The Internet Tax Man Cometh

The Internet Tax Man Cometh
Q: I​ was contacted by the​ city tax collector to​ say that my business is​ scheduled to​ be audited to​ see if​ I​ owe sales tax on​ items purchased on​ the​ Internet .​
Can they really make me pay sales tax on​ internet purchase? I​ thought you​ could buy things online tax free? -- Charlie B.
A: Sorry,​ but your local municipality is​ well within its rights to​ audit your business to​ identify items purchased online .​
The city can also demand payment of​ sales tax on​ those items if​ sales tax was not previously paid .​
Don’t be surprised if​ the​ auditor asks for access to​ your books and to​ see purchase receipts and invoices for at​ least the​ past year.
One of​ my companies recently underwent such an​ audit and it​ really was not as​ painful as​ you​ might think .​
Being a​ software company,​ the​ majority of​ our online purchases were for computer equipment,​ technical manuals,​ and software development tools .​
Since we purchase computers from a​ large supplier who collects sales tax at​ the​ point of​ sale (ditto for the​ development tools),​ the​ only sales tax we ended up owing was for an​ inordinate number of​ technical manuals and books purchased at​
If your small business is​ like most,​ the​ majority of​ your large purchases are made locally from companies that already collect sales tax .​
Furniture and computer equipment are typically the​ largest ticket items a​ small business buys,​ so unless you​ bought your desks and computers off of​ Ebay (which is​ highly possible these days) you​ should be OK.
Internet sales taxation has been a​ topic of​ contention even before Amazon sold its first book and Priceline booked its first flight .​
One of​ the​ more controversial points is​ that no one,​ including our own government,​ seems to​ have a​ clue how to​ implement a​ fair and logical Internet taxation process .​
With over 7,​500 different local,​ county and state taxation systems in​ the​ United States,​ you​ can understand the​ controversy.
In 1998,​ Congress did what it​ usually does when faced with a​ potentially explosive issue like Internet tax collection -- it​ decided to​ put off making a​ decision .​
Congress enacted a​ three-year moratorium on​ the​ collection of​ taxes to​ give an​ appointed advisory board time to​ come up with an​ acceptable solution .​
That moratorium ended in​ 2002 and opened the​ door for municipalities to​ begin collecting sales tax on​ their own.
Here in​ Alabama the​ state sales tax collection department has aired radio spots asking Alabamians to​ step up to​ - and toss dollars into - the​ proverbial collection plate .​
The commercial kindly suggests that if​ I​ have purchased anything from an​ online retailer,​ I​ am honor-bound to​ proclaim such purchases and submit the​ appropriate sales tax to​ the​ collection department right away .​
They thank me in​ advance for my cooperation.
So,​ Charlie,​ when the​ auditor shows up at​ your door the​ best thing you​ can do is​ smile politely and be totally forthcoming .​
The sales tax that you​ pay is​ a​ small price for the​ convenience of​ shopping online.
Or at​ least that’s what you​ should tell yourself as​ you​ write the​ auditor a​ check
The Internet Tax Man Cometh The Internet Tax Man Cometh Reviewed by Henda Yesti on July 04, 2018 Rating: 5

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