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Avoiding Tax on New Tractor??
- Thread starter Curtis861
- Start date
- Views: 41155
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Who Replied?</font><font color="blue" class="small">( You only think the online purchase is tax free. I don't know specifically about WA but I'm quite sure that the law is the same as all the other states; you are still liable for the "use" tax. )</font>
The bottom line is if you get "caught". It is tax free until someone asks for the tax. I would guess that 99% of all tax free internet purchases never have taxes paid on the item. I assume these are mainly small dollar amounts. Now, buy a 30 K tractor, tax free, then start deucting it as business expense, then get audited, then have the tax agent get picky and ask for evidence that you have paid your tax on it and BAM!
Like Clint Eastwood asked in the movie dirty harry, "do you feel lucky punk?" Most of the time I feel lucky. Very lucky. the question is "do you feel lucky?"
Bob
The bottom line is if you get "caught". It is tax free until someone asks for the tax. I would guess that 99% of all tax free internet purchases never have taxes paid on the item. I assume these are mainly small dollar amounts. Now, buy a 30 K tractor, tax free, then start deucting it as business expense, then get audited, then have the tax agent get picky and ask for evidence that you have paid your tax on it and BAM!
Like Clint Eastwood asked in the movie dirty harry, "do you feel lucky punk?" Most of the time I feel lucky. Very lucky. the question is "do you feel lucky?"
Bob
</font><font color="blue" class="small">( You only think the online purchase is tax free. I don't know specifically about WA but I'm quite sure that the law is the same as all the other states; you are still liable for the "use" tax. )</font>
The bottom line is if you get "caught". It is tax free until someone asks for the tax. I would guess that 99% of all tax free internet purchases never have taxes paid on the item. I assume these are mainly small dollar amounts. Now, buy a 30 K tractor, tax free, then start deucting it as business expense, then get audited, then have the tax agent get picky and ask for evidence that you have paid your tax on it and BAM!
Like Clint Eastwood asked in the movie dirty harry, "do you feel lucky punk?" Most of the time I feel lucky. Very lucky. the question is "do you feel lucky?"
Bob
The bottom line is if you get "caught". It is tax free until someone asks for the tax. I would guess that 99% of all tax free internet purchases never have taxes paid on the item. I assume these are mainly small dollar amounts. Now, buy a 30 K tractor, tax free, then start deucting it as business expense, then get audited, then have the tax agent get picky and ask for evidence that you have paid your tax on it and BAM!
Like Clint Eastwood asked in the movie dirty harry, "do you feel lucky punk?" Most of the time I feel lucky. Very lucky. the question is "do you feel lucky?"
Bob
DavesTractor
Elite Member
I bought a forklift from Colorado, never thought about Sales or Use tax. I depreciated it off in my business (so it was not inventory, it was an asset) and this came up in an audit and I owed the tax. Same thing on a lathe I bought in Oregon. They aren't flexible on this.
DavesTractor
Elite Member
I bought a forklift from Colorado, never thought about Sales or Use tax. I depreciated it off in my business (so it was not inventory, it was an asset) and this came up in an audit and I owed the tax. Same thing on a lathe I bought in Oregon. They aren't flexible on this.
chuck1975
Bronze Member
- Joined
- Oct 30, 2005
- Messages
- 52
- Tractor
- new holland 1920, ferguson to35, case 1948 dc, kubota (my brothers but left here as he has no where to keep it)
Ok guys this was a day in itself. Audit going on, typical workday, staff, pcs, equipment problems then I get a call to come over to the office. you need to take the boss to the MD or emergency room! We decide to go to MD since we hate ER rooms. He tests and sends us to ER because of amount of pain. What's the problem? kidney stone. Now after being admitted and getting into a room 2.5 to 3 hrs later they (hospital staff) finally start the IV and pain meds. I'm back here and she is finally resting ok. Oh by the way I work for my wife.
Yes the auditor found 4 questions and we've already resolved 2 and 2 we're in error. Yes I could be upset but out of the hundreds maybe thousands of invoices / receipts only having 2 mistakes, I'm ok with that. (wish it were zero of course) Don't have a final figure but I believe they're not going crazy with the penalties, we'll see. Also remember the auditor is also on a fishing trip to look into all of the vendors also.
(This is a free trip for the states to go thru everyones' books. Find something and the go into the next guys books and do the same thing.) This is not a new law "use tax" it has been on the books here since the mid 60's per auditor. Auditor seems to be very decent (lives in farm country, takes info and asks for supporting docs, have it no problem, don't then there's the problem.)
