Use Tax(Which is Sales Tax)

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Books4me

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In my state you are supposed to print off a form and send in use tax, which is basically sales tax, whenever you make an online purchase and the business you purchase from doesn’t charge you for sales tax. I’ve shopped online a lot over the years and have yet to pay any tax at most of the places I bought from. Evidently you are charged penalties and interest whenever you don’t pay your taxes on time. The first time I called they said I had to pay these fees and I think he told me to look online for instructions. The second time I called a local office and he attempted to explain, but I don’t even think he knew how to do it. If he works there and doesn’t know it, how in the world do they expect regular consumers to know it? I called the comptroller’s office again today hoping to get someone who knew what they were talking about, and after putting me on hold, he said that I should just pay my taxes without adding in any penalties and fees. I asked him if he was sure I’m not supposed to pay any fees, and he put me on hold for a while, and came back to say that all I needed to pay was the Use Tax.

So, my question is, should I call the local office again to see if the information the guy at the main office gave me is correct? I feel like I’d be stealing or cheating if I didn’t pay the penalties and interest, but I’m so frustrated at this point. I’m almost positive I’m supposed to pay some kind of penalty fee and interest but I don’t know how.
 
Books4me said:
In my state you are supposed to print off a form and send in use tax, which is basically sales tax, whenever you make an online purchase and the business you purchase from doesn’t charge you for sales tax. I’ve shopped online a lot over the years and have yet to pay any tax at most of the places I bought from. Evidently you are charged penalties and interest whenever you don’t pay your taxes on time. The first time I called they said I had to pay these fees and I think he told me to look online for instructions. The second time I called a local office and he attempted to explain, but I don’t even think he knew how to do it. If he works there and doesn’t know it, how in the world do they expect regular consumers to know it? I called the comptroller’s office again today hoping to get someone who knew what they were talking about, and after putting me on hold, he said that I should just pay my taxes without adding in any penalties and fees. I asked him if he was sure I’m not supposed to pay any fees, and he put me on hold for a while, and came back to say that all I needed to pay was the Use Tax.

So, my question is, should I call the local office again to see if the information the guy at the main office gave me is correct? I feel like I’d be stealing or cheating if I didn’t pay the penalties and interest, but I’m so frustrated at this point. I’m almost positive I’m supposed to pay some kind of penalty fee and interest but I don’t know how.
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I would see if you could somehow get them to put those instructions in writing, whether they fax you a response, respond to a letter, or even just email them. See if you can get the person you spoke with to send you an email confirmation. Then at least you have it in writing should someone try to penalize you further down the road.

Pretty frustrating tax system we have. Definitely tries one’s patience! Hang in there.
 
Generally, it is the SELLER’S responsibility to submit the sales tax to the state, not the buyer’s. The seller is supposed to collect as necessary by law and remit the money to the state.
 
Catholic90 said:
Generally, it is the SELLER’S responsibility to submit the sales tax to the state, not the buyer’s. The seller is supposed to collect as necessary by law and remit the money to the state.
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Normally, that is true, but in Kansas, for example, when you file your state income tax return, there is a line toward the end for the “Use Tax,” which you are supposed to calculate and add in. This is for items bought from online sellers and delivered to Kansas residents.

Now, I don’t know of anyone who actually keeps tracks of items bought on line and whether or not they paid state sales tax on them, so it is pretty much a guessing game. The solution would be for sellers to collect the sales tax, but they would have to figure different tax rates for each state in which they have customers and further remit it to 50 different states. It’s a confusing situation which will probably require national legislation.
 
JimG said:
Normally, that is true, but in Kansas, for example, when you file your state income tax return, there is a line toward the end for the “Use Tax,” which you are supposed to calculate and add in. This is for items bought from online sellers and delivered to Kansas residents.

Now, I don’t know of anyone who actually keeps tracks of items bought on line and whether or not they paid state sales tax on them, so it is pretty much a guessing game. The solution would be for sellers to collect the sales tax, but they would have to figure different tax rates for each state in which they have customers and further remit it to 50 different states. It’s a confusing situation which will probably require national legislation.
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How confusing!
 
Catholic90 said:
Generally, it is the SELLER’S responsibility to submit the sales tax to the state, not the buyer’s. The seller is supposed to collect as necessary by law and remit the money to the state.
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There was a Supreme Court decision stating that the responsibility to collect taxes only applies when the seller has a physical presence within that state.

So if you purchase from Sears, for example, which has a physical presence in every state, sales tax is usually collected.

Amazon, on the other hand, which has a physical presence only in Washington State, does not collect sales tax for other states.

As the OP notes, most states will then require you to submit tax forms for your online purchases.
 
