CA "Mandatory Use Account Registration Notice" came in the mail. What do *you* do?

Let me start off by saying that, in my mind, USE tax is the worst tax there is. It's an obvious means for the state to try to get tax for goods that they have no real interest in (and I mean 'interest' as a legal term and not an affectionate term). It also causes multiple taxation on singular goods which I find as unethical.

It looks like here in CA, they are getting very serious about trying to recoup the taxes we have enjoyed avoiding by buying online. I received a letter in the mail "MANDATORY USE TAX ACCOUNT REGISTRATION NOTICE" of which the state has informed me that they took it upon themselves to register me an account that I am supposed to use to report use tax accrued on items purchased from mail order, the internet, online auctions, tv shopping network, etc.

I have a well-established product design business of 15 years and have recently decided to expand it to include product photography, so I have bought a lot of photography gear in the last year. I do have a CPA who I will talk to about this issue, but I thought it would be an interesting discussion here. I have some very strong opinions about how on one hand the politicians say that small business is what makes the economy strong, yet I have found myself getting squeezed from every angle to help them make up for the deficit (made so much worse by poor government decision-making and public and private sector greed) while the big boys get a get-out-of-jail-free card.

What do you guys think about all this USE TAX reporting?? Is this something you are concerned about? Are other states starting to enforce this as well?

Buckle your seat belts... the government is still trying to catch up to the internet and I have no doubt their goal is to eliminate the peoples 'escape' of taxes on goods by buying out of state.

I received one as well, if it makes you feel any better Not for my photo biz (already had registered that), but for another business where there is very little use tax issue, but I had chosen to ignore it over the years. My CPA says CA is coming down on all his clients, so we're not alone.

My plan is to report the tax, as I say it is very small, so not much money, but a PITA to track out of state purchases, calculate what I should have paid, etc.

I'm pretty sure they say that, so yes

Dave

Multiple taxation how so?

Yes, most (if not all) states that have a state sales tax also have use tax laws. In most states with sales taxes, everyone--not just businesses--is supposed to pay a use tax for all goods purchased out of state. Certainly they are difficult to police for most purchasers, but for registered businesses, they have a hook to grab.

And they're working hard to figure out a way to force Internet merchants to collect those taxes for them. I suspect there will be a technological method developed for that in a few years.

Not knowing your situation and not making any insinuations but:
If you have a business and are claiming the cost of goods (eg camera) to produce income for that business, then generally you will need to have paid sales tax on that camera. (sorry, not trying to tell you how to suck eggs)
That is very very general i know, and may not apply to you.
Different states, different countries, different tax laws obviously can change that generalisation.

You owe the taxes on purchases made online or in the store. CA has had this law for quite some time. One of your vendors turned you in _obviously_.

The state needs the taxes, no one wants to pay, but the penalty is quite harsh if you don't. CA does not play around with tax issues. They are much tougher than the IRS... yes it's from personal experience.

The Govanater needs a new Limo.

TopHatMoments wrote in post #12003849
The Govanater needs a new Limo.

The Governator's out of office...

Goes to show you, how much attention I pay to politickles!

I pay my dues, vote, grumble and continue on.

If you reside in one of the 45 states that imposes sales taxes you must pay use taxes. This law has been around for years and states like CA are finally to be enforcing it and can you blame them in the current economic environment? It is one thing to buy online for a better price, but you ultimately have to pay taxes on it. Easiest item for any auditor to reconcile. They will request copies of your credit card/debit card statement which will clearly indicate purchases, then take the gross sum purchased out of state, and if that amount does not match the 1040, or special form for those states without income taxes, you will owe taxes and penalties.

Best advice, save your money your CPA will charge to discuss the matter and pay the bill.

Ah, this forum is like church. Everyone is so holy here...

Nobody turned me in. Everyone who makes any money gets this notice.

