The quick answer was;
"When a business purchases items for business use from a retail vendor, they have to pay the tax on the purchase and take a credit against the tax due on their monthly sales tax return."
My thought is that a business already does cost accounting and logs expenses. Most businesses keep documentation to track what is on the ledger. The only difference under the FairTax is that they would be expected to show the support documents if audited.
A one man deep business that travels far and wide and keeps receipts in a basket may require a process change.
If I am in B2B sales, I don’t have any sales tax to collect. And there are a great number of B2B businesses.
In any event, you are pointing out that most accounting is done for reasons other than taxes. Another reason that compliance costs will not be dropping much with the FairTax.
And for any B2B business, I see a lot more intrusion. How does anyone guarantee that those business records are kept secret for example. ANd not sold to my competitor who might love to know everywhere I’ve been and what I’ve spent.
My thought is that a business already does cost accounting and logs expenses. Most businesses keep documentation to track what is on the ledger. The only difference under the FairTax is that they would be expected to show the support documents if audited.What happened to all those "compliance cost savings"?----------
"When a business purchases items for business use from a retail vendor, they have to pay the tax on the purchase and take a credit against the tax due on their monthly sales tax return."
Wholesale businesses and manufacturers won't have a "sales tax return"...There is no tax due, what's to credit?