Tuesday, January 24, 2012

State Use Tax

The final item worth mentioning prior to returning to the Q & A format is use tax. With revenues down in all states, one of the means utilized to increase revenue is with use tax. Some states have actually included it as a line item on the state income tax return. Most commonly, use tax results from on-line purchases made without the seller collecting state sales tax.

If you live in California, Kansas, Maine, Massachusetts, Michigan, New Jersey, New York, North Carolina, Oklahoma or Vermont, be aware these states now have a Tax Use Look-up Table. As a "Safe Harbor," you can pay the amount on the table based on your state adjusted gross income. Of course if you kept your receipts, you should report the correct amount. The Safe Harbor should protect you from intentional disregard in the event of an audit and the resultant penalties.

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