Great Article: Solving the Pains of Sales Tax Returns

from Avalara

A pretty good overview of why you may wish to get rid of doing sales tax returns.  This whitepaper covers the challenges of doing them yourselves, and the benefits of outsourcing.  Yes, there's a page on Avalara, but the rest of the piece is "sales-free."  Enjoy the article.

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This link is part of a series called "Excellent articles that I wish I had written."  The short name is "Great Articles." 

The Sales Tax Guy
http://salestaxguy.blogspot.com

Don't forget our upcoming seminars and webinars.
http://www.salestax-usetax.com/
Picture note: the image above is hosted on Flickr. If you'd like to see more, click on the photo. 

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Let the other guy do it!

I wrote an article yesterday where the customer was insisting that they weren't taxable and I suggested that they were.  I also suggested that the customer provide the seller with proof that the purchase was exempt.  I wanted to link to an article I wrote on this narrow subject, but found that I never did write anything.  So here ya go.  And yes, I'm going back and adding the link to yesterday's article.

I've written many times about where to find answers.  Most of these resources require that you spend money, and all of them require that you spend your valuable time.  But here's the thing.  If you're a regular reader of this blog, or other sales and use tax publications, then you are probably much more well-informed on sales and use taxes than just about anyone else you're going to routinely meet.  

When you find yourself in a situation where a vendor or customer is insisting that the sales tax law is different than you believe, make them prove it.  Don't waste your time researching the issue when they are probably wrong.  Remember, you're smarter than they are.

By the way, proof isn't "well, that's what my boss said."  Proof is in writing with references to statutes, regulations, bulletins or court cases.  "Well, the auditor told us to do it this way," isn't enough either.  

Here's one way the dialogue might go:

You: "I understand what you're saying, but my boss and I have been to several sales tax seminars and webinars* and I read a lot about sales and use taxes and I've never heard about that rule.  Can you email me the statute that gives the details.  I'm going need something to show my boss."  

Remember to always use your boss's persnicketiness as an excuse.  

Them: "Well, I don't have that.  That's just what my boss told me to do." 

You: "And I appreciate that.  But I still have to charge you tax unless I can show my boss something authoritative that shows it's exempt.  You must have something like that in the files.  Maybe you can call your CPA." 

Let them pay the money to have the CPA research it.  Remember that you're smarter than them.  Relax.  Go fishing. **

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* an admittedly shameless plug 

** picture tie-in

The Sales Tax Guy
http://salestaxguy.blogspot.com

See the disclaimer - this is for education only.  Research these issues thoroughly before making decisions.  Remember: there are details that haven't been discussed, and every state is different.  Here's more information

Get these articles in your inbox - subscribe at http://salestaxguy.blogspot.com

Don't forget our upcoming seminars and webinars.
http://www.salestax-usetax.com/
Picture note: the image above is hosted on Flickr. If you'd like to see more, click on the photo. 

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Mistaken Manufacturer

I exchanged a couple of emails with a past participant yesterday. She'd been stung during a sales tax audit because one of her vendors hadn't charged her sales tax. So she wound up having to pay the use tax, plus interest and penalties. Standard stuff, of course.

What was interesting is that, after the audit, she called the vendor and asked why they didn't charge her tax. Their response was that they didn't have to, they were a manufacturer and therefore exempt.

What?

Now, to be fair, the product was odd enough that I can see there being some really arcane exemption lurking in the statutes. So I suggested she check on that. But it amazed me (I should learn to never be amazed) that a company would think that the manufacturing exemption would apply to what they sell.

Just to make sure, for some of you who may be reading this, when we're talking about the manufacturing exemption, it's for the purchases of the manufacturer who uses them in manufacturing. Every state has different rules of course, but that's the big concept. It doesn't grant an exemption to what the company sells! Sheesh.

Now, I'm sending a link to this article to (we'll call her "Jane") who gave me the idea for this article (thanks and a gold star to you!). But I'm going to have to chide her a little. I talk about the fact that, when an in-state vendor fails to charge you tax on something you think is taxable, you should call them and find out why. If she had made that phone call back when these purchases were made, she might not have convinced the vendor. But she would have known to accrue the tax, and thereby avoid the interest and penalties that she paid as a result of the audit.

And, as a consolation prize, I did tell her that the vendor was probably going to get audited. Let's face it. When an auditor comes across a few invoices from an in-state vendor where they didn't charge sales tax for any apparent reason, they're audit-bait.

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The Sales Tax Guy
http://salestaxguy.blogspot.com

See the disclaimer - this is for education only. Research these issues thoroughly before making decisions. Remember: there are details we haven't discussed, and every state is different. Here's more information

Get these articles in your inbox - subscribe at http://salestaxguy.blogspot.com

Don't forget our upcoming seminars and webinars.
http://www.salestax-usetax.com/

Picture note: the image above is hosted on Flickr. If you'd like to see more, click on the photo. And the subject of the picture has nothing to do with this story!

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Illustrations and Parables - Lori's Story

Lori bought a lot of propane by the tank from a gas supplier. After hearing me say, in a seminar, that you should ask your intrastate vendors why they didn't charge you tax, she did.

"How come you're not charging me tax on this propane."

"Because it's not taxable."

"Yes it is"

"No it's not."

Lori then showed them the law in their state that says gases, like propane, are not taxable when sold for residential use. Her purchases were for business use.

"So you're going to start charging me tax, right?"

"Yeah, I guess so. If it'll make you happy."

Lori happened to be at my next class too, and she told me the above story. She was pretty proud that she had been able to kick a little vendor butt based on my advice.

I said, "Lori, let's think about this. This propane vendor obviously thought that all of his sales were not taxable."

Lori said, "Yep."

"If that's so, then they had no reason to be registered with the state, since none of their sales were taxable, as far as they knew. So if they're charging you tax to make you happy, how do you know they're actually registered and paying it. Couldn't they just be charging you an extra 7% and pocketing it? Would they really go through the registration process just for you?"

Lori, who is really a nice person, said, "Those b_____s!"

In my previous article, I recommended that you ask for proof that your interstate vendors are registered in the delivery state if they charge you tax. But asking for that proof for your intrastate vendors seems unnecessary. But in Lori's case, the situation smelled a little funny.

Her plan was to demand that permit from the propane dealer when she got to work the very next morning. Unfortunately, she has never been at another of my seminars. So I haven't gotten the next chapter in the story.

The morals of this story?

1. Don't assume your vendor knows the sales tax rules for what they sell.
2. If you're suspicious, demand proof that they're registered in the delivery state. Even if they're located in your state.

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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. Don't forget, we just announced our February to April schedule!
http://www.salestax-usetax.com/

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