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So we are undergoing a local audit, and they can't find anything on us except a USE TAX. Pretty sure this is something all states have in place, and my guess is nobody is reporting it.
What is a USE TAX? So, you know how buying online is all nice and good because you don't pay any sales tax? Well, you are supposed to report that on your end of year taxes. So, anything that you buy out of state, that you are not reselling and charging tax on in your local market, you are supposed to pay a use tax on.
A quick rundown of some items you would have to pay Use tax on:
- VIP stickers - unless you are charging every customer for it when you do a VIP. Just including, is cause for use tax. Unless you are charging tax when you sell it...USE TAX
- Buy your staff some T-shirts while on vacation in ST. Thomas...guess what, USE TAX
- Packing tape- did you buy some packing tape, not at a local store? Guess what, USE TAX.
- Buy some storage bins out of state? - USE TAX
- Buy something out of state, when you are IN that state and can't prove you paid tax on it? USE TAX
Now, if you buy this stuff local, and pay tax on it, then you have nothing to worry about. Anything else that you buy, that you are NOT reselling, you will be required to pay a USE TAX.
There is a major assault on small businesses almost everywhere across the country. Please be aware of something like this and protect yourselves. The Federal and State IRS are really starting to target small businesses because you don't have the money to fight, they know they will win, and they know we miss some small items and are easy targets. Of all the things out there, at least we know this is the only thing they can get us on, but it's a desperate stretch, but one that you will start to see more often.
Be aware about your business, and please post more stories if you have them for others to learn.
What is a USE TAX? So, you know how buying online is all nice and good because you don't pay any sales tax? Well, you are supposed to report that on your end of year taxes. So, anything that you buy out of state, that you are not reselling and charging tax on in your local market, you are supposed to pay a use tax on.
A quick rundown of some items you would have to pay Use tax on:
- VIP stickers - unless you are charging every customer for it when you do a VIP. Just including, is cause for use tax. Unless you are charging tax when you sell it...USE TAX
- Buy your staff some T-shirts while on vacation in ST. Thomas...guess what, USE TAX
- Packing tape- did you buy some packing tape, not at a local store? Guess what, USE TAX.
- Buy some storage bins out of state? - USE TAX
- Buy something out of state, when you are IN that state and can't prove you paid tax on it? USE TAX
Now, if you buy this stuff local, and pay tax on it, then you have nothing to worry about. Anything else that you buy, that you are NOT reselling, you will be required to pay a USE TAX.
There is a major assault on small businesses almost everywhere across the country. Please be aware of something like this and protect yourselves. The Federal and State IRS are really starting to target small businesses because you don't have the money to fight, they know they will win, and they know we miss some small items and are easy targets. Of all the things out there, at least we know this is the only thing they can get us on, but it's a desperate stretch, but one that you will start to see more often.
Be aware about your business, and please post more stories if you have them for others to learn.
