News flash! Understanding the Tax Code is not the easiest thing to do. The good news is that almost jurisdictions provide resources to help taxpayers. Websites with publications, FAQs, the Tax Code and Comptroller or DOR agents are all ready to assist you.
But, sometimes complex issues cannot be resolved by reading the FAQs section of the website or with a call to the taxing jurisdiction. Websites are only as good as the information on them. I have found old, superseded information on DOR websites. I have also found information that was just plain wrong.
If the idea of incorrect information on the website scares you, try calling the Department of Revenue or Comptroller for a quick answer. Good luck with that! DOR or Comptroller employees are like anyone else. They sometimes get things right and sometimes get them wrong. The answer you may receive on Monday can be different that the answer on Tuesday.
But, if you contacted the DOR and relied on the wrong answer that a agent gave you, you are okay if you get audited, right? Wrong! The Comptroller does not have to stand behind the erroneous information that you received from their agent. The onus is on you to get it right, even if they told you something wrong. All of this is enough to make you want to rip your hair out.
But never fear, business owners have a few options when addressing their sales/use tax questions. You can hire a sales and use tax consultant to research the issue or figure it out themselves. In both cases, make sure that there is a Tax Code reference from the appropriate taxing jurisdiction to hang your hat on. For example, if you call the DOR and they tell you something is taxable, take a note of the day, time and name of the person you spoke to and ask for the Tax Code reference. If you send a question via email to the DOR, ask for the Tax Code reference to support their response. The same thing applies to your sales tax professional. Also, make sure you read the Tax Code reference that they give you. It has to address your tax issue.
Some business owners just ask other business owners in the same line of work or just google the answer. I caution against this. Other business owners get things wrong too. The Comptroller is notorious for hitting certain types of businesses (Hi contractors!) because they know a lot of you get it wrong. Googling isn’t your best friend either. Out of date answers and wrong information can be found there. Plus, it is the internet. If you believe everything you read on Google, I have a story to tell you about Bigfoot and Papa Smurf vacationing in Big Sur this weekend.
Spies and security types in movies also say,” Secure the package”. Your mantra for a taxability response is “Get the Code”. Make sure you have the Tax Code reference and that it addresses your needs. It is your business. It is up to you to make sure you get it right.
The next time you're tempted to Google your tax questions, ask a professional. It is our job to help you address your state tax needs. When it comes to state tax, it is better to be safe than sorry!