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Thread: Use Tax

  1. #1
    Kaylinn
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    Default Use Tax

    I got a letter today from the IRS saying my Use Tax was delequent and I needed to sent in payment, however, they didn't say how much I owe, or for what.
    What is a Use tax? What did I use?
    I filed my taxes back in Feb. and got a refund back the same month.
    Although I had my business license last year, I worked as a cocktail waitress for most of the year, only danced on occasion, and did nto make enough to worry about claiming. I mean...I count count the days I danced on one hand.

    Anyone know what Use tax is?
    And how I figure out what I owe for it?

  2. #2
    Banned Melonie's Avatar
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    Default Re: Use Tax

    ... well, they could be talking about THIS ...

    (snip)"Online purchases from sites like Amazon.com and eBay may seem to arrive in a state of untaxed bliss. But the law actually requires shoppers to pay their own state's sales tax rate--the concept is called a "use tax"--and voluntarily cough up the exact amount owed each year at tax time.

    Tax bureaucrats for years have lamented the difficulty of collecting use taxes on catalog and mail order sales. Now, with online shopping growing rapidly and nearing $100 billion a year in consumer sales, tax collectors are adopting more aggressive tactics.

    New York state has added a line to income tax returns requiring all residents to calculate how much they should pay on Internet, mail order or out-of-state purchases. The threat is explicit: Anyone who creatively underestimates will face stiff penalties if an audit occurs.

    "If you've written zero or left it blank, during the audit we're going to make you produce your financial records, bank statements, credit card statements," said Michael Bucci, a spokesman for the New York Department of Taxation and Finance. "If we find out you have made purchases you haven't reported to us, not only are you going to be liable for the amount owed, the tax liability, but also interest and penalties, which...could be up to three times as much as what you actually owe." '(snip) from

    I would suspect that the above scenario is the case if your credit card(s) have a record of some high ticket purchases from online vendors.


    But it's also possible that they are talking about THIS ...

    If you are a registered business (which is apparently required in Nevada), the IRS and Nevada tax people may be looking for your business to be remitting 'use tax' that is has failed to collect from customers in the course of selling its 'product' during the past year. See If this is indeed the case, then the IRS and state of Nevada may be looking to you to pay them some 7% on every dollar's worth of 'product' that you sold last year i.e. 7% of all of the customer private dance money that you received. I have never heard of this sort of attempt to collect sales/use tax from a 'business' that consisted of one exotic dancer before, but hey all of those state social welfare budgets and retirement funds need more money, right ?

    I found this link which has more detailed info.

    I would recommend calling your local Nevada tax dep't regional office, play 'dumb', and let them explain to YOU what they are looking for !
    ~
    Last edited by Melonie; 06-04-2007 at 09:37 AM.

  3. #3
    God/dess doc-catfish's Avatar
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    Default Re: Use Tax

    I've never heard of a federal use tax, except a "heavy vehicle use tax", but I don't see you driving a semi trailer truck to the club, so that couldn't be it.


    Some states have a "compensating use tax" which is a sales tax you pay on items you buy from an out of state merchant that you didn't pay your own state's sales tax on. Not sure if that's what you're talking about though. Are you sure this letter isn't from your state DOR?
    Former SCJ now in rehab.

  4. #4
    Kaylinn
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    Default Re: Use Tax

    ^^ Yes, I was wrong, it IS from Nevada DOT.

    It appears to have something to do with my business license, because the letter says
    If your business has closed, please provide proof of the dte business ceased operations weather or not sales or purchases were made during the reporting period.

    Does this mean, Melonie, That they are actually trying to charge me 7% of all my lapdances? And why would they? I'm so confused.

    And if it happens to be from online purchases...first of all, How would the tax dept. find out about purchases? From my bank statements? I made maybe $50 worth online purchases last year. I don't shop online very often at ALL.
    Wouldn't they be after bigger fish than me?

    It has to be my business license....bnut you said you've never heard of this happening before...

    Assume for a minute I danced full time last year, made decent amount of money, and paid my taxes as due. Would I still be getting this letter to pay even more taxes?

    Im going to read the info in the link now...
    I'm so confused.

    Thanks for the info.

    OK..Im reading the ninfo. but it says
    " Use tax is a tax imposed on tangible personal property used in Nevada on which Nevada sales tax has not been paid.

