Tuesday, November 10, 2009

Personal Liability

You are in such trouble! This is going to be a relatively short article. But one that's very important. Based on what the rules are in most states, you need to worry about personal liability. What does that mean? It means you could lose your savings, your vacation house, etc. All because your company really screwed up the sales tax. So read on.

Officers of the corporation
You're liable. Period. Maybe you'll dodge a bullet if you're not involved in the management of the company. Maybe.

Spouses in sole proprietorships or partnerships
You're liable. Particularly if you filed your income taxes jointly. You signed the return. Which means you officially knew what was going on.

You're the controller
If you're an officer, see above. If you're not, but you're intentionally failing to pay the appropriate taxes, and you have authority, you might feel some pain too.

Staff accountants and other employees who complete and sign the return
First of all, don't sign the return. The officer who does have the personal liability should be signing that return. Make sure the auditor knows that you're signing the return because the big dog told you to. The auditor will then go after the big dog.

See, short one. But very important to your future vacation plans.

Sales Tax Guy

See disclaimer and research the issues thoroughly before making decisions

Here's information on our upcoming seminars and webinars And we do coaching!

And please don't forget to visit our advertisers!

Picture note: the picture above is hosted on Flickr. If you'd like to see more of Bandit, click on the picture.



Monday, November 09, 2009

Sales and Use Tax News

These are gleanings from newsletters, etc. I have not included all of the events, nor have I provided much detail. As usual, the disclaimer applies - check this kind of thing out yourself. I just want to give you a heads-up.

Michigan

They've explained the rules for food.
Michigan Revenue Administrative Bulletin 2009-8, 10/21/2009 , replacing Michigan Revenue Administrative Bulletin 2002-20, 12/10/2002

Connecticut

The rate reduction previously announced may not happen depending on the state's deficit this year.

Missouri

No use tax for free flu shots.
Missouri Private Letter Ruling LR 5900, 09/29/2009

And Missouri opened up a can of chakras by saying that sales tax applies to participation fees in yoga classes. Some are saying it's a tax on religion. I have only one question. When I go to church, I don't pay a required fee to attend. But if I go to a yoga class, I do pay a fee. That's the difference. And no, I won't be going to any yoga classes anytime soon. My chakras are just fine, thank you. Sabrix, Google/AP and more

North Carolina

New rules for state government purchases. Most purchases exempt now.
17 NCAC § 7B.1701, effective 10/01/2009

Local rate increases

Arizona
Georgia
Missouri
Ohio
Utah
Washington

Sales Tax Guy

See disclaimer and research the issues thoroughly before making decisions

Here's information on our upcoming seminars and webinars And we do coaching!

And please don't forget to visit our advertisers!

Thursday, November 05, 2009

Quick Tip: Buying Sales Tax Software

Years ago, in another life, I sold software and computer systems...mostly accounting related. In this article, I give you a few tricks for making this investment:

  • Don't assume the sales rep is looking out for you or has your best interest in mind
  • Take control of the process
  • Get references and VISIT them (this is probably the most important piece of advice)
Here's the last paragraph...

Remember, it's not the cost of the software you have to worry about. It's the costs associated with the conversion, installation and training that are big and painful. By making the right software choice initially, you'll minimize your pain, get the most out of your investment, and make only ONE investment.

Sales Tax Guy

See disclaimer and research the issues thoroughly before making decisions

Here's information on our upcoming seminars and webinars And we do coaching!

And please don't forget to visit our advertisers!

Wednesday, November 04, 2009

About Seminars

I had this email today and I thought you would all gain from the answer.

I would be interested in a seminar in the --- area. Do you currently have anything in the works?

I am looking for credible sales and use tax training. I feel like this is a huge trap for our company. I am looking at the --- coming in Jan of 2010 but saw some reviews that indicated it was going to be a huge sales presentation of their for-purchase materials. I am looking for TRAINING!!

Now, I have to be careful here, since I do occasionally contract with one of those companies. I don't want to tick anybody off, but I feel that you all can gain from a little knowledge.

1. Most of the general public seminar companies (GPSCs)* sell stuff at their events. However, the companies that are more focused on legal and tax seminars don't (like ours), but their prices are usually at least 50% higher. Here is a list of all of the companies that do sales tax seminars (to my knowledge).

