As a small business owner I have to report/pay sales tax that I've collected each quarter. I'm also supposed to report "use tax" on items that I've purchased but did not pay sales tax on. I try to keep my purchases separate to avoid this. In other words, I don't pay sales tax on materials I buy for customers, I do pay sales when I buy tools and office supplies, etc. Apparently it is very unusual for businesses to not pay use tax each quarter so the state department of revenue wants me to look through my records back to 2005 and find any items that I've overlooked. What's less likely to result in an audit: sticking to my guns and not reporting any "use tax", or picking an amount to pay? If it's the latter, what amount are they looking for? Yes, I'd rather pay them off with money I don't owe them than go through the hassle. If I pay some amount will they come looking for more? Why did this come up after years of reporting $0 use tax? Well one theory is that the state goverment is looking under every rock because per capita, we have largest debt in the nation. Had our governor only increased state spending by 20% above inflation in her first term then we'd be still in the black.
dig up every receipt of every purchase you have made (include everything...incl;uding Gas, your personal bills....a strip joint receipt...etc..) then produce them at an audit and ask them to find a transgression and promise to pay. make those *******s work. I keep every single receipt and I have them ready for an audit. the point is that you NEED to make these jagoffs work or they will continue to bother you for this or that down the line. TRUST ME...you WANT an audit. (unless you are cheating your sales tax or income....)
Thanks for your input. I think I'm going to do my best guess and let the chips fall where they may. While I may not pay tax on some items I should, I know I occasionally pay tax on items that I shouldn't. If I had all my ducks perfectly in a row, and had the time to spare, then I might want an audit. Seems like it would be a big time consuming hassle. I have all my receipts. Most items are itemized by job/client in my quicken file, but not all of them. They want me to go back to 2005 and I just can't say for sure what every item on each receipt was for. In their letter they had this chart to estimate use tax: less than $200,000 ... $490 $200,000 - $500,000 ... $563 $500,000 - $1,000,000 ... $1,236 more than $1,000,000 ... $4,842 Even if I assume every unitemized item was not for a customer and use tax is owed, I'm still way short of those numbers. Here's a related article having to do with them going after use tax for valuables purchased over the internet: http://www.carneylaw.com/resources/getProfile.asp?publicationID=10