    Lap dances are not tangible property.

    And more....
    Use Tax is to be paid by the purchaser when the seller has not collected sales tax.
    Which woudl mean, I SELL lapdances, so I would not be required to pay use tax, in thoery, the guy buying the dance woudl have to pay it. It is a purchaser's responsibility to pay....

    Which goes back to onlien purchases, or I guess business expences, but I didnt claim any expenses last year, since I didnt really dance. I had no expenses to claim.

    Even more confused now.

    Grr...last time I edit.
    It HAS to be onlien purchases, after reading that link.
    The use tax guidlines do notapply to dancing in any way, unless I made a purchase related to it, but I didnt.

    So its for shit I bought online last year. I dont even know what I bought onlien last year. Some makeup for $13, That's it.

    Ohh.....
    I bought 6 tickle me elmo's on ebay.
    I wonder if that's it......
    But again, how woudl they know? WHy didnt my boyfriend get the same letter, as the bank account is in both our names, if that's how they found out. The paypal is in his name, the ebay account is in mine.
    And if it is the emlmo's, why does the letter ask if my business is still open?

    hmm
    Last edited by Kaylinn; 06-04-2007 at 09:54 AM.

  5. #5
    Member daytona's Avatar
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    Default Re: Use Tax

    Just got my letter for the same thing today! I am confused as well.... looks like I need to make a phone call

  6. #6
    Banned Melonie's Avatar
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    Default Re: Use Tax

    before going any farther please understand that there is no direct precedent for this, so everything I'm going to post is pure speculation ...

    If your business has closed, please provide proof of the dte business ceased operations weather or not sales or purchases were made during the reporting period.

    Does this mean, Melonie, That they are actually trying to charge me 7% of all my lapdances? And why would they? I'm so confused.
    The Nevada tax people asked about your business i.e. whether the business ceased operations plus what sort of purchases and sales your business made during the past year. In my own mind at least, this must be interpreted as meaning that the state tax people are interested in an unpaid business 'use tax' - which rules out personal purchases on ebay etc.

    Lap dances are not tangible property.
    Very true at least by any 'conventional' definition. The nevada state forms also make mention of construction contractors in a context where the collection of sales tax is not required.

    Based on the construction contractor analogy, I believe that the nevada state tax people are looking for you to file THIS form ...



    Just got my letter for the same thing today! I am confused as well.... looks like I need to make a phone call
    unfortunately, there is also a different concept that the 'use tax' due on tangible property is interchangable with a 'transaction privelege tax' that is not limited to tangible property ...



    ~
    Last edited by Melonie; 06-04-2007 at 03:47 PM.

  7. #7
    Kaylinn
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    Default Re: Use Tax

    Thank you for being so helpful. I really appriciate your advice.
    I still have no clue what they want me to pay it for. Can't be lapdances, as the use tax is a purchaser's responsibility, not the seller.

    It has to be for items purchased for my "business". Clothes, shoes, whatever.
    Since I did not file a return for dancing, I never knew about this tax, which is why it is now delequent.
    If you stop dancing for any period of time, your "business" closes, and you are supposed to close your lisence. I keep mine current all the time...you never know when you might want to stop in and work a night here and there. So I had an open business all year, yet I never filed any taxes related to it. So I probably raised a red flag. Stupid of me. I should have done something with my business taxes, even just claim $500 or something, just for proof my open business made money? I dont know. I was a cocktail waitress most of the year, and didnt work the rest of the time.

    I only need to pay that tax for items purchased that I did not pay sales tax on.
    Since any dancing supplies I bought in stores, I have already paid tax on them. I have not recieved any tangible goods related to dancing from a private seller that I have not paid tax on.

    Which means i need to file this form, but I do not need to send in any money.

    Sorry...I was just thinking out loud.....
    I was all worried, but it doesn't appear that I did anythign wrong, or that this letter is a bad thing.


    Thanks soo much for your advice, and sorry for rambling.

  8. #8
    Yekhefah
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    Default Re: Use Tax

    I got something similar from Nevada and took it to my accountant because it made no sense to me. He said to ignore it, that it didn't apply to me so I didn't need to worry about it.

