Kathy McDonald on fri 27 aug 04
dollars)
David Henley wrote
"As Bonnie, our professional accountant said, even if you buy from
out of your state, you are still technically and legally required to pay
your state sales tax, now called a use tax. I think this is true for all
states, I know it is true in Texas."
I can attest to this first hand. I live in Manitoba Canada, and purchased a
kiln form Geil kiln Co in 1996. A broker brokered this piece of equipment
for me at the time.
I had no knowledge that it was incumbent on me to pay the provincial retail
sales tax. Other duty and taxes were collected by the broker.
In March of 2003 I formally applied to register Willow Tree Pottery as a
business and in May a representative of the provincial retail sales tax
division visted my studio, I willingly showed him around and he began to ask
questions about a number of pieces of equipment that have been acquired over
the span of a 25 yr stint of potting.
He asked me when I had purchased a number of the pieces of equipment and to
be honest I could not tell him, because they had been purchased second hand
etc etc...the exception was the kiln and I openly admitted I did not know
whether provincial tax had been paid.
To make a very long and painful story short.....the retail sales tax
division
assessed my equipment purchases and valued them at 45,000 and also assessed
the tax , a penalty, and accrued interest on the whole "shootin match".
The bill assessed was over 9,000 dollars. The notification arrived 3 weeks
prior to the provincial statute of limitations.
Needless to say...I appealed the assessment and refused to pay because
retail sales tax had been paid on much of the equipment. They garnasheed my
earned income from another source, etc etc etc.
I have since gone to very great length and expense to retrieve invoices
etc.... etc.. but many of the accountants that I have done business with
over the years have moved or retired. Its been awful. Not to mention the
consulting fees paid to accountants and lawyers.
The outcome......after recreating 10 years of purchases is,,,that i do owe
972 dollars PST plus interest plus penalty on the Geil
kiln.............which I had willingly agreed to pay on the tax reps
original visit.
The bill is still substantial...and I have worked making pots all summer to
pay it.
The old adage about ignorance being bliss is certianly not true when it
comes to dealing with the tax dept.
I wonder how many people who imported boats, RV's, and the like were hassled
by the same tax official,,,,,very few I expect!!!!
Kathy McDonald (who's mug making skills have improved tremendously in the
past few months)
-----Original Message-----
From: Clayart [mailto:CLAYART@LSV.CERAMICS.ORG]On Behalf Of David
Hendley
Sent: Friday, August 27, 2004 12:10 AM
To: CLAYART@LSV.CERAMICS.ORG
Subject: Re: avoiding sales tax on ceramics equipment pruchases
As Bonnie, our professional accountant said, even if you buy from
out of your state, you are still technically and legally required to pay
your state sales tax, now called a use tax. I think this is true for all
states, I know it is true in Texas.
Of course, almost no one really keeps track of all their mail-order and
on-line purchases, and then pays tax on them. In Texas, where we
have no state income tax forms, I don't even know how one would go
about properly reporting and remitting the taxes due.
This all changes if you are buying equipment and supplies for a business.
Now, since you are keeping ledgers for your business, the figures are
right there - you know how much you spent and how much use tax
you should pay.
And, since you file to remit the sales taxes you have collected on your
sales, you are now "in the system".
Any time the state would like to, they can audit your books and
check to see if you have paid use taxes for out-of-state equipment
purchases. I don't know how often this happens, but my tiny little
pottery business was indeed audited by the state of Texas in the
1980's. That's why I am familiar with the law. After going over my
books, the auditor came up with about $12 that I owed in use taxes.
Considering that she traveled to my business for the audit and spent
about 2 hours there, it wasn't exactly a cost effective adventure for
the state.
David Hendley
david@farmpots.com
http://www.farmpots.com
----- Original Message -----
> I am curious--is it possible to avoid sales tax by purchasing studio
> equipment and supplies via the internet? If so, can anyone recommend a
good
> internet-based ceramics supply business? I need to purchase a kiln,
wheel, and
> possibly a slab roller and extruder, plus lots of supplies and hand tools.
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