Archive for the ‘Sales Tax’ Category

Sales Tax on Services Under Consideration in Maryland

Tuesday, February 28th, 2012

For those who haven’t followed Clayton Financial and Tax, we now have an office in Maryland. Our charges for preparing your return aren’t dependent on whether you’re in our Las Vegas or Bethesda office. However, that may soon change.

Shiela Hixson and James Gilchrist, two Democrats in the Maryland House of Delegates (the lower chamber of Maryland’s legislature) introduced legislation that would add sales tax to 29 different services. The services that would be taxed under this proposed legislation include tax preparation, gyms, cable television, consulting, and dating services.

If this tax passes, the added costs to our business will be passed on to our customers. And, yes, there are always added costs in compliance: The time we will have to spend complying with bureaucratic paperwork.

I haven’t been following Maryland’s budget situation, but I’m sure they (like every state) are facing some shortfalls. The typical Democratic response is to increase revenues, not decrease expenses. That may be one of the reasons “Blue” states find themselves with worse budget situations than “Red” states. However, I might just be too cynical.

[Image of Maryland’s state flag from Wikipedia]

We’re Back, But Will the Sales Tax Deduction Come Back in 2012?

Sunday, December 18th, 2011

I’ve moved into my new office, and everything is more-or-less running correctly in my new office in Las Vegas. There’s a new fax number (yes, there’s a real fax machine in my office) for those who need to send me a fax. So I’m back in business.

However, now that I’m a Nevadan, there’s the issue of the deduction for sales tax. That’s not going to be an issue for 2011 (individuals can choose between deducting sales tax or income tax for this calendar year), but as of now the deduction for sales tax will vanish for 2012. It’s vanished before (most recently, in 2009) but was retroactively reenacted; this may happen again for 2012. We’ll have to wait and see.

The BOE Does Something Smart

Monday, October 31st, 2011

One of my clients received a letter from the California Board of Equalization:

Our records of your qualified purchaser use tax account indicate that you have filed “zero returns” (no use tax to report) for three consecutive years. Therefore, this letter is to inform you that we are canceling your qualified purchaser use tax account….

My client was required to register for a use tax account as he had gross sales of over $100,000. He buys everything from retailers, so he’s never had a purchase subject to use tax. Yet he’s had to file use tax returns for the last three years.

Not anymore. The BOE has decided that California service businesses that have no purchases subject to use tax for three consecutive years will now not need to file use tax returns. Those returns are due on April 15th…a day tax professionals have something else to worry about.

That said, more and more jurisdictions are beginning to enforce use tax laws. We’re adding a form with our Organizers for 2011 regarding use tax as it’s clear where this is heading. Still, the BOE’s action is a ray of sunshine on the tax front.

Amazon and California Legislators Strike a Deal

Thursday, September 8th, 2011

Yesterday, Amazon.com and key California legislative leaders of both parties struck a deal. Assuming this deal passes the state legislature and is signed by Governor Brown, Amazon.com will begin collecting sales tax in California on September 12, 2012. However, if Congress were to pass a national law dealing with Internet retailers, that law would supersede this legislation.

Amazon has been trying to get a referendum qualified on the California ballot. That measure would put the new “Amazon Tax” up to a vote of the people (probably on the March/June presidential primary); if the referendum were to pass, the Amazon Tax would be a thing of the past.

From Amazon’s view, this measure gives them a year to operate without any legal worries, and a year to lobby Congress to pass a national measure. (Given that next year is a presidential election year, I’m not hopeful of anything substantive passing Congress.) For key Democrats, this deal gives the likely certainty of future revenues versus the strong possibility of the Amazon Tax heading into history via a probable referendum.

That said, Governor Brown has not stated his position on the measure. Should he veto the measure, it’s likely the referendum would move forward.

BOE Approves Use Tax Table for Indviduals

Thursday, July 28th, 2011

The Board of Equalization approved a tax table that individuals can use (if they wish) to report Use Tax for their 2011 tax returns (filed in 2012). Use Tax is owed by individuals and businesses when they buy products where sales tax is not charged but would be charged if they purchased it in a local store.

The table is only for non-business purchases of $1,000 or less; businesses cannot use the table and must report their actual expenses. The table is:

Adjusted Gross Income Use Tax
Less than $20,000 $7
$20,000 – $39,999 $21
$40,000 – $59,999 $35
$60,000 – $79,999 $49
$80,000 – $99,999 $63
$100,000 – $149,999 $88
$150,000 – $199,999 $123
More than $199,999 AGI times 0.07% (0.0007)

Again, businesses must use actual expenses to calculate Use Tax.

Most individuals ignore Use Tax so it’s likely having the table will increase compliance with the law.

Bozo Tax Tip #5: Sales Tax is an Unnecessary Expense

Sunday, April 10th, 2011

Imagine you are running a business.  Times are tough and you need to make some serious cuts in expenses to stay afloat.  Or perhaps you are just greedy.  In any case, let’s suppose you neglect to pay your payroll tax.  Well,  even many Bozos know that neglecting to pay your Federal payroll taxes is the quickest possible trip to ClubFed for a tax crime.  So, no, that is not what today’s Bozo allegedly did.

