Cliff's Notes

The Business of Dentistry

StructurPremium by VOCO & If You Want to Play With Fire, Expect to Get Burned!

Cliff’s Notes for July 18, 2010

Cliff Marsh, Henry Schein ……Cell: 201-321-7494……Fax: 201-262-2210…..E-mail:

“Managing is getting paid for home runs that someone else hits.”
Casey Stengel

In This Week’s Issue
• StructurPremium by VOCO, Temporary C&B Material!
• If You Want to Play With Fire, Expect to Get Burned! (The 2 Biggest Mistakes a Healthcare Provider’s Business can Make)
Part #1 – State Sales Tax
Part #2 – Is Counterfeit Product on Your Shelf or Inside Your Patient?(see attachment)

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Fluorescence yes

If You Want to Play With Fire, Expect to Get Burned!…….Part #1 – State Sales Tax…………..
This report is very important to you and your business. I suggest that you consult with your tax & legal advisors.

You run your dental practice. Everything that happens is your responsibility. Richard Nixon said about the Watergate mess “I am responsible, but not the blame.” How did that work out for him? Do you know the sources that your staff uses to help run your practice? Do they ask for insurance documentation from plumbers, electricians, suppliers, etc.? Do they understand your personal liability in all of those areas? You want them to be frugal and try to minimize all expenses, but without understanding the difference between “consumer” and “business” liabilities they may be opening you up to some very damaging issues. You need to understand the risk and direct your staff to avoid it. It’s not hard, you just need to open your eyes and pay attention. Any questions you have should be directed to your professional consultants. Remember, it is all you and tax liability is a big one!

In 1996 my company went through a random state tax audit. We always played by the rules, however, two years earlier we had purchased some office supplies from an out-of-state company. The invoice slipped through our system and on day 3 of the audit the state investigator found it, they go back 3 years. The purchase was for about $250.00 and the USE tax due was only $15.00. Well, the tax and penalties multiplied by “36 months” cost us $2500.00. So go ahead and play with fire.

The economic climate appears to still be a little shaky. Everyone is shopping for better deals, but you need to remember, if it sounds too good to be true, it usually isn’t. Several weeks ago I re-printed an article written by Dr. Gordon Christensen about counterfeit product being sold by un-authorized dealers (see attachment) and the liability it causes for the office. Well, what about the NJ State Sales Tax, currently at 7%?

Henry Schein does not charge N.J. state sales tax. We collect it for the state and forward it to the Division of Taxation. If your business is registered with the state of New Jersey and we didn’t collect the tax, you would be responsible for it. State law states that any taxable item you purchase and take possession of within the state boundary is subject to the 7% sales tax. If the item is shipped to you via a common carrier (i.e. UPS, FedEx, USPS, etc.) it is subject to NJ State sales tax. The tax is called the “USE TAX”.

As a private individual, you do not have to file a USE tax declaration unless your tax obligated purchases exceed $2500.00 annually (this figure is subject to change so consult with a tax professional). However, as a registered business all tax obligations must be reported. If they are not, fines, penalties & interest will be levied. So goes the old saying, “If you want to play with fire, expect to get burned.”

The following was taken from the NJ Division of Taxation website. Again, I suggest you consult with your tax advisor. If you get audited, it could be financially devastating. The penalties and fees are extensive and with the state running out of money the number of audits will increase.

The information below has been copied from the State of NJ Division of Taxation website.
New Jersey Division of Taxation Technical Services Activity
New Jersey Use Tax – Rev. 6/09

What is Use Tax?
The New Jersey Sales and Use Tax Act (N.J.S.A. 54:32B-1 et seq.) provides for use tax to be imposed when taxable goods and services are purchased for use in New Jersey but sales tax was not collected by the retailer in the state of purchase or was collected at a rate less than the New Jersey sales tax rate. When sales tax is not collected at the time of purchase or is collected at a rate less than the current New Jersey sales tax rate of 7%, the purchaser is liable for use tax to New Jersey.

Examples of when use tax is due:
• Taxable goods and services are purchased out of State for use in New Jersey and no sales tax is collected. The purchaser owes use tax.
• Taxable goods and services are purchased out of State for use in New Jersey and sales tax is collected at a lower rate than New Jersey’s. The purchaser owes use tax.
• Items of inventory that were purchased tax-free with a resale certificate are used by the purchaser (e.g., are given away as part of a promotion). The purchaser owes use tax.

