Sales Taxes

[Number Six]

http://www.ct.gov/drs/cwp/view.asp?a=3807&q=458212

I'm impressed at how energetic our friends at D.R.S. can be in arresting people for cheating on sales taxes. By comparison, the IRS seems tame.

[Gregg]

Sore subject for me, I am involved in a 7 year battle over sales tax in Ohio. When I first started my company, I didn't have an exemption certificate so I just paid the sales tax. When I got the cert, I filed for a refund of the taxes paid on items that were resold. I don't have retail customers, only distributors, had no sales to anyone in Ohio etc...

So I filed the return, they asked for an itemized list.
I sent an itemized list, the asked to see the physical invoices.
Then they wanted documentation that I resold the stuff, so I sent them every invoice I issued during the time frame.
Then they wanted me to match each invoice for COGS to which invoice where it was sold.
(which is just silly, do YOU know anyone who buys 2,000 line pressure modulator valves for one specific transmission NOT to resell them?)
I went to Columbus with a box of invoices and they wanted checking account statements showing the cleared checks (a lot of it, hell most of it, was paid with FRNs, not checks or debit cards) which is the only time in my memory of the receipts not being evidence of a transaction. So I got letters from my vendors, saying the invoices were paid.
And then the file got lost for 4 years....

I have a hearing coming up. At this point the interest is more than the refund, which isn't even a much money, its the principle of the thing to me.

[Cathulhu]

This isn't news to me. When I hosted small business seminars, the State people were very upfront about it, and cheerfully advised the attendees that they moved a lot faster than the Feds and would shut them down if they didn't pay up promptly. On a lot of tax cases, the State beat the Feds to any money and shut down the company while the Fed cases were still working their way to an officer. They could give IRS lessons in ruthless.

[JamesVincent]

A few years back, me and a friend of mine sold airsoft, swords, knives and various other implements of destruction at various local flea markets in the area. We had our traders license when we started doing it all the time but when we first started we didnt. We got ours the weekend we saw the state people roll into the flea market and started going through everyones paperwork to make sure they were legit. We got away the first time since we had less than x amount of sales and the records they kept at the flea market confirmed we had only sold there once before. The guy next to us got arrested since he had failed to renew his license and didnt have his paperwork up and the flea market said he was there every weekend. They were looking for him the whole time they were there but didnt want to pass up the opportunity to get anyone else they could. Funny thing is now we dont do it anymore, havent done it in like 4 years but every year we still get paperwork where we have to prove that we dont do it anymore, even though our traders license lapsed 3-4 years ago.

[Judge Roy Bean]

The absurdity of small-business oppression in Texas never ends. Texas puts itself out as a very business-friendly state but that doesn't apply to very small entities - you have to know someone to avoid the pitfalls.

If someone is stupid enough to create a small business here in Texas and then closes or sells it, he or she will eventually find zombie-sales taxes have been concocted without regard to whether or not the business actually sold anything to anyone - even years after closing.

And if your business is acquired, years and years later some clueless clerk on the phone can tell you they've filed liens in counties in your name even though you've never owned any real property in those counties. (I wonder if bogus lien filings apply to state bureaucrats? )

Filing the papers showing zero sales and "no longer in business" is meaningless; the fact that they can't find one of the copies of two letters advising the state that the business is no longer in business is meaningless; the fact that there hasn't been a bank account in the entity's name in five years is also meaningless.

One senior idiot bureaucrat suggests the victim of this idiocy bring their income tax returns for the seven years in question to their offices to somehow show the alleged amounts aren't due.

And as has been shown to me, this Texas brand of idiocy does wonders for the victim's credit score.

[silversopp]

Maybe the magic words "Accepted for Value" and "Refused for Cause" work for sales tax problems?

[Imalawman]

This isn't news to me. When I hosted small business seminars, the State people were very upfront about it, and cheerfully advised the attendees that they moved a lot faster than the Feds and would shut them down if they didn't pay up promptly. On a lot of tax cases, the State beat the Feds to any money and shut down the company while the Fed cases were still working their way to an officer. They could give IRS lessons in ruthless.

I tell people to pay the state first. In Iowa, the state can garnish 100% of wages until the debt is paid. Fed's don't get close to that. In addition, the state will only let you pay over 1 year. If you go over that amount, they garnish right away. They are hesitant to foreclose on a homestead, though. But otherwise, they are indeed ruthless. More so now than previously. The states are under so much pressure to increase revenue. I worked for the gov't for a while and it was not a ruthless as it is now.

[Imalawman]

The absurdity of small-business oppression in Texas never ends. Texas puts itself out as a very business-friendly state but that doesn't apply to very small entities - you have to know someone to avoid the pitfalls.

If someone is stupid enough to create a small business here in Texas and then closes or sells it, he or she will eventually find zombie-sales taxes have been concocted without regard to whether or not the business actually sold anything to anyone - even years after closing.

And if your business is acquired, years and years later some clueless clerk on the phone can tell you they've filed liens in counties in your name even though you've never owned any real property in those counties. (I wonder if bogus lien filings apply to state bureaucrats? )

Filing the papers showing zero sales and "no longer in business" is meaningless; the fact that they can't find one of the copies of two letters advising the state that the business is no longer in business is meaningless; the fact that there hasn't been a bank account in the entity's name in five years is also meaningless.

