Friday, July 17, 2015

Attention: Chicago does NOT have the highest sales tax rate in the US.

Seems like there's a lot of sloppy writing going on in the last few days.

Yeah, Chicago's sales tax is (or will be) the highest for major cities in the US. But few of the headlines and tweets say that.  What they say is that Chicago has the highest sales tax in America.

Actually, the last time I looked, Tuba City* Arizona (I've actually been there) has the highest rate at 12.725%  Granted it's not a big city, but it is in America.

So please get your facts straight, folks!  Or at least write more accurate headlines.

Sorry, this has been bothering me for the last couple of days.

Here are some links:

Small town, big tax: Tuba City again pays nation’s highest sales tax

Tuba City tops for sales tax

Highest Sales Tax in the United States

Small town, big tax: Tuba City again pays nation’s highest sales tax

*The population is over 8,000 people, so it isn't a wide spot in the road. Heck, they've even got a McDonalds!

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

Thursday, July 16, 2015

The Issues Involving Food Taxability - it isn't THAT Weird

There is a lot written about the taxability of food. Most of it involves some "weird" rules with bloggers throwing up their hands in disbelief at how bizarre the world has become.

While I bow to no one in my belief that sales tax rules are frequently stupid and often corrupt, it's worth noting that some of the laws make sense, even if convoluted, when you consider what they're intended to accomplish.

Depending on the state, food is frequently an exception - either not taxable or taxed at a lower rate. However, our elected officials want to make sure that there are certain foods that are NOT treated in this special way. Because we just can't possibly let someone have a Coke or a Milky Way tax-free. Our beloved politicians know better than the poor huddled masses. Although why they are OK with letting us eat potato chips and ice cream is beyond me.

These "weird" rules involve two objectives:

1. The politicians have to figure out a way of differentiating nontaxable food from food that they have decided is bad for us and is therefore taxable. The most common items that are taxed differently are candy and pop (or soda). That means intricate rules to differentiate candy from cookies, and similar gyrations to separate juice from orange drink.

Frankly, I'm not sure why cookies should get a pass. They're just as bad for you as a nice Peanut Butter Cup. And Hostess products? C'mon. What's the difference between a delicious Snowball and a Baby Ruth, other than some flour?

Here's the Sales Tax Guy solution. If it's sweet, it's taxable. Period. People drink too much orange juice anyway - bad for your teeth.

2. Possibly even more complicated is differentiating restaurants, whose sales are universally taxable (sometimes even at a higher rate), from places that also sell groceries. This would include delis, bakeries, etc. who function as grocery stores, but also as restaurants. For example, there are rules that say that if someone is sold six donuts, it's not taxable. But if you buy just two, then you're obviously going to stuff your face with them right away. And our betters want to make sure you pay sales tax on them.

And the Sales Tax Guy solution? If they walk out the door with it, and it's not sweet, it's not taxable. Done. Bakeries may complain, but do you think I'm going to let a little thing like sales tax stand between me and my chocolate eclair? Really?

Ohio comes to close to this rule. If food is sold to be eaten off the premises, then it's not taxable. Simple. They complicate things with beverages, but it's still much simpler than any other state. More about Ohio here.

There's a final rule that a few states have. This one is to make sure those nasty, icky businesses, who can't vote, don't get to take advantage of non-taxable food. In those states, they add "for home consumption only" to the criteria for exempt food. Or they'll do something else to insure that only individuals and families (voters) get to buy their food free from tax.

One solution to the whole problem is to make all food taxable. That REALLY simplifies things. But then you'd have people complaining that it just makes sales tax even more regressive. But that's a topic for my next post.

Or go with the Ohio method. Of course, that would mean the state would lose a lot of tax revenue - and we can't have that. But it would sure be less regressive - and really easy. And I'm thinking the voters would like it. Are you listening, politicians?

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

Tuesday, July 07, 2015

Yeah, you haven't heard from me in a while, now I'm going to start hitting you daily!

Got my writing thing on, so you'll see more posts here.  AND, I'll be posting a link here every time I update Sales Tax News and Links - which will be almost daily.  If it's too much, feedback is appreciated. There are a LOT of smart people writing about sales tax these days, so I want to make sure you know about them.

Finally, if I find an article that is particularly worthwhile - one which I wish I had written, I'll keyword it with "recommended read."

By the way, I just posted 20 links today.  So there ya go.  Enjoy.

Oh, and did I mention we're on Facebook now?

Friday, June 26, 2015

So, how many returns DO you file?

Sign Away!

As any good seminar leader will tell you, you need to get your audience interacting a little.  Now a sales tax seminar doesn't lend itself to forming teams to build bridges, or walking around the room trying to figure out people's shoe sizes.  But I do try, at least, to get them to raise their hands once in a while.

One of the things I do is poll the room to figure out the number of returns people file.  This gives me an idea about the complexity of their businesses, and how sophisticated they are about sales taxes.  So I start out saying "How many of you file returns in more than one state?" Usually about half the class raises their hand.

Then I ask, "How many of you file returns in more than 5 states?"  Maybe a quarter of the class responds this time.

Then, "How many of you file in more than 10 states?" At this point, only a few hands go up.

Ever the adventurer, I continue, "How many of you file in more than 25 states?"  Usually no hands go up.  And if they do, I know that I have someone in the room who knows as much about sales and use taxes as me.  So I proceed warily.

This time, I did see one person who was still holding up her hand.  I asked her, "OK, how many states do you file in?"

She said, "45 states plus the District of Columbia - plus the local returns."  In other words, ALL of them.

The audience gasped.  I swear one newbie AP specialist fainted.  But I digress.

"Wow.  I'm impressed.  So how many returns are we talking about?"

"Over 200 a month"

"And what software are you using?"  Cause she has GOT to be using software, right?

"None, I do it all by hand - pen and paper."

At this point, a controller joined the AP specialist in a swoon.  Heck, even I felt a little unsteady.

After I recovered, I stuttered, "Uh, how?"

"I just pull the numbers off the general ledger each month and drop them into the returns.  I allocate about three days to do them all."

Later, I had a chance to chat with her. She had one manufacturing plant at their headquarters, and this particular state didn't have much in the way of manufacturing exemptions.  And she sold a product that was pretty much universally taxable.  The resale exemption was the only one she had to worry about.  And she had nexus everywhere because they had reps wandering aimlessly around the country.  So their business was pretty simple, relatively speaking.  Aside from the unspeakable drudgery, I could see how she accomplished this amazing feat.

So my friends at Vertex SMB, Avalara and the other software companies are probably getting ready to email me and ask who is this heroic woman, that they might save her from her desperate situation.

Frankly, it was a while back. I just remember she was 10 feet tall and had very strong arms.

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.

Thursday, June 25, 2015

So....we' Facebook now

We've been on Twitter for a while, but finally decided that Facebook is OK too.  Pretty much the same stuff that we post on Twitter (other than retweets) will get posted here.

Now we have to figure out Pinterest.....

Oh!  I almost forgot!

There ya go.