Learn how Mary Thomas and Stephanie Thomas, a.k.a, The Sales Tax Sisters think about taxable purchases and why you should not only care about them but understand and recognize them for your clients’ sake.
Taxable purchases are one of those things that don’t get a lot of attention but which have a profound impact in tax planning and preparation.
While many firm owners wish they could avoid it altogether, they’ve come to realize it’s not entirely possible. But don’t worry, The Sales Tax Sisters joined us on Firm Founders Live to break down Everything Accountants Need to Know About Taxable Purchases.
In this article, you’ll find Mary and Stephanie’s thoughts on:
Continue reading or watch the full episode below:
“If I go to Office Depot which is right up the street and I buy supplies, I’m going to pay eight and a quarter percent of tax. That’s sales tax. Use tax would be if I bought the same office supplies, but my vendor instead of being Office Depot down the street, is a small vendor that has offices in California but not in Texas, where I live. And they’re not registered to collect Texas sales or use tax. We see it a lot when companies get audited where they bought something online that if they had purchased from a vendor in Texas or wherever they live, it would have been taxable. But because they bought it online from somewhere else, that entity did not charge them tax. They may have not been taxed not because tax wasn’t due, but because they weren’t permitted to collect the tax and give it to the appropriate taxing authority. And when that happens, it’s the consumer’s job to do it. And that’s why taxable purchases are important. They’re worth a lot of money in audits. Because if you have a zero balance, as relates to tax purchases – month in, month out and year in, year out – the taxing authorities know that you don’t know what you’re doing, because there should be something normally.“ – Mary Thomas
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“One of the key things that I’ve always heard accountants say is that they don’t want to do sales tax. And my answer to that is you don’t have to be an expert at it. You just have to know enough to say there’s an issue here and work with an expert to resolve it.” – Stephanie Thomas
So I always tell people, if you are engaging in a transaction that is worth a lot of money and you know that you can’t handle a bill associated with an additional 10 or 14% tax, have somebody look at it. – Mary Thomas
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– Mary Thomas“Don’t be intimidated by it (Identifying and Dealing with Taxable Purchases). Also, it’s always good to know that you don’t know everything. There are resources out there to help you so you can help your client and look good.”
– Stephanie Thomas
Mary Thomas and Stephanie Thomas, The Sales Tax Sisters, run a practice area that is devoted solely to educating accountants, bookkeepers, small business owners (DIYers), and novices on basic information about sales and use tax. They are both Principals of The Sales Tax Sisters and Thomas, Thomas &; Thomas,PC.