2. When working for GPSCs, the leaders make at least some of their earnings from commissions on what they sell. This means that there will be some sort of presentation about products at these seminars. On the rare occasion when I do one of them on a contract basis, I try to talk only about materials specific to the topic of sales and use taxes, and let participants find the other products on the tables in the back of the room. But even I, the Sales Tax Guy, will sell stuff when I'm contracting for one of the GPSCs. It depends on the speaker's style as to how annoying this will be. In my case, well, let's just say I'm not the top seller. And I'm OK with that.

Note - in webinars and seminars from TakeChargeSeminars.com, in other words, us, we don't sell stuff. Period.

3. Sales tax seminars from the GPSCs will cover sales and use taxes from two perspectives. They'll talk about what most states do (what I call the Golden Rules). And they'll talk in depth about what is done in the state where the seminar is being held.

If you're on the fence about going to a seminar, contact the seminar company, and ask if you can communicate directly with the speaker. Or see if you can, at least, send him or her an email. Then ask about any specific topics you're hoping to see covered. This will give you more comfort that you're going to have a useful seminar experience.

Sales and use taxes are a trap for any company, as you said. But even if you're going to get "sold" at the seminar, that shouldn't prevent you from going and picking up as much as you can. GO! If you learn anything that'll get you out of a potential hole, it's worth it.

4. Now it's time to talk about us! In my webinars and seminars (from Take Charge Seminars), we don't sell any products. We actually do talk about tools you may find helpful, but we don't take orders or quote prices. No selling. So fear no sales pitches in a seminar offered by Take Charge Seminars.

To answer the original question about my schedule, I don't have any plans in the next 6 months for your state. But eventually, yes. It's a state with a big city and that's what I need to be able to do a seminar.

But in the meantime, consider some of our webinars. Except for the Taxing Policies webinars, they're not state-specific, and they don't need to be. I'd suggest taking the other webinars which will tell you about a fair amount of the potential traps you're facing, and then when it's available, sign up for the Taxing Policies webinar for your state. And since I've got some pull around here. I'll make sure that your state pops up in the rotation sooner rather than later.

This is probably a good time to talk about our upcoming face-to-face on-location seminars. We're working out some of the details and will allow registration pretty soon. In the meantime, consider blocking these dates out on your calendars.

Chicago (probably in Oak Brook area) - January 20, February 10,
Dallas / Fort Worth (probably near DFW) - February 16
Houston - February 18

And I'm actually doing a contract seminar for Padgett-Thompson in Wisconsin in March. That'll be one of those where I try to sell you stuff. But I'll be nice. ;-)

Sales Tax Guy

Here's information on our upcoming seminars and webinars And we do coaching!

And please don't forget to visit our advertisers!

Picture note: Yes, that's me in the picture doing a seminar in Arlington, Virgina.

* These are the companies you get fliers from constantly on a wide variety of topics, from "sales and use tax" to "how to be a better manager."

Tuesday, November 03, 2009

Illustrations and Parables - The Story of the Fizzy Turkey

A guy in the class worked for a poultry processor. The auditor busted them on the carbon dioxide gas that they injected into the meat. The company had always assumed that this gas was exempt from sales tax because it was an ingredient. Ingredients are almost always exempt.

"Sounds good to me," I said. "But why do you inject carbon dioxide into the meat?" All I could think of was fizzy turkey.

The guy said, "I don't know, I work in accounts payable." I kid you not. Absolutely true.

This is one of my favorite stories, frankly because the AP piece is the funny part. When I told it in a different seminar, another poultry processor told me that the CO2 is a preservative. And, since it's the stuff that gives your Coke the bubbles, it's gotta be safe.

Anyway, the auditor said it didn't qualify for the exemption, and they were nicked for the sales tax. The amount was BIG - the assessment hurt. Now, the carbon dioxide IS an ingredient in the meat. They inject it into the chicken. So why was it taxable?

The auditor said that, in order for the CO2 to be considered an ingredient, it must be present in the final product when opened by the final consumer. And by the time you take your chicken home from the store, and open up the package, the carbon dioxide is gone. So, according to the auditor, it's not an ingredient - it's taxable.