In our case it wasn't a case of "do you feel lucky" it was an oversight by both CPA and myself, we had already disscused the purchase and decided to pay use tax. Just didn't, and even in the auditors comment he stated how it could be interpreted as not needed to be taxed because of its usage.
2 fold problem it has other uses and secondly is the $ amount. They may let $5.00 go but they want the big sales.
Just thoughts on my day, hope everyone has had a better one, though mine really was ok could be a lot worse.
chuck
Keep all receipts, call and ask CPA ?'s and get answers
Yes the auditor found 4 questions and we've already resolved 2 and 2 we're in error. Yes I could be upset but out of the hundreds maybe thousands of invoices / receipts only having 2 mistakes, I'm ok with that. (wish it were zero of course) Don't have a final figure but I believe they're not going crazy with the penalties, we'll see. Also remember the auditor is also on a fishing trip to look into all of the vendors also.
(This is a free trip for the states to go thru everyones' books. Find something and the go into the next guys books and do the same thing.) This is not a new law "use tax" it has been on the books here since the mid 60's per auditor. Auditor seems to be very decent (lives in farm country, takes info and asks for supporting docs, have it no problem, don't then there's the problem.)
In our case it wasn't a case of "do you feel lucky" it was an oversight by both CPA and myself, we had already disscused the purchase and decided to pay use tax. Just didn't, and even in the auditors comment he stated how it could be interpreted as not needed to be taxed because of its usage.
2 fold problem it has other uses and secondly is the $ amount. They may let $5.00 go but they want the big sales.
Just thoughts on my day, hope everyone has had a better one, though mine really was ok could be a lot worse.
chuck
Keep all receipts, call and ask CPA ?'s and get answers
chuck1975
Bronze Member
- Joined
- Oct 30, 2005
- Messages
- 52
- Tractor
- new holland 1920, ferguson to35, case 1948 dc, kubota (my brothers but left here as he has no where to keep it)
Ok guys this was a day in itself. Audit going on, typical workday, staff, pcs, equipment problems then I get a call to come over to the office. you need to take the boss to the MD or emergency room! We decide to go to MD since we hate ER rooms. He tests and sends us to ER because of amount of pain. What's the problem? kidney stone. Now after being admitted and getting into a room 2.5 to 3 hrs later they (hospital staff) finally start the IV and pain meds. I'm back here and she is finally resting ok. Oh by the way I work for my wife.
Yes the auditor found 4 questions and we've already resolved 2 and 2 we're in error. Yes I could be upset but out of the hundreds maybe thousands of invoices / receipts only having 2 mistakes, I'm ok with that. (wish it were zero of course) Don't have a final figure but I believe they're not going crazy with the penalties, we'll see. Also remember the auditor is also on a fishing trip to look into all of the vendors also.
(This is a free trip for the states to go thru everyones' books. Find something and the go into the next guys books and do the same thing.) This is not a new law "use tax" it has been on the books here since the mid 60's per auditor. Auditor seems to be very decent (lives in farm country, takes info and asks for supporting docs, have it no problem, don't then there's the problem.)
In our case it wasn't a case of "do you feel lucky" it was an oversight by both CPA and myself, we had already disscused the purchase and decided to pay use tax. Just didn't, and even in the auditors comment he stated how it could be interpreted as not needed to be taxed because of its usage.
2 fold problem it has other uses and secondly is the $ amount. They may let $5.00 go but they want the big sales.
Just thoughts on my day, hope everyone has had a better one, though mine really was ok could be a lot worse.
chuck
Keep all receipts, call and ask CPA ?'s and get answers
Yes the auditor found 4 questions and we've already resolved 2 and 2 we're in error. Yes I could be upset but out of the hundreds maybe thousands of invoices / receipts only having 2 mistakes, I'm ok with that. (wish it were zero of course) Don't have a final figure but I believe they're not going crazy with the penalties, we'll see. Also remember the auditor is also on a fishing trip to look into all of the vendors also.
(This is a free trip for the states to go thru everyones' books. Find something and the go into the next guys books and do the same thing.) This is not a new law "use tax" it has been on the books here since the mid 60's per auditor. Auditor seems to be very decent (lives in farm country, takes info and asks for supporting docs, have it no problem, don't then there's the problem.)
