Sales Tax Horror Stories

[Tom Monego]

My last equipment lease turned into a sales tax nightmare. The price in the lease documents included the state sales tax, that was fine with the original leasing company, but they were bought out by Citibank and I noticed a raise in the monthly payments, it was because they were charging sales tax on the monthly payments. told them that the original lease included sales tax, they told me they always charge for sales tax for monthly payments because they could, asked my accountant, he said yes they could do this then charged me $200 for reading the contract. That was fine until we moved our studio, this town charged a use fee for all equipment, where other towns and states allow you to depreciate use fees on equipment, this town charged full price for as long the lease was in effect. So I was paying $700 a year on a $10000 lease while the guy I worked with maxed out his credit card for his $10000 equipment purchase ended up paying under $100 per year. My accountant told me this was just a bad town to have a lease in. To make this all worse CitiBank called me a year after closing the lease to get more tax $ for the last year, I didn't have the lease. They said the town I had been in was asking them for it. I had closed the business and taken a paying job in another state. Business had become too complex for me in a sole proprietorship.

Tom

[Bob Salomon]

I'll give you another one:
We have one place of business in northern NJ. We have no other offices nor do we have any employees living in any state other then NJ.
A state in the Pacific NW sent us a questionair wanting to know the following:
Do we own property in that state - NO
Do we have an employee in that state - NO
Do we ever go into that state to train employees of our dealers in that state - YES
Do we have an independant sales representative who lives in that state- YES

The state then notified us that we were subject to their Occupational and Business tax of 0.0034% of all shipments to that state, even though these shipments were to retail stores in that state who collected sales tax on the sale of our merchadise made by them.
They also said that we were liable for penalty and interest on all shipments to that state for the previous 5 years.

So, rather then fighting it, which would have cost around $50,000.00 we decided to pay this quarterly tax, which our sales rep also has to pay.
A few months ago this state sent us a letter that they have decided that they will no longer accept company checks for the payment of the tax and all payments have to be made electronically, unless they would grant an exception for special conditions. As we do not make any electronic payments at all we appealed the letter on those grounds, of course they refused the appeal. So we notified them that we would no longer pay their tax. It should be noted that most suppliers of photographic merchandise to retailers in that state were not notified by that state that they were subject to this tax. Even though they also had no property in the state and also did not have employees in that state and they did to training in the state. We often work next to each other doing trade shows in that state.

[Black Lightning]

Bob, Read the following pdf. Public Law 86-272 seems applicable in your situation.

http://www.steptoe.com/assets/attachments/1571.pdf

[Bob Salomon]

Bob, Read the following pdf. Public Law 86-272 seems applicable in your situation.

http://www.steptoe.com/assets/attachments/1571.pdf

Thanks, I think that is why they call it a Business and Occupation tax rather then an Income Tax. The state claims that they can collect this tax because they do not have an Income Tax in that state. We have had an accountant and a major law firm look at it and they both stated that the costs for fighting it were well above the tax we were charged.

[John Koehrer]

It has to be to keep legislators, accountants, enforcers, and lawyers employed. If we had simplified taxes then they would all be worthless, right?

How much more worthless is possible?

[Greg Blank]

I am not going to say one profession does not have value to make mine easier for me.
My 17 plus year business experience leads me to say: There really needs to be a National sales tax-and NO State intervention- or additional imposed taxes. There really needs to be better enforcement of © Laws, and strict punishment of all violations. If done correctly there is better buisness for all and more easily to navigate and do business.

[Ari]

It has to be to keep legislators, accountants, enforcers, and lawyers employed. If we had simplified taxes then they would all be worthless, right?

In this case, worthless is a relative term.

[Brian Ellis]

I used to do a lot of sales tax work as a worthless lawyer in Florida. Without intending to demean anyone posting here, there's a massive amount of incorrect information, misunderstandings, omitted information, and so many other misconceptions, mistakes, and erroneous assumptions in most of the tales related here that it's impossible for someone who knows something about taxes to figure out what really happened to anyone and why it happened.

[Larry Gebhardt]

My worst sales tax horror is that I traveled out of New Hampshire and bought something. They had the nerve to charge me a tax to buy the product.

[Tom Monego]

My worst sales tax horror is that I traveled out of New Hampshire and bought something. They had the nerve to charge me a tax to buy the product.

Larry,
How did that happen? I live on the NH, Vermont border and buy a lot of stuff in NH, unfortunately not photo equipment as our last area photo shop closed last year. We recently bought some furniture in NH and they wouldn't have charged us sales tax if we had picked it up for our selves. Generally if you take something yourself no sales tax, even items you have shipped, if it is a direct delivery then sales tax will be charged.

Tom