I M P O R T A N T

S A L E S & U S E T A X U P D A T E

The State of New York as well as the State of New Jersey and

other states have begun a new series of audits in their never

ending attempt to collect additional taxes. The new audit is

the Sales & Use Tax audit.

While it is common knowledge as to what the Sales Tax is,

most of you may not know what the Use Tax is. Take the

following example:

You make a mail order purchase from an out of state company

for a computer, office supplies, furniture, or for that

matter any purchase which would normally be subject to

sales tax if purchased locally. The Supreme Court has

ruled that sales tax cannot be charged on Out of State

Purchases.

The States, in order to collect the tax have enacted THE

USE TAX. The Use Tax is the mirror image of the Sales Tax

and is due on all purchases which would have been subject

to sales tax but are from out of state vendors. Although

in effect for over 20 years, it was never enforced.

The tax that was due on the purchase and never collected is

now due and payable under the heading of USE TAX.

New York, New Jersey and other states are now beginning USE

TAX audits, which check for out of state purchases (Quill

office supplies, Viking offices supplies, mail order

equipment, etc), on which sales tax was not collected. They

then assess the use tax when applicable. The audit normally

covers a 3 year period if you are filing sales tax returns

and a 6 year period if you do not normally file sales tax

returns.

WHAT CAN YOU DO?

The bottom line is that if you buy any personal property,

whether office supplies, computers, clothing or any other

personal property, and the seller does not collect sales tax

then you are liable for the equivalent amount of Use Tax.

The use tax can be paid along with your regular sales tax

returns. You must let us know the amount of purchases

subject to use tax and we will make the calculations. For

those of you who do not file sales tax returns, we can

register you so that you may pay the use tax quarterly.

We do not know what the chances of your being audited or

caught are if you do not comply with the use tax law, but it

could happen. There are no strategies or plans to be made to

avoid this audit. You must make the final decision as to

whether or not to inform us of use tax liability and we will

file the appropriate forms.

Finally, individuals as well as businesses are subject to the

same rules as stated above. Individuals with large out of

state purchases may also find themselves in the same

situation as outlined above.