Monday, July 06, 2009

What state are you asking about?

This should be the first question out of anyone's mouth when asked a sales and use tax question. If you call your accountant or lawyer, and they just give you an answer, without asking that Question, they have missed three of the most fundamental rules of SUT, the Golden Rules.

They may not realize that the delivery state makes the rules - that is the state that has jurisdiction. So the answer must be based on that remote state, not the ship-from state. But since your professional hasn't even asked the Question, he or she doesn't know about the remote state.

And they may not understand that every state has different rules. What's taxable in your state won't be taxable in the other state. And what's exempt there, won't be exempt where you are. There might be completely different rules in that other state, but your professional doesn't even know that there is another state involved.

So can you see that your chosen SUT professional has really messed up if he or she doesn't ask, "What state are you asking about?"

There is an exception to this. If you have a business that never ships your product out of state, you never perform services in or visit another state for business purposes, and your professional knows this from previous experience with you, then not asking the Question is OK. But does that professional really know? Either about your business, or about the golden rules of sales and use taxes?

If they don't ask the Question, be afraid. Be very afraid.

Sales Tax Guy

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Picture note: It's a picture of me. I figure it's safer to use my picture when I'm mocking. Less lawsuits that way.

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