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Sales & Use Tax Tips for January 2008
Why Concern Yourself With Sales Tax?
What Is Sales Tax And What Is It Typically Imposed On?
Currently, 45 states, Puerto Rico and the District of Columbia impose a Sales, Use or similar tax. As a general rule, Sales Tax is a tax imposed on sales of tangible personal property and specifically enumerated services. The enumerated services vary by state and in some cases by local jurisdiction. In most cases, state Sales or Use Tax applies if delivery to the customer occurs in the state. In the case of service, Sales Tax typically applies if the benefit of the service is derived in the state.
Why be concerned?
There are a number of reasons to be concerned with and informed about Sales & Use Tax issues. We’ve listed some of the issues below:
- Sales & Use Tax is not your expense; it's your customer's! It becomes your expense if you don't collect it properly.
- Filing a Sales Tax return starts the statute of limitations clock, typically limiting states to looking back only three to five years when assessing owed taxes, interest and penalties. If you've never filed a return, states can conceivably go back to day one of your operations!
- Generally, you are personally liable if your business does not properly collect and remit Sales & Use Tax.
- A company's value declines as the increasing liability of unresolved exposures is accrued for by the firm's financial auditors.
- Traveling salespeople and independent contractors may create a Sales & Use Tax collection responsibility outside their home state or tax jurisdiction.
- Many businesses over pay their taxes because they are unaware of applicable Sales & Use Tax exemptions.
- Some businesses are at a competitive disadvantage by charging tax when competitors don't. How you invoice can make some items taxable or exempt.
For additional insight, please see the Did You Know? section of our website.
Our professionals can help minimize potential exposure and make sure your company is in compliance with the sales and use tax laws. For more information visit our Services webpage.
* This tip is intended to provide general information only and is not to be considered as a substitute for professional advice.
Click here for more Sales Tax Tips or visit our website www.oatax.com.
Should you have questions or require assistance please Contact us today or call 1-888-466-2829 to speak with an Olivier &
Associates Sales and Use Tax professional for a no-obligation consultation about your Sales & Use Tax issues.
