Hotel Industry – everyone should jump on this

OK. So, I must admit that this is the first time I’ve heard of hotels using wrist bands in place of card keys for getting in/out of the building and its amenities and charging goods/services to the room. It’s brilliant for a few reasons I can think of off the top of my head:

· Each occupant gets a key

· Keys won’t be left in room or lost

· Security enhanced – no one can use a lost key card to get in your room or charge something without your knowledge

· Savings – these bracelets have got to be cheaper than traditional key cards and since they are not reusable, many states would likely consider them exempt purchases for resale and transferred to the customer as Indiana does in this instance.

Although, if you’re at the hotel for a wedding and you get your band upon check-in on Friday evening, who wants to have the entire bridal party wearing plastic bands for their wedding photos?

To read about the case of sales tax on these wrist bands, see the following:

http://www.in.gov/legislative/iac/20110525-IR-045110301NRA.xml.pdf

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Connecticut – Budget woes increase sales taxes in more than just a rate increase

Well, the CT Governor signed it – so, here are the highlights of changes to be effective July 1, 2011 for the sales tax side of things.

· Rate increase from 6%-6.35% (where do they come up with these odd rates?).

· Luxury tax at 7% (i.e. cars over $50K; jewelry over $5K).

· Personal services now taxed: Mani/Pedi, Massages, Pet Grooming

· All clothing now taxed– even if less than $50. (Luxury rate, if item is over $1,000)

For more information on the total Sales Tax changes coming to Connecticut in July, see the budget bill (Senate Bill 1239). It’s long, but start around section 88 – a little less than 2/3 down for the sales tax pieces (some great bed-time reading). http://www.cga.ct.gov/2011/TOB/S/2011SB-01239-R00-SB.htm

Otherwise, for a more concise snapshot, KPMG summarizes it well: http://www.us.kpmg.com/microsite/taxnewsflash/2011/May/11224.html

NOTICE: DON’T BUY EXEMPTION CERTIFICATES!!!

I’ve seen my fair share of people trying to get out of paying U.S. sales taxes:  forging certificates, making false claims about exemptions, giving false information on a certificate, shipping to one state and then claiming they took it across the border or in their suitcase to another country.  But in all my years, I don’t think I’ve ever thought about someone trying to make money this way:

I wish that ND would have been more forthcoming with the actual businesses/websites that are claiming you can buy a taxpayer number and exemption certificate. 

But nevertheless, you can’t just go out and purchase an exemption certificate.  Generally, you must apply with the state in which you do business, and they will either provide you with a permit/license or some kind of certificate/letter that you can use to give to your vendors to claim an exemption, or you will use the number given by your state on that permit, license, etc. to complete a valid certificate.

As a vendor, if you need to check that the number placed on a resale/exemption certificate is valid, see the list of states on the right that offer verification sites.

Also, if you need a blank exemption certificate for your state, you can either go to the relevant state’s website or check out CertCapture for current blank exemption certificates available throughout the U.S. –  FREE!

As always, with sales & use tax, it’s not only “buyer beware” but vendors must be equally aware.

2010 Sales Tax Holidays around the U.S.

It’s about that time of year, when states are either having or implementing future sales tax holidays. I’ll, once again, try to track them and keep this list updated for changes/additions for 2010.

Alabama – August 6-8. Clothes ≤$100 ea. Computers/SW/Peripherals ≤$750 ea. School supplies/materials ≤$50 ea.; Books (non-commercial) ≤$30 ea.

Connecticut – August 15-21 Clothes/Shoes <$300 ea.

D.C. – August 7-15 & Nov. 26-Dec. 5. Clothes/Shoes/Accessories/School Supplies ≤$100 ea.

Iowa – August 6-7. Clothes/Shoes <$100 ea.

Louisiana – May 29-30. Hurricane Preparedness Items totaling ≤$1500.

August 6-7. Non-commercial purchases of TPP (free for all) totaling ≤$2500. Exempt from state-level sales tax only.

September 3-5. Guns/Hunting supplies (non-commercial).

Mississippi – July 30-31. Clothes/Shoes <$100 ea.

Missouri – April 19-25. Green Holiday – Energy Star qualified new appliances ≤$1500 ea.  If appliance is over $1500, the portion over $1500 will be subject to tax.  Not all local tax jurisdictions will participate, so you may be charged local sales tax on the entire purchase. 

August 6-8. Clothing ≤$100 ea. School Supplies ≤$50 total. SW ≤$350. Computers/Peripherals ≤$3500. May not apply to local sales taxes.

TX & NY – Energy Star Rebate Programs

***UPDATE: 

SC – Says even though you can’t deduct the rebate to be received from the sales price to calculate sales tax, you CAN deduct any “salvage” value amount that the retailer allows from the sales price.  Temporary Revenue Ruling #10-4 March 1, 2010.

This isn’t directly sales tax related, although both New York and Texas(see Note: at bottom of this webpage) thought it important to mention sales tax in the treatment of the appliance purchases and the pending rebates that purchasers are entitled to receive.   They’re calling it “Cash for Clunkers… on Appliances.”

And for those of you consumers (or retailers) wanting to know:  Sales Tax is to be paid upon the purchase price of the item sans any pending rebate.  And, the rebate received will be a single lump sum figure – there will be no tax added to the rebate to reimburse you for the sales tax on the rebate amount.

NY rebate program information here:  NY originally scheduled their rebate program to only last one week in mid-February (12th-21st), but the program has been extended until “available funding runs out.”