  9. #9
    Jay Zeno
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    Default Re: Use Tax

    State tax authorities can be spammers. They don't know what a specific business has done that might qualify for use taxes. So they send out a wide net with the expectation that, A, Something will come in that they couldn't get otherwise and, B, if they ever do prosecute a business for failure to pay use taxes, they have a paper trail that they demanded it.

    I might guess that they spammed this to all the businesses they have on file from whom they got no use tax payments. I don't know if that's correct, but it has a logic to it.

    So I got some electronics online last year that are installed in the office. I can expect to pay a use tax on them. If i don't and if I get audited, then I better have some receipts to show that I paid taxes on them somehow, or I could get dinged for penalties.

    On the other hand, I provided some consulting to some clients. I did not charge a tax on the consulting, nor did I send any taxes in. This is correct. My taxing authorities do not have a service tax (but I bet it's coming!). Only for tangible property sold.

    So if I were you, I would fill out the form that our ever-helpful Melonie pointed you to. If the amount is zero, it's zero - if it's $13, it's whatever it is. But I am risk-averse, and I am not you. You would probably feel safe to ignore it, and I couldn't argue with that.

  10. #10
    Banned Melonie's Avatar
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    Default Re: Use Tax

    My taxing authorities do not have a service tax (but I bet it's coming!). Only for tangible property sold.
    agreed that Nevada's tax is limited to the sale of tangible property. But what do you make of Arizona's 'transaction privelege tax' on businesses which would seem to apply to personal services businesses ?

  11. #11
    Veteran Member Robertjordan's Avatar
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    Default Re: Use Tax

    I found this definition of "Use tax" for Nevada on a Chamber of commerce website:
    Use tax. A use tax is imposed on all property that was acquired out of state in a transaction that would have been a taxable sale if it had occurred within the state. The use tax does not apply to property on which the Nevada sales tax has been paid.
    Many people and businesses make purchases out of state and thus do not pay any sales tax. I'm pretty sure all states have basically the same law that says the above. They want to get paid. I'd say for most transactions there is no way for them to track out of state (non-taxed) purchases especially on small items. Large items are something else. I once had a piece of furniture shipped from North Carolina and it was flagged by the state authorities who basically said, "provide us with proof you paid sales tax on this item in North Carolina, or else pay us." They actually stopped the truck with the shipment. Since I hadn't paid tax in NC, I had to fork over to Florida. No fine or anything, just pay up.

    I'm thinking there must be some kind of "use tax" return for your business that Nevada requires you to file. Even if it's simply filling in zeros you might have to file one.

  12. #12
    Veteran Member Robertjordan's Avatar
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    Default Re: Use Tax

    OK, so I'm a nerd and I read the form on the Nevada website. Here's the link for the form:

    http://tax.state.nv.us/documents/con...e_043007c3.pdf

    The second page is instructions and it says:

    CONSUMER USE TAX RETURN INSTRUCTIONS

    This return is for users of tangible personal property - not sellers

    A RETURN MUST BE FILED EVEN IF NO TAX LIABILITY EXISTS


    ________________________________________________

    It looks like Nevada is requiring all businesses to file these returns regardless of whether they owe anything or not. My suggestion is to file one with zeros as appropriate. That should satisfy them.

    This is the Consumer Use tax return for businesses that do not sell, don’t require a seller’s permit, and report only use taxes, such as construction contractors.
    Unless your business makes purchases that are non-taxed then you should have no liability.

  13. #13
    Jay Zeno
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    Default Re: Use Tax

    Quote Originally Posted by Melonie View Post
    But what do you make of Arizona's 'transaction privelege tax' on businesses which would seem to apply to personal services businesses ?
    I think it's inevitable for many, if not most, if not all, jurisdictions.

    We have gone from a largely industrial economy to a largely service economy. No big surprise there. But now there's this huge flow of money to doctors, lawyers, architects, engineers, realtors, consultants, handymen, designers, etc., ad nauseam, that isn't taxed in many jurisdictions.

    The attitude of government is, "If money changes hands, a tax should be paid." I'm sure it's driving many finance directors at the local, state, and federal levels bonkers that there's all this exchange of money for services performed that is going untaxed. It won't continue. Sooner or later, they'll look to institute a service tax. My own theory of why it hasn't been done yet is that it's the people in power, the service professionals, with the all the lobbying power who are at stake, and the legislators don't want to get them riled up. But it'll happen.

    /soapbox

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