IS THE RECENT RISE IN ENFORCEMENT OF NEXUS TAX LAWS THE DEATH OF SNOWMOBILE SHOWS???

[mountainhorse]

http://www.mtc.gov/Nexus.aspx?id=526

This relates directly to snowmobiling and the snowmobile aftermarket.
This is NOT a "political" discussion but rather a practical discussion of this as it will have a profound affect on the Snowmobile shows and the snowmobile aftermarket.

With more and more of the states feeling the budget "pinch".. they are looking for ways to collect more revenue.

The way that understand it, if a business that Displays their products at a snowmobile show (or any trade show for that matter) in another state they must collect tax for ALL sales in that state, regardless of whether they were at-the-show sales OR internet/interstate sales.

This is not a Chicken Little "The sky is falling " scenario... but one that has already affected some of the aftermarket product mfgs and dealers in a major way... and the states are only now starting to fire up the assault.

The state, according to the law, has the right to go back to the date of first display at the Trade show where the business established a trade presence, and levy Sales tax on ALL sales made to that state, retroactively, even though the products may have been ordered over the phone/internet.

This could bankrupt some companies as they would be on the hook for huge back tax bills.

I believe that the NEXUS "watchdogs" have already been prowling the shows and keeping records of who is there and what they may be able to bill them.

If I were a vendor... this would weigh HEAVILY on weather I would continue to show or cancel my out of state booth!

Death and Taxes... Death and Taxes (? Death FROM Taxes ?)

 

[mountainhorse]

And before this tuns into a Liberal/Republican "thing"... this has bipartisan support and bipartisan development.

It is about money for the state... plain and simple.

And it will be getting sticky.. with all trade shows from toys to kitchen gadgets to cars/trucks, to computers.... to even snowmobiles.

OUCH!!

 

[mountainhorse]

If you know of any vendors, video makers, dealers, or mfgs that have a booth at an out-of-state SnowMobile or Outdoors trade show.... Let then know about this... many don't know.

This could expose them to huge back AND future tax Liabilities.

 

[WyoBoy1000]

I don't think anyone should get hung on anything until after they have been confronted on the issue,

States should be cutting expenses not taking more of our money to keep throwing out the window. Thanks for the heads up.

 

[mountainhorse]

There are many in the snowmobile industry that have been confronted... and are involved in legal actions with the state tax boards at this time.

And NO, because of the sensitivity of the individual cases, I will NOT discuss names.

Like I said above... this is NOT a "Chicken Little" scenario.

It is the back tax, that the vendor would no longer be able to collect from the customer, that is the killer.

Once you are in the system... the states have shown that they will spend more money prosecuting the "offender" than they actually collect.

 

[Ryanlilly]

So so sad... If the government would focus more on decreasing wasteful spending they wouldn't need to think of new ways to collect revenue. Pisses me off actually, I saw something a while back for washington state, they spent something like 5 million on anti drunk driving ads. Really, come on. Do we really need to tell people there are more drunk driving patrols, let the idiots get arrested! Its like reminding people to wipe their butt after going to the bathroom..... Such a waste!

 

[Dobber1]

Kinda like when Amazon.com left Colorado a year or so ago...

 

[Dam Dave]

how is this going to bankrupt or hurt the vender, he is just going to tax the customer right, so it will affect me more than the vender

 

[mountainhorse]

Lets say for example that Dam Dave Fabrications from New Jersey has a booth at the Puyallup show... and has since 2006...

Although they are based out of Jersey, they have established a Business Presence, according to the NEXUS laws, in the state of Washington even though they have no "brick and mortar" in that state.

Since 2006 they have sold say $72,000 in products to customers in Washington, NOT at the show, but by internet or Phone orders...

The state of Washington can charge sales tax AND penalties on that unpaid tax on that $72,000 in sales since 2007.

Add that to any other states they've shown in.

As I said above... the retroactive tax would be the killer... no way to collect it from the customer after the sale.

Sounds weird, but true.

 

[POLZIN]

If retroactive tax isnt tyrany I dont know what is. Thats Just wrong.

I wonder considering expenses do vendors make huge sums at the shows . Im sure a few of the big booths turn a fair bit but most probably cover their expenses and call it advertising.

 

[SnowBound]

I assumed something like this would happen sooner or later. The states do loose tons of tax revenue due to Internet sales. I always shop online to find the better deal and get out of paying the 9-10% California sales tax. Making you pay for back taxes on products that sold in the past in a particular state is criminal since the law never existed at that time. I feel they should charge maybe a internet sales tax that would be the same rate country wide if anything at all. A standard tax rate would be equally fair for all states. I mostly would fear a business in let's say Oregon where they don't collect sales tax as opposed to a business in California where you would have to pay 10% more for the same item. It would be the only fair way to keep the internet market on the same playing field. Will see how the Amazon tax Law pans out.

 

[mountainhorse]

Making you pay for back taxes on products that sold in the past in a particular state is criminal since the law never existed at that time.

But the law DID exist at that time... People just didn't pay attention to it or enforce it.

This is not a NEW regulation.

Like other tax laws...the weight of being informed of them falls on the vendor.

Just so I'm clear... I think this whole NEXUS scheme is horrible!!

