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Tax Tip - September 15th,  2008

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Understand your sales and use tax obligations

Are you keeping up with your business's sales and use tax responsibilities?

If it's been a while since you reviewed your compliance procedures, now's a good time to schedule an assessment. As evidenced by the lawsuit Amazon filed against New York State, slowing tax collections are encouraging legislators to pursue additional revenue in this area.

What to do:

  • Review your sales. Generally, if you sell personal property such as books or toys in a state where you have a business presence, you need to collect and remit sales tax. (A business presence can mean owning property in a state or having employees there.)

    In addition to tangible property, some states tax labor and services. Examples include New York, which taxes the sale of mailing and customer lists, and Pennsylvania, which taxes secretarial and editing services as well as employment agency services.

    Another area to review: If you're a shareholder renting office space to your company, you may be required to pay sales tax on the rent.
  • Check your purchases. Besides sales taxes, most states also collect use taxes. These taxes are typically due on purchases you make of taxable items when the seller does not collect the sales tax — say, for instance, a computer you buy online and use in your business.

If you think you have unexpected sales or use tax obligations, give us a call. We'll be happy to answer your questions, including what exemptions apply to your business and what voluntary disclosure or amnesty programs are available.

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