Cliff's Notes

State Sales Tax & Use Tax

Cliff’s Notes For August 25,2008 E-NEWS LETTER & REPORT
Cliff Marsh, Henry Schein Dental……..
Cell: 201-321-7494……..e-mail:cliff.marsh@henryschein.com
Attention, Out of State & Online Shoppers: Taxes Are Coming………………

New York has e-commerce retailers like Amazon collecting state sales tax. You need to remember, Amazon does not charge tax, they collect it and forward it to the state. The rest of the country will follow shortly. Let us try to clarify the state tax laws of New York and New Jersey. If you do business in the states of New York or New Jersey, you are obligated by state law to pay sales tax on any taxable goods you purchase. If the seller does not collect the appropriate sales tax at the time of sale, you are obligated to file a USE TAX form and forward the tax amount to the state. This law, it is cemented into stone, ask your tax advisor. Also, New Jersey & New York have enacted and enforced a “Reciprocal Tax Agreement” that obligates each state to attempt to collect tax for the other. This program has been in effect for over 10 years. It is on a voluntary basis for all sellers, however, state law authorizes tax audits by either state across state boundaries. What this means is that if you are in New Jersey and purchase something from a company in New York, New Jersey has the right to audit the New York companies sales records and charge you for the tax, interest and penalties. Please do not fall for the sales pitch “we don’t charge tax” because no one does, we collect it. Those sellers are not are putting the full sales tax liability on you. New York and New Jersey also look at taxable and non-taxable items differently. In New Jersey, anything that you purchase that stays in the mouth (becomes property of the patient) is non-taxable. For example, non-taxable items would include cements, composites, anesthetic, prophy pastes, etc. Gloves, masks and gowns are also non-taxable because they are classified as wearing apparel and in NJ, the category is tax free. New York is quiet different. In NY, everything is taxable except needles and anesthetics. Now, who’s tax do you pay if you buy from out of state? The law is very clear, it is the sales tax laws that govern the state you are in when you physically take possession of the product. Another important note, if the company you buy from has any type of physical presence in your state (including installers or service techs) they are obligated by law to collect the appropriate sales tax. The only time a seller can avoid having to collect sales tax for a state, is if their entire organization only deals with their customers through an ICC licensed interstate carrier such as United Parcel or Federal Express. For more information on state sales tax liability, I suggest you consult your personal tax advisor.

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October 16, 2009 - Posted by Cliff's Notes Blog | 1