trusno1

So when we started our busines, we were down at the state dept of taxation and after having reviewed the sale & use tax book, it was unclear on whether I had to charge tax on services, so I spoke with about 3 workers separately down there that said I had to charge tax on services. So I lowered my prices in the computer by .06 so that I wouldn't have to give out change all the time.

Long story short, last year they pass a law saying tanning and massage services have to start charging sales tax. I file amended forms for 5 years and call today to make sure they got everything.

The lady says it takes 6-8 months to get a refund. That's right MONTHS not weeks. It's my own fault, I should've asked 6 more people down there.

On the bright side, I've got a big jump on next years income.(I hope. They'll probably say I need to fill out another form)

jo

We've always had to charge tax on the service here in Canada (nasty GST)
Here's what's got me wondering about our PST. When I buy beds or lamps in province I pay PST. If I buy them out of province, I don't pay the distributor PST but I'm supposed to pay it on my own PST remittance. I just imported some tanning beds and did the customs broker thing myself with the help of the customs clerk. I only had to pay GST - no PST because I was using them for business. What the f***?

tanu01

Well now we all know where it came from.
Bob

gripmarketing

Don't count your chickens yet. It's possible you may never see any of the money. Why? When you collect sales tax, you act as an agent of the government to collect the tax from the end user, the customer, and then forward that tax collection to your local government. It wasn't your money then and isn't your money now.

However, in this case, you collected money from customers that wasn't supposed to be collected and you paid it to the government. It's not your money, but rather belongs to those customers you collected it from. Under the forfeited deposit laws, the government gets to keep forfeited deposits. Therefore, if your local government claims this - they can keep the money and there is not much you can do about it.

You should be claiming that you are going to return the money to your customers in the form of setting up an account for each of them with the money in it AND then put the money on your books as "deposits" with a $5 per month inactive account service fee - that month after month eats into the "deposit" until it is all used up.

Otherwise, you're at risk for the above. Previously, with 150 stores in 48 states, I've experienced this before. Take my advice.

trusno1

Hhhm, I wasn't counting on it but I was hoping for it. Wonder why the guy at the dept of taxation made it sound like I could get a refund? Probably the same reason all those people told me I had to pay tax on services. How would I go about setting up around 3000 accounts with various amounts of money? Do I have to notify everyone or just let people know as they come in? Did you put all the money into one account? I just don't want them to keep it. That could bring in a lot of long lost customers.[ This Message was edited by: trusno1 on 2004-09-23 13:46 ]

gripmarketing

Your guess is as good as any. They always tell you a refund is possible and then it is 'reviewed'.

By law, you don't have to notify customers - unless you know you're going to close the business and only then if you get caught not doing it. You just have to put the money into one account and keep records of how much belongs to each one. Then wait 1 yr (probably all that is necessary) for the 'service fees' for each 'account' to eat up each amount and then move the money on your books from "deposits" (a liability account) to "service fees" (an income account) and viola!

trusno1

Thanks Gary!

top250tansyou

Trunso 1 - you were taking a loss so you wouldnt have to make change. Is that what I read. If so - are you crazy. If not please explain.

gripmarketing

You're welcome!

Please allow me to expand on the 'notifying customers' issue so you'll have a full understanding of consumer rights and laws protecting them.

If you know you are going to be going out of business, you have taken customer deposits for tanning services that you know you will not be able to honor, you must write a certified return-receipt requested letter to each of those customers, stating "we're going to be closing, come use up your store credit for if you don't use it up by such and such date, you will lose it." This is the legal way to handle keeping the money.

However, if you took money and knew you were going to close up and didn't inform customers in the above fashion, it is FRAUD. All it takes is one customer to complain to the state authorities and they'll be tracking you down to arrest you for fraud.

So, if you see a salon down the street closing - offer to honor their packages in exchange for their database list. Otherwise, they risk fraud - and don't tell them how to avoid it by writing the letter

richard9091

I assumed she was reducing her price so that it included tax. In other words she reduced her session price by the same as the tax collected.