Brendan said:
There was a Supreme Court decision stating that the responsibility to collect taxes only applies when the seller has a physical presence within that state.

So if you purchase from Sears, for example, which has a physical presence in every state, sales tax is usually collected.

Amazon, on the other hand, which has a physical presence only in Washington State, does not collect sales tax for other states.

As the OP notes, most states will then require you to submit tax forms for your online purchases.
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In some states there is an option to use an estimate based on a certain percentage of your AGI. It is really quite easy if you take that option, and the estimate is what an average person would spend on out of state purchases. But if you think you will do better itemizing those purchases, then that option is open to you too.
 
How did they catch you? I mean, I never knew there was a way for them to catch you for not reporting the sales tax but apparently I was wrong because they caught you. I generally don’t buy stuff online so I don’t have this problem but if I do in the future, I am curious as to how you were caught.
 
wjp984 said:
How did they catch you? I mean, I never knew there was a way for them to catch you for not reporting the sales tax but apparently I was wrong because they caught you. I generally don’t buy stuff online so I don’t have this problem but if I do in the future, I am curious as to how you were caught.
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I don’t think Books4me is suggesting she (or he) was caught, but that she just wants to do the right thing and doesn’t know the procedure for reporting and paying the tax on her mail order purchases.

JimG mentioned that in Kansas you can do it by filling in a line on your income tax return. Kentucky has the same thing and I usually send them $100.00 per year. That will cover about $1,600 worth of on line purchases and for me that’s about right. Here is the link to the Kentucky form:
revenue.ky.gov/NR/rdonlyres/B03EC73C-E860-4BA5-A98C-EB99751033FB/0/11_42A74020110002_FINAL.pdf
The use tax declaration is on Line 27.

I expect other states have something similar.
 
Books4me said:
In my state you are supposed to print off a form and send in use tax, which is basically sales tax, whenever you make an online purchase and the business you purchase from doesn’t charge you for sales tax. I’ve shopped online a lot over the years and have yet to pay any tax at most of the places I bought from.
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most likely the law says you are supposed to file this return only if the on-line seller has not paid any sales tax due in your state. almost all on-line vendors have complicated programs to calculate what tax if any is owed (DH makes is living writing these programs for on-line retailers). Until recently the law was that the retailer had to collect sales tax only in states where he maintained a business legal presence, not where the purchaser lived, unless the purchaser’s state required sales tax on out-of-state purchases. Many states have recently changed their laws, so they are taxing many more on-line sales than formerly. I would not worry at all about this form as it is nearly impossible to make a legitimate on-line purchase in this country w/o having the proper state sales tax calculated and collected.

don’t know about purchases from foreign sites, private sellers etc. but I still would not worry about it. If you are concerned ask your tax advisor. If your state requires it he usually gathers the necessary info when he does your other taxes.
 
Zenas said:
I don’t think Books4me is suggesting she (or he) was caught, but that she just wants to do the right thing and doesn’t know the procedure for reporting and paying the tax on her mail order purchases.

JimG mentioned that in Kansas you can do it by filling in a line on your income tax return. Kentucky has the same thing and I usually send them $100.00 per year. That will cover about $1,600 worth of on line purchases and for me that’s about right. Here is the link to the Kentucky form:
revenue.ky.gov/NR/rdonlyres/B03EC73C-E860-4BA5-A98C-EB99751033FB/0/11_42A74020110002_FINAL.pdf
The use tax declaration is on Line 27.

I expect other states have something similar.
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Alabama has something similar – “How much did you buy out-of-state, and send in 4.5% of that.” Heck, I don’t have any idea what my total on-line purchases were this year; I don’t keep track of that, and I’m not about to start. I know it was more than $1000 and less than $2000, so I’m going to estimate $1500, and if they’re unhappy with that, tough toenails. Let them keep the records.
 
We don’t do that here. I give my accountant all my paperwork, and then he calculates everything.
 
Catholic90 said:
We don’t do that here. I give my accountant all my paperwork, and then he calculates everything.
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I’m not rich enough to hire an accountant 😛 Since the late '60s I’ve done mine (“ours” since 1970) every year with a pencil and paper (and a calculator, after they dropped below $100). Last year was my first year with TurboTax, and it screwed up to the tune of several hundred $$$ (in our favor).
 
Last year the IL IRS did press releases noting that in light of the ubiquitous internet sales a claimed ZERO use tax could be an audit flag. Thankfully, like many states, they offer the estimate option. I suspect I actually buy more online than that, but I’m not nearly organized enough to track them all down. Since IL allows the estimate option with no paperwork required, I choose that. It’s not really all that much.
 
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