Susan Dickenson

While we're on the subject of tax audits...

After reading the N.C. interior designers sales tax article, a Texas retailer dropped me an interesting note about a similar tax issue. Some of you may know her -- Melissa Haberstroh, owner of The Burlap Horse, who is no stranger to retailing. Melissa was named to Home Accents Today's Retail Stars list in 2006, has been honored twice with  Gifts & Decorative Accessories' Gold Retailers Excellence Award, and has served as a director and officer of the Greater Boerne Chamber of Commerce, as a member of AmericasMart Atlanta Gift and Home Furnishings Advisory Board, and as a GHTA Retail Advisory Board member. Melissa wrote:
 
Recently, a custom manufacturer of furniture that I've contracted with on several commercial design projects was audited by our sales tax entity. The audit occurred because a vendor (a lumber yard) to him had been audited and some issues were found. They began auditing all of the lumber yard's accounts which we are prepared to have spiral to us. In the process of the audit, my manufacturer learned that you must have a signed exemption form on file for each person. 

Many retailers, like myself, sell to other retailers and designers alike and have been under the impression that a "stamp" that requests the tax id and signature of the purchaser was acceptable. Apparently this isn't the case.  This has led to a wild goose chase to get signatures from people who may no longer be in business.  We are also going back into our seven years of records to track as many as possible.
 
Shipping, at least in Texas, gets confusing as well.  If a product drop ships to the customer, than shipping is taxable. If we ship an item purchased then not so. 
 
The downside, obviously, is that if you aren't audited or notified, you repeat the error (innocently).  The problem with that is large tax bills are generated and can cause devastation to the person's business and life.
 

Posted by Susan Dickenson on May 28, 2008 | Comments (0)