Katie Jaques writes:

- quote -

And once again my Massachusetts 1099G was for the amount of
my refund check and did not include the portion of pre/over
payment applied to use tax. One might almost think that
Massachusetts is treating the (supposedly) use tax payment
as an extra voluntary income tax. (By coincidence, we do
have an extra voluntary income tax in the form of an
optional higher rate. Very few people select this option.)

Dan Lanciani
ddl[at]danlan.*com

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- quote -

.....But it still doesn't show that sales/use tax was
collected, nor does it show that the merchant has an
in-state nexus by having another location. It only shows
that the taxpayer did business with "that" location.

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D. Stussy wrote:
- quote -

Credit card statement do show the merchant and his location,
as in "Joe Blow jewlery, Taos,NM"

Cheer$,
Harlan Lunsford

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heesh3[at]yahoo.com wrote:
- quote -

I do not think NC or any other state is going to pick
returns with zero on the use tax line and audit them for
just the use tax. There just isn't enough money in almost
all cases to make it worthwhile. If what you mean is that
auditors will look at the zero use tax line when they are
auditing a return for another reason, then I agree with you.

I believe most states will continue their existing program
or start a program to request information on large purchases
from the vendors and then send bills to the taxpayers.

Drew Edmundson, CPA (NC)

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Harlan Lunsford wrote:
- quote -

I don't see how a credit card statement would tell - by
itself....

If the company is out of state but does have a nexus (a
dealer or branch office) in state, then it should have
collected state sales tax. Credit card statements (not the
receipts themselves) don't show a breakout.

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Harlan Lunsford wrote:

- quote -

Actually, I think the problem is that no governor is going
to want to take the heat for an examination program, not
that the state couldn't collect the tax. I don't know about
other states, but the actual statute in Arizona imposing the
use tax on purchases makes *every* purchase subject to use
tax unless the buyer can show that the Arizona transaction
privilege tax (our close cousin to a sales tax <grin> ) was
paid. So, at least in theory, the issue isn't for the state
of Arizona to show what you bought from out of
state--rather, the burden is on the taxpayer to show what
he/she bought was subjected to the Arizona transaction
privilege tax.

When you look at it that way, the state clearly could
collect a *lot* of money if they literally applied the law
as it stands. What stops them from doing this is that it
would be a certain way to get whoever was governor at the
time recalled--and an initiative on the ballot to repeal the
use tax at the same time <grin> .

--
Ed Zollars, CPA
Phoenix, Arizona

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sheesh3[at]yahoo.com wrote:
- quote -

Nor can I speak to the truth of this, however it would vary
with individual states to begin with.

Face it, what state income tax auditor will have the time to
demand and ultimately get any taxpayer's invoice or credit
card statements in order to figure out if anything was
bought outside and imported into the state? and what
taxpayer would/could come up with credit card statements
after the year's end (besides me maybe! lol) Certainly
bank statements wouldn't help, unless an isolated check to
an out of state company was shown.

This is not worth a candle to state tax authorities.

Cheer$,
Harlan Lunsford, EA n LA

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Drew Edmundson <drewsbeagles[at]hotmail.com> wrote:

- quote -

It is my understanding that while only the honest are paying
it now, it is fodder for an audit. It has been told to me
that this is a good way to guarantee something will come of
a state audit.

I do not know the truth of this however.

bex

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Drew Edmundson <drewsbeagles[at]hotmail.com> wrote:
- quote -

I think from the standpoint of the states, there are two
benefits to putting the line on the income tax return. The
first is the added revenue, which however much or little it
is, is revenue the state wouldn't otherwise get. The
second, and perhaps more important, is education. Most
people are simply unaware of the fact that their retail
purchases from remote sellers are subject to use tax. And
the vendors themselves aren't helpful. In fact, I just
received a flyer the other day from a vendor crowing that
recent federal legislation prohibited sales taxes on
internet purchases. That's simply not true.

Katie in San Diego

The foregoing is intended for educational purposes only and
does not constitute legal or professional advice.

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- quote -

<table snipped
- quote -

The use of the table is voluntary. The reporting of use tax
is not. A zero is allowed; leaving the line blank
apparently is not.

