Thursday, July 25, 2013

Sales and Use Taxes on Services - A Scientific Survey (sort of)

I did a survey!  I'm so proud.  It's been a while since I've done one, and this particular question has been bugging me, so I thought I'd check it out.

When I do seminars, I generally talk about the percentage of states that tax services vs. the states that don't tax services.  I've been ball-parking it, but I decided to actually get harder numbers. 

So, what is the distribution of the taxing of services among the 46 states (including DC)?

First of all, there are some services that are generally taxed - not in every state necessarily, but in the majority:

Rental of tangible personal property

Then there is a mixed bag of other services.  For each of the 46 states, I surveyed four specific categories that I thought would give me a snapshot of the amount of services a state taxes:

Repair labor

I assigned each state one point for each category that is taxable. 

Alabama  0
Arizona 0
Arkansas 4
California 0
Colorado 4
Connecticut 4
DC 3
Florida 3
Georgia 0
Hawaii 4
Idaho 0
Illinois 0
Indiana 0
Iowa 4
Kansas 1
Kentucky 0
Louisiana 1
Maine 0
Maryland 2
Massachusetts 0
Michigan 0
Minnesota 3
Mississippi 1
Missouri 0
Nebraska 3
Nevada 0
New Jersey 4
New Mexico 4
New York 3
North Carolina 0
North Dakota 0
Ohio 4
Oklahoma 0
Pennsylvania 2
Rhode Island 0
South Carolina 0
South Dakota 4
Tennessee 1
Texas 4
Utah 1
Vermont 0
Virginia 0
Washington 3
West Virginia 4
Wisconsin 1
Wyoming 0

I found that my ballpark guesses were pretty close:

21 states tax none of the items in my basket of services 45%
6 states tax only one of the items in my basket (usually repair labor) 13%
19 states tax tax two or more items from my basket (what I would call a health mix)  41%

So what does this mean?  Well, for one thing, I'm right.  Yay!  Which explains the picture at the top.

If you're in one of those states that taxes a lot of services, then, well, YELL at your politicians.  It won't help, but you might feel better.

 If you're in one of those states that don't tax a lot of services, then count your blessings.  And if you're in one of those states that got a ZERO, don't be surprised at the sales tax when your car breaks down in West Virginia!

See, we got all sciency there.

The Sales Tax Guy

See the disclaimer on the right.

Don't forget our upcoming seminars and webinars.
and there's more sales tax news and links here

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

Friday, July 05, 2013

It's Only Fair...

Truth - Justice -  The American Way

I came across this article this morning, and it's so brilliant in its insight, I just had to comment here and link to the article.  Hat tip to for the link. 

I'm not a big fan of the Marketplace Fairness Act.  For one thing, I'm always suspicious of any use of the word "fair" by a politician.  But, as this article points out, fairness can run both ways.

MFA would require that businesses collect tax for other states if they ship to those states.  It's insanely complicated. But what about people coming into a state to avoid taxes in their own state.  Think about people from Wisconsin going to Minnesota to buy clothing (the example in the article).

But what about people in Washington state who go to Oregon to avoid sales tax on appliances (this is a big problem).  Should Oregon retailers be required to collect Washington sales tax if all they do is put the TV in the customer's SUV?  Ditto for retailers in New Hampshire and Delaware.

What about people from Chicago, where the sales tax rate is insanely high, who go to the outlet malls in Kenosha, Wisconsin to take advantage of a substantially lower sales tax rate.  Shouldn't those malls be required to collect the tax for Chicago?

If you're going to make retailers from other states collect taxes based on where they ship to, it seems clear to me that retailers in other states should collect the taxes for people who are trying to avoid tax in their home state.

Seems only fair.

The Sales Tax Guy

See the disclaimer on the right.

Don't forget our upcoming seminars and webinars.
and there's more sales tax news and links here

Picture note: the image above is hosted on Flickr. If you'd like to see more, click on the photo. And if you're desperately trying to see the connection...Superman stands for "justice".  Get it?

Tuesday, July 02, 2013

CPE Sales Tax Webinars on July 11

Yellow and Blue
We're offering two sales and use tax webinars on July 11.  And they come with CPE credit!  We're doing these in association with  And if response is good, we'll be offering them again.  So if you need those points, and you want to learn more about sales and use taxes, now's the time.

Please click on the links for more information about each class:

Sales and Use Tax Basics

Sales and Use Tax Best Practices

The Sales Tax Guy