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Use Tax?


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#1 Orlando Duguay

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Posted 05 May 2012 - 11:59 AM

What are people's experience paying tax when buying used items on the steadicam forum marketplace? It looks like every purchase is subject to a "use tax".

http://www.boe.ca.gov/ads/news06.htm

How have people gone about paying this? And if you did not pay any use tax on an item purchased on the forum, were you still able to write the purchase off as a business expense?

Any advice would be much appreciated!

Thanks!

Orlando
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#2 Orlando Duguay

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Posted 05 May 2012 - 12:11 PM

Also does anyone pay personal property tax on their gear?
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#3 Alan Rencher

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Posted 05 May 2012 - 06:34 PM

Of course we do... *wink.
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#4 Carl Wiedemann

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Posted 05 May 2012 - 10:28 PM

Alan's response confirms what I suspect is common in the freelance community. As an Illinois resident this topic is of particular interest to me. I wonder how many people actually are willing to make a public declaration of their personal practice.
In the mid-west it has been common practice for freelance photographers and videographers to purchase gear from out of state businesses (like B and H in New York) and not pay Use Tax. The State of Illinois seems to be gearing up to enforce payments. A year ago they established an Amnesty Program (with a limited window for participation) for the payment of retroactive Use Tax going back to July 2004. I paid in full last year (the retroactive use tax) and am now making the regular payments for current out of state purchases. If the State of Illinois starts auditing Sole Proprietors and small businesses it will be very easy to see who is making large deductions for equipment and to request confirmation of the purchase locations. I haven't heard of any audits yet, but I imagine some people could take a big financial hit with the penalties and interest on top of the actual tax due.
The looming enforcement has altered my purchasing behavior. I'm making more purchases at local businesses when possible to eliminate the hassle of tracking the use tax items (although as Chicago has the highest sales tax rates in the country, at close to 11 percent, I'd be saving a bit by paying the use tax instead, which is 6 and a quarter percent). This topic is not my area of expertise. I've had the same wonderful accountant for over a decade and I follow her advice so I can stay in full complacence with the ever changing tax rules.
With California being in such a financial crunch I don't see why they wouldn't be taking steps toward enforcing Use Tax payments. Perhaps some business savvy Californian's can describe the current state of affairs in your area.
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#5 Eric Fletcher S.O.C.

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Posted 05 May 2012 - 10:45 PM

I was audited last year, they looked at my deductions along with everything and I was found to be good. I have never paid a use tax
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#6 Carl Wiedemann

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Posted 05 May 2012 - 11:51 PM

Eric,
Are you purchasing most of your gear from within your own state? Perhaps the state of California isn't looking at this as an area worth pursuing. People in the video and photo biz in the flyover states are more likely to find it necessary to make the bulk of their hardware purchases via distant mail order. The State of Illinois has issued many ominous communications regarding enforcement. Good to hear that California isn't going in that direction.
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#7 Janice Arthur

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Posted 06 May 2012 - 08:31 AM

Hi all

"Use tax" maybe that's a european thing? I don't have that

I have sales tax and income tax

If I buy out of state from a manufacturer that does have an office in my state then I pay it

Used gear sale between me and the buyer for the sales tax is seldom trackable for that purchase


If its taxed by state regulation as an Internet purchase then I pay that tax amount

If I sell used gear to anyone the money from that sale is taxableable as income

(In Illinois they now have "Internet" purchase tax and u tell them what u bought over a yr and pay on thath
amount but that's for everyone even u you're just buying clothes.)
Thats what I know


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#8 Carl Wiedemann

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Posted 06 May 2012 - 09:20 AM

Janice,
I believe that the Internet Purchase Tax that you're describing is the same thing as what has been traditionally called a Use Tax. I know that there are people in Illinois making thousands of dollars a year in purchases from out of state businesses (such as B and H) who have never paid the Internet Purchase Tax/Use Tax. The state of Illinois would like to collect that money going back seven years. Whether or not they create a system to audit and collect remains to be seen.
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#9 Lawrence Karman

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Posted 07 May 2012 - 09:39 AM

What are people's experience paying tax when buying used items on the steadicam forum marketplace? It looks like every purchase is subject to a "use tax".

http://www.boe.ca.gov/ads/news06.htm

How have people gone about paying this? And if you did not pay any use tax on an item purchased on the forum, were you still able to write the purchase off as a business expense?

Any advice would be much appreciated!

Thanks!

Orlando



I have been paying use tax on all out of state, Amazon and B&H purchases made by my corporation as I was forced to declare all these purchases by the BOE last year going back 3 years. California is desperate for tax revenue.
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#10 Janice Arthur

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Posted 07 May 2012 - 11:47 AM

Orlando

Yes I can deduct as business expense. Usually it's small stuff and a private purchase or through PayPal and they collect all fees that are supposed to be was my understanding

All the other questions your accountant can answer in more detail

you've got all we know.

Janice
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#11 Orlando Duguay

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Posted 07 May 2012 - 11:50 AM

Thanks everyone for the input! I spoke with my accountant about this and he said I absolutely do have to pay use tax, but at least that is another tax-deductible expense at the end of the year. I just wanted to feel out how common is was for people buying used to actually pay this tax.

Thanks again!
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#12 Richard W. Davis

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Posted 07 May 2012 - 01:28 PM

[/quote]


I have been paying use tax on all out of state, Amazon and B&H purchases made by my corporation as I was forced to declare all these purchases by the BOE last year going back 3 years. California is desperate for tax revenue.
[/quote]


Me too(corporation)... So now I do a lot less out of state purchases so I don't have to deal with it. Last year -NONE-

Rich Davis
LA
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#13 Rich Cottrell

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Posted 07 May 2012 - 01:58 PM

In the USA we get to pay three sets of taxes, federal state and local!
I have not paid a single cent in use tax but that is not so say I should have...

Eric,
Who were you audited by?
That makes a difference.
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Richard J Cottrell
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