We were at the bird store making our monthly investment in seed for the feeders (I really hate squirrels). While standing at the counter signing the loan paperwork, I asked Shari, the owner of the store, to add a magazine to the bill.I noticed that she charged me sales tax not only on the seed, but also on the magazine.
Now I really don't care about the sales tax on the magazine, particularly after having to pawn the car to buy more bird feed. But, since I am in the business, and Shari is a friend of ours, I decided that I had to give her a hard time.
"Why did you charge me tax?"
"Why not?" she said, suspiciously.
"You're not supposed to charge sales tax on magazines, they're exempt."
"But the cash register software charges it automatically. Nobody has ever complained before."
"Your software is wrong. And nobody else has complained because none of your other customers are such monumentally brilliant sales tax experts."
She was all set to refund me the tax, but I told her not to worry about it. I just like to turn the rest of my life into a never-ending sales tax seminar. I really am a boring guy.
Last weekend, we stopped in again for our next purchase. Shari said, "Jim, I called the software company. They fixed it! They said they made a mistake." She was thrilled that she could tell me that I was right. I mean, we are putting her five kids through college. Did I mention I hate squirrels?
What are the morals of the story?
1. I'll bet you didn't know that magazines are exempt in Illinois. Illinois is one of the few states that has that exemption. Most states exempt magazines sold by subscription only. But in Illinois, over-the-counter magazines are not taxable. Remember that every state is completely different.
2. Don't count on your software vendor to get it right. If that company had just looked it up, they would have easily found that Illinois has the exemption. But some programmer didn't bother to look it up because everybody taxes magazines. You are responsible for getting your sales tax right. The vendor is supposed to help, but you gotta check. Luckily for the Shari, she had been over-charging taxes. If she had been under-charging taxes, do you think the software company would have stepped up and taken care of any liability she had?
I just looked out the window. Dang feeder is empty again.
The Sales Tax Guy
http://salestaxguy.blogspot.com
See the disclaimer - this is for education only. Research these issues thoroughly before making decisions.
Here's information on our upcoming seminars and webinars.
http://www.salestax-usetax.com/
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