 

[diggerdown]

Retro active tax is not legal to the best of my knowledge, and no state would stand a chance in court of collecting it. Also tax collection at a show would be on a state by state basis and they would need to require each vendor to apply and get a license to sell products. Any tax collected would amount to less than the cost to the state of record keeping and auditing. Makes no sense, I would like to see a copy of the actual bill. They have been working on internet sales and I expect something to eventually come from that although I would think that would need to be a federal tax due to the almost impossible task of tracking who sold what from where to whom!

 

[mountainhorse]

Actually... MY BAD... Retroactive is a legal term... I used it improperly.

Retroactive would be a term for a NEW tax law.

This is an existing tax law... so I guess the term I should be using is "Back Tax" on an existing obligation.

Sorry for the bad wording.

This law applies even if the vendor did not sell or offer for sale any items.

This is NOT and internet tax and should not be confused with internet tax.

Trust me... I did not go off "half cocked" on this thread.

Washington

From: http://blog.sabrix.com/blog/value-a...ton-nexus-requirements-for-sales-and-use-tax-

Nexus Requirements:
Out-of-state businesses must register with the Washington State Department of Revenue if the business conducts activities that establish nexus.

Companies doing business in this state are subject to Washington tax laws when sales tax nexus is established. A few examples include, but are not limited to the following:

1. Soliciting sales in this state through employees or other representatives
2. Installing or assembling goods in this state, either by employees or other representatives
3. Maintaining a local stock of goods in this state
4. Renting or leasing tangible personal property
5. Providing services
6. Making repairs or providing maintenance or service to property sold, either by employees, agents, or other representatives

Doing Business, Out-of-State Businesses
Washington Tax Determination 87-286

Trade Shows: attending trade shows and visiting brokers and customers creates nexus (one day is enough). Washington Tax Determination No. 91-097R, 11 WTD 135, 06/10/1991

 

[WyoBoy1000]

Retro active tax is not legal to the best of my knowledge, and no state would stand a chance in court of collecting it. Also tax collection at a show would be on a state by state basis and they would need to require each vendor to apply and get a license to sell products. Any tax collected would amount to less than the cost to the state of record keeping and auditing. Makes no sense, I would like to see a copy of the actual bill. They have been working on internet sales and I expect something to eventually come from that although I would think that would need to be a federal tax due to the almost impossible task of tracking who sold what from where to whom!

It shouldn't be but how well will you defend yourself after the IRS seizes all your assets for back charges and penalties. The Governments are to big and out of hand. A local town around here tried to pass a weed tax until a old guy sent them a bill for 5 year of mowing there weeds and they discovered they where the biggest offender. All I'm saying is nothing makes sense anymore. I think I would bankrupt the company and start a new one doing it right.

 

[milehighassassin]

This has been discussed about the shows we have done in Utah, and yes it could certainly determine if we go to these shows are not.

 

[mountainhorse]

Some pretty prominent vendors that we all know and love are involved in tax battles with the states over this very thing... UGLY.

 

[TIM]

the vendors at snow shows should be collecting sales tax and giving it to the state.
Why should a snowshow vendor not have to collect tax? everyother business in that state has to collect taxes on those days.

I see no issue. And if the vendor doesn't want washington state to look at the business they shouldn't do business in washington state. I also believe that the internet should have to pay sales taxes. Make it an even playing field.

 

[TIM]

Some pretty prominent vendors that we all know and love are involved in tax battles with the states over this very thing... UGLY.

welcome to owning your own business. all business get audited every now and than. and yes washington goes back 4 years. just got done with them a couple of months ago. If you play legally, you don't have much issues when audited.

you will get very little sympathy from me on this.

 

[mountainhorse]

Tim: the vendors at snow shows should be collecting sales tax and giving it to the state.
Why should a snowshow vendor not have to collect tax? every other business in that state has to collect taxes on those days.

Tim, I see what you are are saying and this is the most mis-understood part of Nexus... please re-read the entire thread above.

I'm NOT talking about collecting sales tax AT the show for Sales AT the show...That is a given which I expect zero sympathy for.. that is only proper.

Nexus is about OUT of STATE Businesses.

By establishing "Nexus" at the show... even if you do not sell a thing at the show... You, as a business are liable to pay tax on ANYTHING that you ship/deliver to that state since the Nexus was established. So, If you have displayed at the show for say 5 years, and not paid tax on EVERYTHING ever sold/shipped to that state in the last 5 years from your business in another state... then you can be held liable for that unpaid back tax PLUS a considerable penalty/interest.

Washington was just an example state... Most states including all of the western states, WA, OR, CA, ID, WY, MT, CO UT etc... have Nexus laws... how they administer them to determine when Nexus is established is up to the individual state.

Mountainhorse: Lets say for example that Dam Dave Fabrications from New Jersey has a booth at the Puyallup show... and has since 2006...

Although they are based out of Jersey, they have established a Business Presence, according to the NEXUS laws, in the state of Washington even though they have no "brick and mortar" in that state.

Since 2006 they have sold say $72,000 in products to customers in Washington, NOT at the show, but by internet or Phone orders...

The state of Washington can charge sales tax AND penalties on that unpaid tax on that $72,000 in sales since 2007.

Add that to any other states they've shown in.

As I said above... the retroactive tax would be the killer... no way to collect it from the customer after the sale.

Sounds weird, but true.