Posted on 07/09/2009 9:04:25 AM PDT by Tallguy
I received a letter from the PA Department of Revenue stating that I had not paid Use Tax in 3 years and they were allowing me to catch up without penalty. They included a brochure explaining what Use Tax is. I had never read anything that had led me to believe I owed this tax. I thought it was a tax on rentals & leases. Boy was I wrong.
Use tax is tax on anything you purchase that is normally taxable and that you did not pay tax on. For example, let's say you purchase something off the Internet for use in your office. Most companies do not charge tax on the Internet. You have 1 month to pay the tax on that item to the state of Pennsylvania.
My first question is ... why? The item was not manufactured in the sate, it was not sold in the state, they had nothing to do with this transaction. Why do they think they have a right to money? Simply because I am in this state they think they deserve money. Don't they get enough from my state, local, and real estate taxes plus sales tax I pay in this state (don't even get me started on the high tax we pay here for gasoline)?
Plus if you purchase something you normally do not pay tax on but use it in a different way - you have to figure out how much you used and what the tax on that portion is and pay that. For example: You build items from wood. Normally there is no tax on any item that you use in making your product. If you take part of a shipment of wood and use it to fix a floor for example you have to pay tax on the portion used to fix the floor.
I had to go back three years and find out what I had not paid tax on or those items I did not pay the full 6% on and pay the difference. I wonder if there were items I paid 8% on would I be able to deduct that 2% - probably not. It took 4 days basically to find the records, go through them, and work up the forms.
I do it all - production, marketing, bookkeeping, sales, paperwork, customer calls, research and development, purchasing. Since I am a one person operation this shut me down for 4 days.
My tax came to less than $25 for 3 years. I could have produced product in those 4 days whose tax upon sale would be more than what I owed. So this I think was really worth my while and the effort of the PA Department of Revenue.
Plus I really love the wording they use in all tax information. Is it really English or just something they came up with that resembles English? The letter said to use the enclosed form for filing tax and the computed penalty and interest. The very next line says If paid by the due date all penalties will be waived. I read this 3 or 4 times before I called to verify. Yes, penalties are waived but interest is still due. Would it have killed them to put in: "penalties will be waived but all interest is still due"? A person not versed in tax lingo may read what they sent and figure as long as they pay on time they owe nothing else but the 6% tax.
I also had a question about tax on the items used to package my items for sale. I did not know if I owed tax on that or not. I went to their website and finally found the following: The tax does not apply to the following:
(5) Wrapping paper, wrapping twine, bags, cartons, tape, rope, labels, nonreturnable containers and other wrapping supplies, when the use is incidental to the delivery of tangible personal property. Charges for wrapping or packaging are subject to tax. (This was cut and pasted from their site)
Upon first reading this it seems contradictory - all these items are not taxable but they are according to the last line. I read it several more times before interpreting that the items used to package are not taxable but if I pay someone to actually do the wrapping or packaging that is taxable. I sure hope that is the correct interpretation.
The amount of taxes paid annually by an average person is staggering anymore. My husband loses almost 40% of his bonus each year to taxes. It is getting to the point you have to wonder if it is worth working if the governments are going to take 30% - 40% of what you earn. That means the person working 40 hours a week are actually working 12-16 hours a week for taxes. Didn't our ancestors start a revolution over taxation problems (in part)?
I reported a few things and paid maybe $50 in taxes & interest. Mostly due to internet purchases of office supplies & computer equipment. But I've noticed that these suppliers are increasingly charging sales tax now, so my exposure to the Use Tax is decreasing.
Anybody else get one of these?
North Carolina has had one for at least 3 years. We pay what they ask for, since it’s a fraction of what we would really owe.
Its become nothing more than a Mafia. Collectin’ for the sake of Collectin’.
A few years ago I went to a small business seminar and sales/use taxes were one of the topics which got everyone fired up. In Ohio, if you buy something in a county with a lower tax rate than your home county and then bring it back home, you are supposed to pay the difference as a use tax. They used to do that for cars until they finally decided that the dealer should just charge your home county's rate rather than relying on you to pay it separately.
The states have no jurisdiction in interstate commerce.I went through the same thing in Ma.A friend who was an attorney sent a sweet buzz off letter and I have never heard from them again.It’s a scam but you have to reply in a legal sense.
Are you a business with a sales tax number?
Items you purchase for resale are not taxable. Items you purchase for use in your business (or personal use) are.
You can buy a desk from a wholesaler (who won’t charge you sales tax because you have a tax number on file with them), but if you keep the desk for use in your business YOU have to pay the sales tax to the state.
A sales tax number doesn’t exempt you from paying sales tax. All it really means that instead of the seller being responsible for paying the sales tax, YOU (the purchaser) are responsible for it.
I can’t comment directly on PA policies but in AZ we also have a Use Tax that works just as you have described.
Now, I certainly don’t recommend that anybody go around breaking the law but, before I filled out the forms I’d have to ask myself a couple of questions:
1. How the heck are they going to know whether I bought $60 worth of crap for my office and didn’t pay tax on it?
2. If I get audited and they find I didn’t pay use tax how much is it going to cost me?
I have been through several audits for sales tax (Use tax is part of the proceedure) and the only items I have seen people “dinged” on are bigger purchases...like vehicles and large tools. I have NEVER seen an auditor go off looking for $100 in office supplies that no tax was paid on.
As a rule of thumb I’d say that the liklihood of any single item being tapped for “use tax” is pretty low if its cost was less than $500.00
Upon first reading this it seems contradictory - all these items are not taxable but they are according to the last line. I read it several more times before interpreting that the items used to package are not taxable but if I pay someone to actually do the wrapping or packaging that is taxable. I sure hope that is the correct interpretation.
This actually makes sense. PA charges sales tax on shipping and handling fees, therefore a business buying shipping materials can count those as something that will be resold, thus they are non-taxable when the business buys them. That's similar to the wood mentioned above. If it is to be resold, then the tax man gets his bite in the final retail sale. On the other hand if it is consumed by the business (either for internal repairs or just for burning), then the business is the final consumer and has to pay the tax.
Here's the answer: Despite 37 GOP legislators warning him and the Rats last year that the good times were over, Fast Eddie Rendell pushed through a budget that caused a $3 billion shortfall this year.
Now he's wanting to "temporarily" raise Pennsylvania state income taxes for three years. The GOP-controlled legislature not only said no, but HELL NO!, and so he's got his Department of Revenue goons shaking down businesses in the Commonwealth for every penny he can pry out of them.
The flip side of that coin is that the Feds do (have jurisdiction in interstate commerce). BOHICA.
Kind of like buying an indulgence from the church.
It’s way time for a complete tax revolt. We are taxed to death by idiots that have no idea how they hurt Americans but are so power and greed crazy that it is time for real change.
Yup, I'd rather have the mafia after me any day. I think their standards are higher.
BTT!
I wonder what happens if you buy something but don't use it. Conversely, I wonder what happens if you use something but don't buy it.
You mean that you pay what they ask for, since its a fraction of what they say that you owe. Greedy bustards are just trying to confiscate more of your hard-earned money so that they can use it to buy votes.
This was the first surprise tax I encountered after I moved up to NY in 2004. I was only here 4 full months and did the “part year resident” form - but they figured I forgot the use tax and charged the full year minimum. My $75 refund was reduced to $28. It’s just assumed you owe it!
They are much happier in Indiana now near a son and family who moved out there. They can actually breathe.
Oh BTW. Breathing may be taxed by the Liberal/Progressives some day you know.
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