But is the auditor right? I looked at the statute and the regulations after the seminar. There is no restriction, in that particular state's laws, saying the the ingredient must be present in the final product when opened by the consumer.

Some states do require that the ingredient be in the product sold at retail. To me, this means the CO2 must be there when the customer picks up the package from the cooler. And other states merely say that the ingredient must be in the final product, not specifying the point in time. Which could mean when the product is packaged and moved to the shipping department. But I've seen no state that specifies that the ingredient must be there when the customer opens the package.

Since the law, in this state, didn't even specify that the ingredient must be present when sold at retail, the taxpayer could have fought it. The assessment was big enough to make it worthwhile to hire some expensive professionals to appeal. But the taxpayer made the big mistake: he assumed the auditor was correct. He didn't even ask to see the law. He just wrote the check to the state.

So the morals of this particular parable are:

1. Know the rules for what qualifies as an ingredient in your state and adjust your procedures accordingly,
2. Have a better understanding of your processes, even if you work in accounts payable,
and most importantly,
3. Never assume that the auditor is right. Make them prove it!

Sales Tax Guy

See disclaimer and research the issues thoroughly before making decisions

Here's information on our upcoming seminars and webinars And we do coaching!

And please don't forget to visit our advertisers!

Picture note: the picture above is hosted on Flickr and is pretty funny. If you'd like to see more, click on the picture.

Monday, November 02, 2009

Sales and Use Tax News

These are gleanings from newsletters, etc. I have not included all of the events, nor have I provided much detail. As usual, the disclaimer applies - check this kind of thing out yourself. I just want to give you a heads-up.

Illinois has clarified rules regarding soft drinks.
Illinois Dept. of Rev. General Information Letter ST 09-0116-GIL, 09/02/2009

Florida has change several regulations regarding food, water softening services, and their forms .
Fla. Admin. Code § 12A-1.0115; 12A-1.071; 12A-1.0115; 12A-1.011; 12A-1.097

Utah has made some changes to their return reporting schedules.

Wisconsin
has made a change in the rate used for calculating use tax on demo vehicles. And they have clarified the new digital products rules.
Wisconsin Dept. Rev. Tax Bulletin 164, 10/01/2009
Digital Goods Frequently Asked Questions, Wisconsin Department of Revenue, 10/20/2009

Georgia
published a bulletin on how to apply for a refund on manufacturing equipment.
Informational Bulletin SUT 2009-10-28, 10/28/2009

Louisiana has issued a release regarding the exclusion for anthropogenic carbon dioxide.\
Louisiana Revenue Information Bulletin 09-049, 10/21/2009

Nah, I don't know either. But if you DO know, then you probably should be very careful about this.

In New York collagen implants for truly medical purposes are taxable. This kind of thing is taxable when sold for providing medical services for money.
New York Advisory Opinion TSB-A-09(48)S, 10/14/2009

North Carolina has an EDI program for returns.
Notice, NC Dept. of Revenue, 10/01/2009

Local rate changes in South Dakota and Wisconsin

Sales Tax Guy

See disclaimer and research the issues thoroughly before making decisions

Here's information on our upcoming seminars and webinars And we do coaching!

And please don't forget to visit our advertisers!

Friday, October 30, 2009

Sales and Use Tax News Links

The big sales tax news in Chicago is that the sales tax hike might get rolled back. For the rest of you, who cares? But what's interesting is the politics behind it. DailyHerald.com and others

A North Carolina spends $250,000 in fees to fight (and win) an assessment of $600,000. If you're in the graphic design business, you may want to look at this. And, if this is true, shame on the NC tax department. Bizjournals.com

Boeing gets a tax break in South Carolina. This is an example of states writing laws that don't mention a particular business by name, but write the rules in such a way that only one possible company could be involved. AP and others

Flu shots get taxed in Illinois Sabrix

Interesting way for an electric car manufacturer to avoid $320 million in sales taxes sfgate

Sales Tax Guy

See disclaimer and research the issues thoroughly before making decisions

Here's information on our upcoming seminars and webinars And we do coaching!

And please don't forget to visit our advertisers!