Out-of-State Purchases Received Outside New Jersey:
When taxable goods and services are purchased and received in another state and sales tax is paid to that state, New Jersey will allow a credit against the use tax due, provided that the other state allows a similar credit for sales tax paid to New Jersey. If the sales tax rate in a reciprocating state is equal to, or greater than, New Jersey’s 7% tax rate, no use tax is due. If the sales tax rate in the state where the purchase is made is less than New Jersey’s, use tax is due at the rate of 7%. However, if the other state has sales tax reciprocity with New Jersey, a credit for the sales tax paid there is allowed against the use tax due. For example, if the out-of-State purchase was for $100 and the sales tax rate was 4%, the purchaser paid $4 in sales tax. The New Jersey use tax is $7 (7% × $100), less a credit for the $4 already paid, for a use tax due of $3.

Out-of-State Purchases Delivered to New Jersey:
When taxable goods and services are purchased in another state and delivered to New Jersey for use in New Jersey, no credit is allowed for sales tax paid to the other state. Use tax is due at the rate of 7% of the purchase price, including delivery charges.

Purchases Made in a Foreign Country:
When taxable goods and services are purchased in a foreign country, no credit is allowed for sales tax paid to the foreign country, regardless of whether the purchaser takes possession of the items there or has them delivered to New Jersey. Use tax is due at the rate of 7% of the purchase price, including delivery charges.
When taxable tangible personal property or digital property is purchased from an out-of-State business and the buyer takes possession of it in New Jersey, the seller will collect New Jersey sales tax if registered to do business in this State. In that case, no use tax is due. On the other hand, an out-of-State business that is not registered in New Jersey cannot legally collect New Jersey sales tax. If taxable merchandise is purchased from an out-of-State business that does not charge New Jersey sales tax, it does not mean that tax is not due, but rather that the seller is not authorized to collect it. In such instances, the purchaser is required to remit use tax directly to New Jersey.
Penalties, Interest, and Collection Fees:
When a return is filed after its due date or tax is paid late, penalties and interest will be assessed as follows:
• Late Filing Penalty: 5% per month (or fraction of a month) up to a maximum of 25% of the amount of the underpayment when a return is filed after the due date. Additional penalties for late filing may also be imposed.
• Late Payment Penalty: 5% of the outstanding tax balance may be imposed.
• Interest: 3% above the prime rate for every month (or fraction of a month) the tax is unpaid, compounded annually. At the end of each calendar year, any tax, penalties, and interest remaining due (unpaid) will become part of the balance on which interest is charged.
• Collection Fees: In addition to the above penalties and interest, if your tax bill is sent to a collection agency, a referral cost recovery fee of 10% of the tax due will be added to your liability. If a certificate of debt is issued for your outstanding liability, a fee for the cost of collection may also be imposed.

For more information on New Jersey USE Tax:
contact the Division’s Customer Service Center at 609-292-6400, e-mail us at, or write to:
New Jersey Division of Taxation
Information and Publications Branch
PO Box 281
Trent on NJ 08695-0281
Many State tax forms and publications are available by fax and on our Web site. Call NJ TaxFax at 609-826-4500 from your fax machine’s phone, or access the Division’s home page at:

Part #2 – Counterfeit Product as Reported by NBC, CBS, Consumer Reports & More……………………
How many times does a person need to be slapped in the face before they realize it hurts? 15 years ago I told my client base that they will need amalgam separators as required by the American Clean Water Act. Most people waited until the last minute. Last year I started telling everyone about the NHII (National Health Information Infrastructure) and I hope you got started preparing. Well, counterfeit product is wide spread in the healthcare industry and I am amazed at how many healthcare professional ignore the threat simply because the price is so low.

To be honest, I am worn out with these discussions. You are a healthcare provider. You perform invasive procedures on human beings in a semi-surgical setting. If you are not obtaining product from the original manufacture’s authorized distribution chain you cannot be sure you are using the true product. We are not talking about using shampoo from the Dollar Shop, we are talking about FDA approved & regulated products. If a patient files a complaint with the state board of dentistry they will want to know where you obtained the item that failed or caused an allergic reaction. Forget about help from the OEM if a non-authorized distributor is involved, you are on your own and it will cost you big time money.

Please don’t take my word for it, consult with your legal advisor or you can contact Jo Ann Pietro,ESQ. Jo Ann is a NJ based attorney that specializes in healthcare litigation. Her law firm defends NJ dentist at state board inquiries on a weekly basis. Her e-mail is

The following link will take you to numerous media reports about this rapidly growing problem. Please contact me if you have any questions or concerns and for the sake of your business and family, DON’T PLAY WITH FIRE, sooner or later you will get burned!

Sunday July 18, 2010……………………………………………………………………………..
We are coming up to the middle of July, where did the summer go? Anyway, its hot so go get your feet wet and enjoy the day.

Cliff Marsh
Henry Schein Dental
P.O. Box 663, 45 Rt. 46 East, Suite 605
Pine Brook, NJ 07058
tel. 201-321-7494

July 18, 2010 - Posted by | Uncategorized

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