One senior idiot bureaucrat suggests the victim of this idiocy bring their income tax returns for the seven years in question to their offices to somehow show the alleged amounts aren't due.

And as has been shown to me, this Texas brand of idiocy does wonders for the victim's credit score.

One of my clients got a notice of tax due for $0. He ignored it and got an intent to levy letter. I got it to go away easily, but still. Come on. Really?

[LPC]

One of my clients got a notice of tax due for $0. He ignored it and got an intent to levy letter.

Years ago, I read a story (supposedly true, but I doubt it) about someone who got a bill from a credit card company showing a balance due of $0.00, and then received a series of increasing strident dunning letters demanding payment. Finally, he mailed them a check for $0.00, and the problem went away.

[silversopp]

It wouldn't surprise me if the bill for $0.00 was a true story. I have run into a piece of accounting software that had a problem closing out an account. When the account balance reaches zero, a job was supposed to run to mark the account as closed. However, the job that should have updated that field was borked and $0.00 balance accounts were still marked as open.

I think it's pretty likely that something similiar happened at the credit card company, and the result was that a few wrong accounts were flagged for being past due. It's pretty easy for one error/failed job to screw things up.

[JamesVincent]

It wouldn't surprise me if the bill for $0.00 was a true story. I have run into a piece of accounting software that had a problem closing out an account. When the account balance reaches zero, a job was supposed to run to mark the account as closed. However, the job that should have updated that field was borked and $0.00 balance accounts were still marked as open.

I think it's pretty likely that something similiar happened at the credit card company, and the result was that a few wrong accounts were flagged for being past due. It's pretty easy for one error/failed job to screw things up.

What sort of recourse would someone have for something like that? As Ive seen over the years little things like common sense dont get you very far in a situation like that and if they send you paperwork on a $0.00 balance being over due, then it shows up as derogatory credit.

[Gregg]

I have had a credit card with a zero balance that started sending me late notices. On the second month it charged me a late fee, a phone call fixed it.

[Number Six]

The shot gun approach that the state revenue agencies use works in a perverse way. They nail people based on many criteria, probably based on profiles of what taxpayers own and what they claim for wages, and then they see if they are getting sales taxes from those self-employed businesses; also based on competitors turning them in. In many cases it would be a lot more efficient if they had a super nice person call up those delinquint, instead of coming down on them like a ton of bricks. But when they use the nasty approach, the word gets out quickly that D.R.S. means business, and many of the customers of the self-employed business person hear the story of what he/she is going through--strangely this doesn't usually translate into the customer wanting to pay more to help the taxpayer out.

I was once with a paytriot type many years ago who set up at a flea market in Texas, supposedly the best one in the state, outside of Dallas. He refused to collect taxes based upon unwillingness to engage in involuntary servitude. The other vendors found it humorous, many of them paid a lot less than the percentage required, the tax people just wanted to get something reasonable from the vendors, not audit them or make their lives difficult. The protestor, however, gets a different treatment. He was told to pack up and leave immediately. I was at a coin show where another vendor told me about a case of a coin dealer at a show in Atlantic City, where the revenue people came around and nailed a tax cheat, requiring him to post a bond before being released. But the low profit non-payers are generally left alone.

What is needed is an easy, foolproof system, where those who are not in compliance on the various types of taxes will be able to do so without the harrassment. There are so many small businesses that have never paid sales or employment taxes in their home state, it would be a gargantuan task to go after them all. If the fisherman's trawlling net is fine enough to catch the small fish, it usually takes far longer to sweep through a given area.

[Gregg]

And just like that, my lawyer calls me and says the state has caved, I'm getting my refund.

Was it because someone here saw it and got some action?

Maybe my impressive Illuminati Credentials?

Dumb luck?

[JamesVincent]

And just like that, my lawyer calls me and says the state has caved, I'm getting my refund.

Was it because someone here saw it and got some action?

Maybe my impressive Illuminati Credentials?

Dumb luck?

Congratz! Now it will show up on some Sovrun forum saying Gregg did it, we can too.

[Number Six]

Congratulations, Gregg!

Next thing you know the state will try to hire you to share your vast expertise so they can make their systems up to date.

Who says it never does any good to complain?

[Gregg]

The state can't afford me. The refund, including the interest is gonna be just over $10K, not a bad little bit of "found money".

[silversopp]

Gregg...sorry to hear about that. Even though everybody knows you're correct on the law and the facts are in your favor, unfortunately the judges are all corrupt. They won't rule correctly on the law if it means the government loses money. You know how judges are paid??? WITH TAX DOLLARS! So they would never ever rule in a way that hurts their paycheck and...

wait a second...you won? You got your money back? You need to tell the world which magic words you used. I want my $10k. The government owes it to me. I want it now. Do you have a book or a youtube video that teaches me how to get my money?

[Gregg]

Gregg...sorry to hear about that. Even though everybody knows you're correct on the law and the facts are in your favor, unfortunately the judges are all corrupt. They won't rule correctly on the law if it means the government loses money. You know how judges are paid??? WITH TAX DOLLARS! So they would never ever rule in a way that hurts their paycheck and...

wait a second...you won? You got your money back? You need to tell the world which magic words you used. I want my $10k. The government owes it to me. I want it now. Do you have a book or a youtube video that teaches me how to get my money?

I kept good records. The law was on my side.

That'll be $90.