In our case it wasn't a case of "do you feel lucky" it was an oversight by both CPA and myself, we had already disscused the purchase and decided to pay use tax. Just didn't, and even in the auditors comment he stated how it could be interpreted as not needed to be taxed because of its usage.
2 fold problem it has other uses and secondly is the $ amount. They may let $5.00 go but they want the big sales.
Just thoughts on my day, hope everyone has had a better one, though mine really was ok could be a lot worse.
chuck
Keep all receipts, call and ask CPA ?'s and get answers
MOPAULY
Gold Member
We've never been, but I'm betting an out of state no tax tractor could probably do it from a purchase size standpoint. I think I'll just stick to local dealers and not find out what it takes /forums/images/graemlins/grin.gif
MOPAULY
Gold Member
We've never been, but I'm betting an out of state no tax tractor could probably do it from a purchase size standpoint. I think I'll just stick to local dealers and not find out what it takes /forums/images/graemlins/grin.gif
riptides
Super Star Member
Having worked very closely with the large government account that may come to question one, I would not use the word "avoid", I would keep all receipts, and try my best to do sales business according to the laws of the state in which one resides.
-Mike Z.
-Mike Z.
riptides
Super Star Member
Having worked very closely with the large government account that may come to question one, I would not use the word "avoid", I would keep all receipts, and try my best to do sales business according to the laws of the state in which one resides.
-Mike Z.
-Mike Z.
</font><font color="blue" class="small">( Having worked very closely with the large government account that may come to question one, I would not use the word "avoid", I would keep all receipts, and try my best to do sales business according to the laws of the state in which one resides.
-Mike Z. )</font>
I should have used a different word other than avoid. I should have asked, what triggered this audits?
Bob
-Mike Z. )</font>
I should have used a different word other than avoid. I should have asked, what triggered this audits?
Bob
</font><font color="blue" class="small">( Having worked very closely with the large government account that may come to question one, I would not use the word "avoid", I would keep all receipts, and try my best to do sales business according to the laws of the state in which one resides.
-Mike Z. )</font>
I should have used a different word other than avoid. I should have asked, what triggered this audits?
Bob
-Mike Z. )</font>
I should have used a different word other than avoid. I should have asked, what triggered this audits?
Bob
BungeeII
Gold Member
- Joined
- May 18, 2006
- Messages
- 375
- Location
- Lapeer County, Michigan
- Tractor
- Ford 860, 861, Bolens GT2000, Eliminator 1700, Cub LT2180
"If you show up with your own trailer, then by statute, he must charge you his state's sales tax."
I've been involved in wholesale/retail sales/distribution since 1988. I've always known this to be the case, certainly in Michigan.
I just don't get how so many folks can simply cross state line and avoid sales tax. If the consumer has entered the retail establishment and taken possession of the product, it is not an interstate sale. Based on my limited knowledge, these retailers are responsible to pay sales tax to the state they're in based on the the final sale amount, whether they've charged tax or not. To me, that's a gamble I wouldn't dare take with my business. Sure, we might be a little lax in collecting resale ID's from customers, but I'd never let a taxable entity enter my store for an item without paying tax. By their taking delivery, without a resale certificate or some other tax exempt certificate, they are taxable.
Granted, an auditor would really have to be digging to determine whether the item was actually shipped or not.
So, in the case of these folks crossing state line and picking up their own tractor without paying tax (assuming both states have sales and use taxes) both the retailer and the consumer would be in violation of a tax code.
From a business standpoint, we're responsible for paying sales tax on taxable sales, less bad debt. There's a little math involved in backing out the amount of the transaction that would be considered tax, but bottom line is that the business is responsible to the state for the amount of in-state taxable sales, period. If you walk out of my store having paid 1 crisp dollar for a widget, the state will consider the sale amount as .94 for me and .06 for them, whether the guy walking out with the widget is aware of it or not. Same thing applies for a tractor.
Sorry to beat this up, but from a small businessmans perspective, that's a lot of risk for a business to take. (Having interstate consumers take delivery of product direct from the store.)
I've been involved in wholesale/retail sales/distribution since 1988. I've always known this to be the case, certainly in Michigan.
