"Seth Breidbart" <sethb[at]panix.com> wrote:
- quote -

If you pay a foreign states sales tax, it is a credit to
your state's use tax.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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Thanks. That's to the point and helpful.

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Thanks. That's to the point and helpful.

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They do a full review of our operating account, check
reconciliation of all accounts, do our taxes, prepare
balance sheet and P & L, K1s for partners - basically a full
audit. I thought the original CPA we used wasn't really up
to snuff so two years ago we hired a larger firm recommended
by our attorney. They made some changes to our methods but
never brought up the use tax issue.

I spoke a Dept. of Revenue rep in that newly formed division
to "educate" and colect use tax. He told me he had never
heard of it himself until the division was formed. When our
bookkeeper asked the Revenue auditor if he was filing
personal returns and paying use tax he pleaded the fifth.

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Seth Breidbart wrote:

- quote -

Theoretically, you owe use tax on the whole purchase, but
may deduct sales tax paid to the other state at the lesser
of your location's rate or the purchase location's rate. So
if you buy in a low-rate jurisdiction, you owe your home
state the difference. At least in Oklahoma, that's the
rule.

Phoebe

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"David Woods, EA, ChFC, CLU" <dwoods[at]woods-financial.com> wrote:

- quote -

T`here are too many "nots" in that sentence. Could you try untangling them for us?

--
D.F. Manno
dfm2a3l0t2[at]spymac.com
The problem with being sure that God is on your side is that you can't
change your mind, because God sure isn't going to change His. (Roger Ebert)

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David Woods, EA, ChFC, CLU wrote:
- quote -

David, the term "use tax" doesn't just apply to out of
state purchases by consumers, but also to items "used" by
businesses either bought out of state or purchased without
paying any sales tax at the time. Surprising how many
businesses will sell to another business and not collect
sales tax at point of sale.

Once a client was being audited by the state re income tax.
She, the wife, insisted on being there although I talked
her into staying in another room out of harm's way you can
appreciate. Actually the auditor was following up on a tip
about undeclared income, but my assurances to the contrary
plus enlightening him on where the rumor had started allayed
him and he was satisfied. AT this point he called out "You
can come in now, Mrs. B.......! and came in she did, talking
and yapping, and ... well, the rest of the story is she said
something about her husband buying parts across the river in
Columbus, GA and one thing led to another. and.... use
tax.

ChEAr$,
Harlan

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David Woods, EA, ChFC, CLU <dwoods[at]woods-financial.com> wrote:

- quote -

If I buy stuff outside my state (MN in this case) subject to
sales tax of the other state, does that exempt me from use
tax in my state? Does that apply even if the foreign sales
tax rate is 0%?

(What happens when one of the no-sales-tax states sets up a
zone with sales tax of 0.1% aiming to get Internet sellers
who'll charge sales tax in order to avoid much larger use
taxes on the other end? They'll have to play games with
title changing and local shipping arrangement, but that's
not infeasible; see, for instance, the way Ikea in New
Jersey handles shipping to NYC.)

Seth

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"dc" <dcipa[at]tcsclosing.com> wrote:

- quote -

If you don't buy items from outside PA not subject to a
foreign state's sales tax, then you don't have a use tax
liability.

As for your fuming, quite honestly, get over it. Up until
the last couple of years, use tax has been largely neglected
by most states. You likely weren't informed of it by your
CPAs because there was no realistic need to tell you.
Beyond the issue of lack of importance and enforcement of
use tax, you also need to be subject to it.

As for your attorney not knowing about a use tax, unless he
is a tax attorney, why are you asking him for tax advice?
If he IS a tax attorney and didn't know there was a use tax,
get a new tax attorney.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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"dc" <dcipa[at]tcsclosing.com> wrote

- quote -

The states are getting tight on their budgets and are
enforcing a law that has been on the books for many years.

They also know that many business (and individuals) buy from
the internet and bypass the traditional sales tax.

It's also easier to enforce it against busineses first,
maybe scare a few individuals to report and pay the tax.

--
Paul A. Thomas, CPA
Athens, Georgia

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"dc" <dcipa[at]tcsclosing.com> wrote:

- quote -

Sure, with respect to those things pertinent to the
situation. It's unclear from your post whether use tax is
something your accountant should have thought about over the
years.

Use taxes are not new, but state enforcement of them is
increasing. Some are now putting a use tax line on the
income tax return. When the Feds put domestic employment
tax on the 1040 one of the purposes was to force paid
preparers to address the issue.

<snip
My attorney never heard of a use tax.

Most people haven't. That's why the states are getting,
shall we say, more informative.

--
Phil Marti
Clarksburg, MD

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dc wrote:

- quote -

Pennsylvania has had sales and use taxes since 1956, so it
is pretty hard to believe your attorney never heard of a use
tax. There has been quite a lot of publicity about use
taxes in recent years due to the difficulty states have in
collecting the tax from individual consumers who purchase
merchandise from out-of-state vendors who have no physical
presence in the buyer's state and therefore have no use tax
collection responsibility. Your attorney must have been
asleep.

Just out of curiosity, what kinds of transactions is the
auditor looking at?

Katie in San Diego

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I am fuming. I have hired professional CPAs for the last
17 years to audit my accounts. None of them have ever told
me about a use tax. Now an auditor comes to my office to
educate me and collect taxes, interest and penalties! Don't
CPAs have any professional obligation to inform their
clients? When I contacted my current CPA, he just said he
has numerous clients being audited and that the Dept. of
Revenue has been doing audits since the state is short of
cash. My attorney never heard of a use tax. What gives?

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