Double taxation? When a car is purchased 10 times over, it is taxed 10 times over. Sorry I wasn't more clear. I should have said triple, quadruple, and whatever comes after that-uple times!

So, all my holy friends, you all pay tax on every item you buy on the internet. Am I hearing that right? Because that's what I'm hearing. And this tax is not just for businesses. It's for every average Joe out there. Remember you are in front of God and all the POTN forum saints when you answer!

lol. If you don't get the tongue-in-cheek response, then let it go. I'm not interested in any flame wars here. That would be too much like hell within these sacred forum walls!

Oh, and no blasphemy cracks. I'm a church attending catholic, believe it or not.

dog rocket wrote in post #12004567
Ah, this forum is like church. Everyone is so holy here...

Nobody turned me in. Everyone who makes any money gets this notice.

Double taxation? When a car is purchased 10 times over, it is taxed 10 times over. Sorry I wasn't more clear. I should have said triple, quadruple, and whatever comes after that-uple times!

So, all my holy friends, you all pay tax on every item you buy on the internet. Am I hearing that right? Because that's what I'm hearing. And this tax is not just for businesses. It's for every average Joe out there. Remember you are in front of God and all the POTN forum saints when you answer!

lol. If you don't get the tongue-in-cheek response, then let it go. I'm not interested in any flame wars here. That would be too much like hell within these sacred forum walls!

One, that was a humorous response. There are lots of items we pay double tax on, homes, cars, etc. As for the holy commentary, I do not necessarily care about god, as he/she/it (depending on your religion) has no impact on my bank account, but the IRS, and State Dept of Revenue does. And yes, this does impact every average Joe, as every average Joe has to pay taxes on items purchased out of state so the state can afford to do stuff from build roads, schools, teachers etc. Your god will like when you help others!

The car was not taxed 10 times over. Each sale transaction was taxed once. It just happend to be the same car. Huge difference.

Use tax is nothing new. It is just newly being enforced. Enforement has been so lax in the past, a lot of people dont even know it exists. Then are surprised when they find out they have been tax evaders.

I will admit to not reporting everything. But large purchases devinatley are as they are easily spotted if you happen to be audited.

South Dakota has the same thing which is really surprising because it is so conservative. Each time I buy something out of state that did not hit me with the sales tax, then I have to pay the use tax.

Oh well, the price of doing business and about all you can do is write your reps about it, which I have done.

I'm just glad we do not have a state income tax!

And that's different....... hoooooooooooooowww? (referring to the car tax statement)

Ok, back to some level of seriousness. Most of my gear (almost all of it) was bought right here *used*. I'm guessing I know the answer to this and I'm sure someone will very happily point this out, but am I obligated to pay USE tax on something bought from another individual as used?

And again... who does this? DO YOU? This is a serious question for those in the photography business. I guess I'm setting myself up here as no-one that is reading this and thinking "hell-no" is bound to post anyway. Therefore I'm only going to get a response from the truly righteous. So I guess I'm back to speaking with my CPA.

I know that this may sound like I'm young... I'm not.
Or new in business.... nope again.
But my current business requires very large purchases once in a blue moon that are all very legitimate on the books. Lenses and cameras are less capital in comparison and I didn't think about this USE tax thing when purchasing these mostly used items. Maybe it's time. But I can and will grumble about it especially when those that get the money... well, we'll leave that for another day. I'm not a cheat although some of the posts may insinuate that I am and I'll bet I pay more taxes than you, so try not to be too critical, eh?

The state really needs the cash... And yes I do pay the use tax. The only exception is purchases of used equipment from private parties. I track my taxes very closely, as part of my business and I don't like paying them either. But it is part if CODB.

Now what really chaps my a$$ is GWC, that do not charge taxes to clients. Anything that comes on a CD ir DVD is tax exempt, electronic files are not tangible. But the labor is, and so are any prints made after the shoot. Use tax is a PITA, but that is because CA didn't plan well to start with. BUT not paying sales tax for work?