TX rebate program information here:  TX is coinciding their rebate with earth day and will begin their rebate program on April 16th through April 25th, 2010 (any votes on whether TX will extend as NY did?).  The TX SECO office will be administering the rebates.  Do not mistake this rebate program for the Energy Star Sales Tax Holiday that TX is offering over Memorial Day weekend.  This holiday will allow the retailer to not charge sales tax on qualifying products (more than just appliances). 

Because this is a program funded by the Federal Government as part of the American Recovery and Reinvestment Act of 2009, these rebate programs are popping up all over the country.  I expect the sales tax treatment to be the same everywhere since it’s a rebate being sent directly to the consumer and not to the retailer who passes on the savings.

See here for other states’ program dates and information.

When to Pay Use Tax? NY has a nice guide, but does it work?

So, I generally give kudos, where it is due, so here is one such instance, or is it?

Not only am I pleased with the way New York State is going after persons involved in tax fraud, but this publication looks like a good one for explaining what Use Tax is in relation to sales taxes, how to know if you owe it and how to submit it.

But, I’m wondering…do all NY residents get this publication mailed to them? Or is the typical layperson supposed to know to go to the NY Tax Website and look up publications related to use tax?

Are Jurisdictional Tax/Revenue administrators so far removed from Sally and Joe Public that they seriously think every consumer inherently knows that if they buy something from the internet without sales tax that they owe the unpaid sales tax to the state in which they live?

What’s Taxable: If big-box stores can’t get it right, who can??

The CT Attorney General recently put forth a press release notifying its citizens to carefully check receipts from Lowe’s Hardware stores. Why?

Well, apparently Lowe’s was undergoing an investigation as to whether they were properly exempting sales of items that qualified for the Energy Efficiency products exemption in Connecticut. I’m sure Lowe’s has a tax system built into their POS and that they employ several sales tax specific associates to help set up whether items are taxable or not in every location where there is a store. (Home Depot had a similar problem a few years ago).

So, my comment on this is: if a large company such as Lowe’s has trouble following the craziness of state statutes, laws, rulings, regulations, etc. and frequent changes of such, how is the small business supposed to get it right? Especially when a small business sells items all over the country and we have states out there like New York trying to get anyone and everyone entrapped into nexus so that they all have to collect sales taxes in multiple states.

It’s always been my plight with this blog to help small businesses and the common layperson to understand the complexities of sales taxes in the U.S. And hopefully, along the way give some direction or assistance to those who need it. So to put it out there: If you’re a small business and find yourself having such difficulties understanding the sales tax intricacies in your state(s), how to file returns in multiple states, whether to collect tax on an item, or what kind of documentation you can accept to exempt a customer, contact me.

See here for the CT Attorney General Press release: http://www.ct.gov/ag/cwp/view.asp?A=2341&Q=450958&pp=12&n=1

Washington – New Resale Permits for 2010

Without a new reseller permit in 2010, you won’t be able to claim a resale exemption. Vendors are instructed to start taxing customers without a new permit come January 1st.

For more information: http://dor.wa.gov/content/aboutus/newsroom/html/100509.aspx

Hey Pennsylvanians, Buy a Helicopter Lately?

So, it took Pennsylvania 90 days to come up with a budget, but did you know that there were a few items (well maybe 3 if you count the pending amnesty – or maybe 4 if you count the increased Philadelphia local tax), that affected sales tax?  Among them:

1.  Pending Amnesty period coming in 2010.

2.  Philadelphia Local Sales Tax increased to 2% – totalling 8%

3.  Not such a big deal for most companies, but if you end up collecting more than 25K in sales taxes during the third quarter of 2010 (July-Sept.), come June 2011, you’ll be required to remit semi-annual sales tax payments.  A real pain in the you-know-what to do this when it first starts, but I’m sure estimates will be allowed and if you do it anywhere else (such as OH), you already know the drill.

4.  THE BIG DEAL (input sarcasm here):  EFFECTIVE IMMEDIATELY – if you purchase a helicopter or any other kind of rotocraft, you do not have to pay the 6% sales tax.  And, if you already owned one before they came exempt, the repairs and maintenance charges of all helicopters are now exempt as of 10/9/09.

Now, I wonder what PA company wants to buy a helicopter and they felt the need to hire  lobbyists to help save the sales taxes on it.   Turns out, that wasn’t the case at all.  You can read the real story here. 

But I still don’t get it.  The manufacturer of these helicopters is already exempt on most of what they purchase to manufacture the rotocraft – it’s called an already existing manufacturing exemption.  The sale – well that’s on the buyer to pay sales tax and the manufacturer simply remits it to the state (if they’re also the retailer) – and gets a 1% discount for collecting it.  Plus, if most of their contracts are with Federal Gov’t, they’re not collecting any sales taxes anyway.  So, no taxes collected, no taxes remitted – just a blank form to mail.  But let’s say for the sake of argument, Wal-Mart wanted one of these helicopters to house in PA- at a price of $1,000,000.  That would be $60,000 to collect and then $600 of that goes to the manufacturer for remitting it.  Just don’t get it.  And really, how many of the taxable helicopters did they plan to sell to PA domiciled companies or taxpayers?  Cause, also, if it’s shipped out of PA, it’s not taxable in PA.  I think the term “Walking Around Money” is a good one. 

 

 

NY: Driver-Only Services are NOT Transportation Services

Nor are they taxed as a Transportation Service.

This Advisory Opinion of Oct. 8, 2009, classifies a driver-only service as separate from the recently taxed transportation services. The difference? Driver-only service is just that – a company sends someone to you, but that person drives your car (or your rented car).

Whereas a Transportation Service is when both the car and the driver are provided.

Notice the last paragraph, though, where NY warns that if Rental Car Companies and Driver Services are noticed to be in cahoots with each other, then that could make the driver service company the same as a Transportation Service. Someone is thinking ahead on this one!