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Don’t Blame Me, I Paid My Use Tax

by Judd Ballard

Yeah Terrelle, we know buddy, you paid for your tattoos, we think.  But the real question is did your ink shop friend charge you sales tax?  After all, tattoos are specifically enumerated taxable personal care services.  Yes, even on payments made “under the table”.  Obviously you paid income tax on all those photographs you sold…

Fine…I digress.  I know…that horse can’t breathe anymore.  Let’s leave our football team alone.

However, there is some truth to the idea the state is missing out on use tax remittances.  What about the college students attending Ohio colleges and universities purchasing textbooks on Amazon.com?  Amazon doesn’t yet have a physical presence in Ohio requiring it to collect sales tax on taxable sales to Ohio customers.  Do those students remit use tax to the state of Ohio?  C’mon parents, we’re not going to let you turn the proverbial “Tressel blind eye” on this one.  I know, I said I wouldn’t go there again.  Stay on topic.

Why would an Ohio State student walk down the street to Long’s Bookstore (assuming it was still there) when he or she could save 7% by buying the same book online from Amazon?  Is it that much of a stretch to place blame on the use tax for state budget woes?  Illinois might not think so.  California certainly does.

The debate focuses on Amazon.com, Inc., the world’s largest online retailer, who has ceased operations in many states enacting laws in order to force companies such as Amazon to collect a sales tax while lacking physical presence in the state.  This topic, which may well shape the future of the online marketplace, was a front page article in the August 3, 2011 edition of the Wall Street Journal, and also the topic of discussion in GBQ’s most recent SALT Watch.

Ultimately the consumer’s responsibility, yet often individual consumers are unaware they’re required to pay use tax.  The result, the tax does not get paid, and states are losing out on billions of dollars in revenue.  It has been estimated in 2012 states will collectively lose $24 billion in tax revenue due to the current disconnect in sales tax administration.  You’ll hear concepts like the Streamlined Sales Tax Agreement and the Main Street Fairness Act, neither of which has proven to be effective.

With all the news coming out of Coral Gables the past couple weeks, I’d hate to think what taxable services Florida sales tax was not paid on.  Those law-abiding student-athletes partying it up in South Beach wouldn’t think twice about not remitting the state’s use tax.  At any rate Miami, Columbus sends their best for stealing the national college football spotlight.  Our care package is in the mail.

This entry was posted in Audit & Tax Talk and tagged Accounting. Bookmark the permalink.

2 thoughts on “Don’t Blame Me, I Paid My Use Tax

    1. jballard Post author

      The following digital products delivered electronically are not subject to Ohio sales tax – music, video, reading materials and ring tones.

      Reply

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