up $13,000,000 short in revenue. To accomplish that goal the last thing done was to authorize $7,000,000 for auditing to the Commissioneer of Revenue. For every $1 added to auditing it adds $3 to revenue therefore the $7,000,000 in costs will generate $21,000,000 in projected revenue which gave them a net of $14,000,000 to balance the session. Got it passed and adjourned.

More work for us.

No. I'm in FL, but spent 16 years in Minnesota. I see Jesse is going to be on Larry King tonight. I suppose he'll have an answer to all our world problems.