Mr. Steven Scali was arrested  recently for grand larceny in Happauge, NY, (as originally reported on HapauugePatch).  Apparently, he was wanted for failure to pay $50,000 in sales tax to the state of NY.  If convicted, he will be facing a very possible stay at SingSing.

Yes, if you are collecting sales tax, you must remit said sales tax to the taxing authority.  If you do not, you are committing a Bozo act. Just like with payroll taxes, the government always goes after people taking “their” money.

2010 California Use Tax Returns Due on January 31st

Tuesday, January 18th, 2011

If you own a business in California (including a sole proprietorship, an LLC, or a corporation) and you have had $100,000 of gross receipts or more in a year from 2008 through 2010 and do not otherwise have to file a sales tax return, you must file a Use Tax return. Use Tax is the equivalent of sales tax when you purchase a product where sales tax is not charged but it normally would be. For example, if you buy a book from Amazon.com you still owe tax on the purchase even though Amazon won’t charge you sales tax (it’s now Use Tax).

You must register on paper for filing a Use Tax return (and then mail the form to your local BOE office). After your registration is processed, you will then be able to go online and file (and pay) your Use Tax return.

And those returns are due in just two weeks — on January 31st.

Shaming in Sales Tax for the Fourth Quarter

Wednesday, December 1st, 2010

The Board of Equalization posted its fourth quarter 2010 list of the 250 most delinquent taxpayers. The BOE collects sales and use tax in California. (Now, if you’re asking me how the fourth quarter results can be posted at the end of November, well, I can’t answer that question. It’s likely the New Math.)

The BOE’s news release notes the newest 22 (or should that be bottom 22) tax delinquents. Sizzler restaurants are apparently having trouble remitting sales taxes, as several franchisees are shown with large dollar balances. The largest balance is from 2002, and is from California Target Enterprises, Inc. of Downey; they owe $18.1 million. It took a balance of $646,587 to make the list: Mira Loma Marine Commander Boats of Huntington Beach is shown owing that amount.

To date, $4.1 million has been collected through this program, with another $27 million to be paid through installment agreements. Unfortunately, there’s a total of $393 million owed by the 250 on the list so there’s definitely a way to go.

Amazon 1, North Carolina 0

Wednesday, October 27th, 2010

Back in April I reported on Amazon.com’s petition for declaratory relief from North Carolina; the North Carolina Department of Revenue requested information on every purchase of goods since 2005 in the Tar Heel State. And that request was rather inclusive:

By letter hand delivered on March 19, 2010, to Amazon in Seattle, Washington (the “March Information Request”), the DOR stated that Amazon’s initial response to Question 16 of the December Information Request omitted the “Bill to Name; Bill to Address (Street, City, State, and Zip); Ship to Name; Ship to Address (Street); Product/item code or description” (the “Customer Data”). The DOR demanded that Amazon provide this information “for examination” on or before April 19, 2010.

Well, the District Court has made its ruling in Amazon.com v. Lay

The DOR concedes that it has no legitimate need or use for having details as to North Carolina Amazon customers’ literary, music, and film purchases. In spite of this, the DOR refuses to give up the detailed information about Amazon’s customers’ purchases, while at the same time requesting the identities of the customers and, arguably, detailed records of their purchases, including the expressive content. With no compelling need for both sets of information, the DOR’s request runs afoul of the First Amendment. It bears noting, too, that the DOR’s requests for information were made solely in the context of calculating Amazon’s potential tax liability. Amazon has provided all of the data necessary to determine its tax liability, except any potential tax exemptions. The DOR has failed to articulate the compelling need to calculate these possible exemptions, particularly where it has admitted that it can and will assess Amazon at the highest rate and it would permit Amazon to “challenge the assessment and … establish that exemptions or lower tax rates applied to some products.” Even assuming there is a compelling need to calculate Amazon’s tax liability inclusive of exemptions, the DOR’s requests are not the least restrictive means to obtain the information. The request is overbroad. The Court GRANTS the motion for summary judgment.

So on First Amendment grounds Amazon wins this battle. Amazon also wins based on the Video Privacy Protection Act (the NC DOR’s request would cause Amazon to violate that act).

Note, though, that the court specifically noted that Amazon must comply with valid tax rulings. Of course, whether Amazon must collect North Carolina tax will continue to be fought….

Alabama Highest in Sales Tax Rates

Monday, August 23rd, 2010

If you don’t want to pay sales tax, go to Delaware, Montana, New Hampshire, or Oregon. On the other hand, if you like high sales taxes, head to Alabama. That’s the crux of a report issued by the Tax Foundation.

The report ranks the 25 largest cities by sales tax. Not surprisingly, Portland, Oregon has the lowest tax rate among cities with populations over 200,000 (0%); however, it’s not one of the 25 largest US cities. For those, you need to head to either Detroit or Baltimore (6%). On the other hand, Los Angeles and Chicago are on top at 9.75%. In cities with populations of 200,000 or more, Irvine ranks 26th at 8.75%. On top at 10% are Birmingham and Montgomery, Alabama.

It’s just a reminder that not only do we pay income tax but we must all pay a host of other taxes. Sales tax is the most obvious, but our government today bombards us with a host of ‘user fees’ that are just disguised taxes.