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Compliance with sales tax regs isn't so simple

Written by Rosa Colucci on .

Your Dec. 14 article "States Hard on Trail of Online Sales Taxes" attempted to address a very complex issue: that of sales tax regulations. As a former auditor with the commonwealth and currently a sales tax manager for a Pittsburgh-based retailer, I can assure you compliance with the myriad of sales tax regulations is not as simplistic as you conveyed in the article.

It is true that software programs facilitate the preparation of the sales tax return and identify the correct rate " ... without the business owner ever having to lift a calculator." You failed to address the administrative burden of filing a sales tax return in potentially every taxing jurisdiction in the country that imposes a sales tax.

Additionally, the jurisdictions' varying treatments of the products that are subject to sales tax compound the issue. Clothing is subject to sales tax in New York; in Pennsylvania, clothing is exempt. Louisiana exempts food from state sales tax, but the local parishes in Louisiana impose a local sales tax.

Food is defined differently in different states. In Kentucky a breakfast cereal bar can be considered candy and subject to sales tax, while a KitKat bar is considered food because flour is listed as one of the ingredients. Which would you hand out to the kids in your neighborhood at Halloween?

The Streamlined Sales Tax Commission has attempted to bring some uniformity to sales tax regulations, but less than half of the states have agreed to conform. Congress will need to overhaul the sales tax regulations to address the issues raised here, and in your article.

With respect to Internet retailers "escaping responsibility" of charging sales tax based on a technicality, they are simply following the same regulations that require retailers to tax a breakfast cereal bar as candy, but exempt a KitKat bar as food.

PATRICK WILLIAMS, CPA
South Fayette

 

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