--
Don EA in Upstate NY

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Harlan Lunsford wrote:
- quote -

Harlan,
This is the first year that line has showed up and its
voluntary. I probably shouldn't have said "almost every tax
return" (I'm starting to sound like Paul O'Neill) but for
sure it is going to be a significant majority that will have
zero on that line.

--
Alan
http://taxtopics.net

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- quote -

I hope you're not saying that the state of New York assumes
that people in said brackets actually send money out of
state for purchases.

It is a voluntary thing, right?

Cheer$,
Harlan LUnsford, EA n LA

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A.G. Kalman wrote:
- quote -

Ah now, EVERY return? Surely every CA resident doesn't
buy mail order out of state or on the net.

Here in Alabama and Georgia, I'd suspect any return that did
list use tax, the suspicion being that they didn't report
the entire amount. (FYI, most people do not have a
computer, and do not buy out of state via mail order.)

cheer$
Harlan Lunsford, EA n LA

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katiej_1958[at]yahoo.com (Katie Jaques) wrote:
- quote -

Even then it would seem to be cost prohibitive. With record
internet sales and all the catalog operations around I know
plenty of people that never buy via the mail/internet.

In NC the use tax line has become a way to collect extra tax
from the very honest, while the rest just fill in zero.

Drew Edmundson, CPA (NC)

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JanZtaxNOSPAM wrote:

- quote -

Also, I wonder if leaving the line blank would do anything
with regard to any period of limitations for assessing
sales/use tax (assuming there is such a period - I haven't
looked in that part of the R&TC lately)....

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janztaxnospam[at]aol.com (JanZtaxNOSPAM) wrote:

- quote -

Jan, I think the key here is that in California it is
clearly an ELECTION to report the use tax on the income tax
return. Not making that election doesn't necessarily mean
that there is use tax liability to report; it's just an
election to report it, if there is any, via a consumer use
tax account.

I don't think there is anything in the FTB's budget to
follow up on non-electors to find out if they filed consumer
use tax reports. I wouldn't worry too much about it.
Unless the FTB and SBE come up with a joint computer program
to compare notes with each other in an automated fashion,
the cost of chasing individual noncompliers would be
prohibitive, it seems to me.

Katie in San Diego

The foregoing is intended for educational purposes only and
does not constitute legal or professional advice.

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- quote -

NY just added that line also. You may have seen my recent
post asking NY preparers how they were going to handle it.I
expect most of my clients will have none. NYS has a
"suggested" amount, based on the tp's income. I'm still
undecided whether to offer them that suggestion or not. One
interesting note for NY returns: That line CANNOT be left
blank. If it is, return will be sent back. You must enter 0,
if that's the case. You are thereby affirming that you made
no such purchases. Will

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- quote -

New York provides a table to use if you didn't keep good
records. You might use that as a reasonable estimate.

Federal AGI Sales Tax
$ 0 - 15K $ 6
$ 15 - 30K $ 18
$ 30 - 50K $ 26
$ 50 - 75K $ 34
$ 75 -100K $ 43
$100 -150K $ 54
$150 -200K $ 69
$200K+ 0.0345% of income ($200 min)

NY sales tax varies from 7-1/4% to 8-5/8%, depending on
locality. There were exceptions for clothes costing less
than $110 until mid-year when the governor noticed that we
needed more money. The table is independent of location.

http://www.tax.state.ny.us/pdf/2003/inc/it201i_2003.pdf page 36-40.

--
Don EA in Upstate NY

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JanZtaxNOSPAM wrote:

- quote -

I can't imagine any return with a zero amount being
considered suspect.

1. The paying of use tax via the income tax return is
voluntary. Taxpayers may pay the BOE directly. The
taxpayer's signature only affirms that the income tax
is accurate.
2. If CA was to consider a return suspect that did not
have any Use Tax, then almost every tax return to be
filed is going to be suspect.

--
Alan
http://taxtopics.net

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Now that California has added a line for use tax on the
state return, I'm wondering how to respond to clients who
ask me how much to report. I can't imagine that anyone, no
matter how honest, really can answer how much they spent on
catalogue and internet orders on which no sales tax was
charged. Will returns that show nothing on that line be
considered suspect?

Jan Zobel EA

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