This information would be on the receipts themselves that were presented for reimbursement, or in the books kept by the retail establishment to document tax-exempt purchases.
I don't know how it will work exactly. When I first asked the question a month ago, I got a number of answers ranging from:
Businesses have to pay the tax like anyone else (wrong) to
You show a cetificate to the retail establishment ( basically a 30% off card) and they don't charge the tax and report the transaction to the HappyTax Compliance Center. to
You pay the Tax, and get a rebate later since you should never have been charged to begin with.
No matter what way they do it, it is going to have to be monitored in an extremely aggressive fashion to keep evasion at a reasonable level. 30% is a large incentive and will need to be guarded to keep people from creating fake businesses just to save the 30%.
The people who are hurt by this are NOT the cheaters, but the regular honest business owner like me who is subjected to these intrusive compliance methods.
Dear RobFromGa,
My guess is that it will be a mix of the second and third.
Where one deals regularly with a business, one will likely have an open account, and one will file a copy of one's sales tax and use license that permits one to buy exempt from the tax.
Where one deals occasionally with a business, and where they're set up to handle it, one will be able to present a copy at the point of sale to buy exempt.
For businesses that don't want to keep those records, or where the level of personnel may not be appropriate, or the method of transaction may make it inappropriate, one will have to pay the tax, get a receipt, and file for reimbursement. Clearly, the part of the code that you cited gives the option to the retailer to accept or reject the tax exemption certification.
I figure that places like drug stores, perhaps grocery stores, five and dime stores, and some other retailers that deal mostly with consumers will not want to deal, at the point of sale, with this. They don't have to, now.
I think places like gas stations may find it difficult to sell both ways, and thus may require that one pays the tax and files for reimbursement. However, I could see ways around it at places like gas stations, perhaps through state-issued cards with magnetic strips that one could use to make tax-free purchases. However, I'm not sure all states would be willing to implement that plan, and I'm not sure of the effects of having some states implement the plan, and others refusing.
It gets kind of hairy, when you think of all the possible different actors that are involved (the retailer, the retailer's franchisor - like Exxon or Shell, the company that writes the software for the point of sale equipment, the 50 states, the federal government, different credit card companies [you could implement it through credit card accounts set up for business purposes only - although that creates a whole 'nother compliance issue], etc.).
And then, for the first bunch of years, all these folks would then have to incorporate all the changes to the law that would pop up every year until the new code settled down.
I think eventually, it would be possible to handle most of this electronically, but it might take a while.
Certainly, it doesn't seem that the legislation proposes any mandated point-of-sale system to handle the specifics of these transactions.
sitetest
`SEC. 501. MONTHLY REPORTS AND PAYMENTS. `(a) Tax Reports and Filing Dates- `(1) IN GENERAL- On or before the 15th day of each month, each person who is-- `(A) liable to collect and remit the tax imposed by this subtitle by reason of section 103(a), or `(B) liable to pay tax imposed by this subtitle which is not collected pursuant to section 103(a), shall submit to the appropriate sales tax administering authority (in a form prescribed by the Secretary) a report relating to the previous calendar month. `(2) CONTENTS OF REPORT- The report required under paragraph (1) shall set forth-- `(A) the gross payments referred to in section 101, `(B) the tax collected under chapter 4 in connection with such payments, `(C) the amount and type of any credit claimed, and `(D) other information reasonably required by the Secretary or the sales tax administering authority for the administration, collection, and remittance of the tax imposed by this subtitle.
(A) the gross payments referred to in section 101,
In your case I would suppose this would mean a statement of the total amount spent on taxable items that you used in your business. That would be no different from what you are doing now in listing total expenses. I can't think of any normal sales expense that wouldn't be taxed though there may be some.
(B) the tax collected under chapter 4 in connection with such payments,
Sounds straight forward enough and the amount will be on all receipts labeled as such.
(C) the amount and type of any credit claimed, and
That would be the total amount of taxes paid and the type of credit claimed would be business to business expenses, probably a multiple choice code.
`(D) other information reasonably required by the Secretary or the sales tax administering authority for the administration, collection, and remittance of the tax imposed by this subtitle.
That seems to be no different from what is in place today. The IRS makes inquiries all the time.
I honestly see no increase in difficulty. In fact, the NRST reporting seems less difficult.
Keep in mind, that with no income tax your salesmen are reporting their expenses for your own corporate bookkeeping needs, not for your tax deduction purposes.
If the elimination of embedded tax related expenses keeps prices the same, your salesmen will be spending no more than they are now. That means your refunds will be more like "found money" than recovering what you have spent.
Rather than reenter that argument let us assume prices will increase by the tax amount. The absence of the income and withholding taxes will bring you back to level. Isn't that agreed to by all? The same advantages as listed above will again accrue.
I understand that if you have a satisfactory thing going now you don't want to rock the boat. However, once we get accustomed to thinking one way, as we have been doing for over 70 years with the income tax, it is hard to imagine things without the basis for those thoughts. If you feel that you are doing quite well right now and have been able to minimize your taxes to an acceptable level, maybe even zero, then seeing any benefit to a change will be difficult.
That is where it is necessary to see the overall effect of such a tax on the economy and how it will benefit you with more business and retainable income than you have now. In order not to see that one has to bring up the objections we see here from you and others. I don't impugn any ones motives. I am just saying that to not see how a sales tax would be superior to an income tax as far as the economy is concerned, and that a rising tide lifts all boats, one must have the objections you guys do.
When I refer to What Karl Marx said about the stealth aspect of an income tax in taking over a society, I am not accusing anyone of favoring Communism, I am simply saying that an income tax structure has so many tentacles as to permeate all our society and guide many of our actions. It gives the government more control over our daily lives than we want them to have.
When I point to what Alan Keyes says about how an income tax eventually deadens our soul and makes us less likely to rest the government, I am not saying any one is dumb, only that the stealth aspect of the tax is working.
We know that through a variety of tax angles, today about half the population pays taxes directly. The rest are subsidized by the government and pay taxes only though increased prices as consumers, those much maligned embedded taxe related costs. Whether I can explain it in a way for all to see or not, most economists agree they are there.
The NRST levels the playing field so that all are participating in the tax base equally. None can play the tax game to advantage over others the way it is now proposed. All are paying for the government rather than some riding and some pulling.
I think if you were to really see the advantages of such a system to you personally, you would be able to put those differences you see in perspective and know they are either minimal or nonexistent.