I just don't get how so many folks can simply cross state line and avoid sales tax. If the consumer has entered the retail establishment and taken possession of the product, it is not an interstate sale. Based on my limited knowledge, these retailers are responsible to pay sales tax to the state they're in based on the the final sale amount, whether they've charged tax or not. To me, that's a gamble I wouldn't dare take with my business. Sure, we might be a little lax in collecting resale ID's from customers, but I'd never let a taxable entity enter my store for an item without paying tax. By their taking delivery, without a resale certificate or some other tax exempt certificate, they are taxable.
Granted, an auditor would really have to be digging to determine whether the item was actually shipped or not.
So, in the case of these folks crossing state line and picking up their own tractor without paying tax (assuming both states have sales and use taxes) both the retailer and the consumer would be in violation of a tax code.
From a business standpoint, we're responsible for paying sales tax on taxable sales, less bad debt. There's a little math involved in backing out the amount of the transaction that would be considered tax, but bottom line is that the business is responsible to the state for the amount of in-state taxable sales, period. If you walk out of my store having paid 1 crisp dollar for a widget, the state will consider the sale amount as .94 for me and .06 for them, whether the guy walking out with the widget is aware of it or not. Same thing applies for a tractor.
Sorry to beat this up, but from a small businessmans perspective, that's a lot of risk for a business to take. (Having interstate consumers take delivery of product direct from the store.)
BungeeII
Gold Member
- Joined
- May 18, 2006
- Messages
- 375
- Location
- Lapeer County, Michigan
- Tractor
- Ford 860, 861, Bolens GT2000, Eliminator 1700, Cub LT2180
"If you show up with your own trailer, then by statute, he must charge you his state's sales tax."
I've been involved in wholesale/retail sales/distribution since 1988. I've always known this to be the case, certainly in Michigan.
I just don't get how so many folks can simply cross state line and avoid sales tax. If the consumer has entered the retail establishment and taken possession of the product, it is not an interstate sale. Based on my limited knowledge, these retailers are responsible to pay sales tax to the state they're in based on the the final sale amount, whether they've charged tax or not. To me, that's a gamble I wouldn't dare take with my business. Sure, we might be a little lax in collecting resale ID's from customers, but I'd never let a taxable entity enter my store for an item without paying tax. By their taking delivery, without a resale certificate or some other tax exempt certificate, they are taxable.
Granted, an auditor would really have to be digging to determine whether the item was actually shipped or not.
So, in the case of these folks crossing state line and picking up their own tractor without paying tax (assuming both states have sales and use taxes) both the retailer and the consumer would be in violation of a tax code.
From a business standpoint, we're responsible for paying sales tax on taxable sales, less bad debt. There's a little math involved in backing out the amount of the transaction that would be considered tax, but bottom line is that the business is responsible to the state for the amount of in-state taxable sales, period. If you walk out of my store having paid 1 crisp dollar for a widget, the state will consider the sale amount as .94 for me and .06 for them, whether the guy walking out with the widget is aware of it or not. Same thing applies for a tractor.
Sorry to beat this up, but from a small businessmans perspective, that's a lot of risk for a business to take. (Having interstate consumers take delivery of product direct from the store.)
I've been involved in wholesale/retail sales/distribution since 1988. I've always known this to be the case, certainly in Michigan.
I just don't get how so many folks can simply cross state line and avoid sales tax. If the consumer has entered the retail establishment and taken possession of the product, it is not an interstate sale. Based on my limited knowledge, these retailers are responsible to pay sales tax to the state they're in based on the the final sale amount, whether they've charged tax or not. To me, that's a gamble I wouldn't dare take with my business. Sure, we might be a little lax in collecting resale ID's from customers, but I'd never let a taxable entity enter my store for an item without paying tax. By their taking delivery, without a resale certificate or some other tax exempt certificate, they are taxable.
Granted, an auditor would really have to be digging to determine whether the item was actually shipped or not.
So, in the case of these folks crossing state line and picking up their own tractor without paying tax (assuming both states have sales and use taxes) both the retailer and the consumer would be in violation of a tax code.
From a business standpoint, we're responsible for paying sales tax on taxable sales, less bad debt. There's a little math involved in backing out the amount of the transaction that would be considered tax, but bottom line is that the business is responsible to the state for the amount of in-state taxable sales, period. If you walk out of my store having paid 1 crisp dollar for a widget, the state will consider the sale amount as .94 for me and .06 for them, whether the guy walking out with the widget is aware of it or not. Same thing applies for a tractor.
Sorry to beat this up, but from a small businessmans perspective, that's a lot of risk for a business to take. (Having interstate consumers take delivery of product direct from the store.)
