Tuesday, October 03, 2006

Vendor didn't charge tax - What do we do?

"A vendor didn't charge us the correct tax. He billed us 6%, the correct tax should have been 6.5% We advised him of this, then paid the uncharged tax as use tax on our return. A month later, he bills us for the difference. Do we owe him since we paid the tax on our own?"

Theoretically, you don't owe the sales tax since you've paid the use tax. But you messed things up by not giving the vendor a chance to do it correctly. You should have given the vendor a chance to bill you properly before you self-assessed. In the future, wait a month or two to see what the vendor does. At this point, my recommendation would be to make an worksheet adjustment to your use tax liability on your next return to get the money back from the state, and pay the vendor. That way his records are correct, and you'll avoid a long drawn out discussion with the vendor.

This may not be technically legal, but leave a good audit trail. If the auditor can understand what you've done, you should be OK. The state got their money...that's the important thing.

Sales Tax Guy
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