Your finance staffers may go crazy trying to stay on top of ever-changing S&U tax laws. Understandable — after you read these.
Scary thought: All of the following are actual sales tax laws on the books.
Even scarier: With states more cash-strapped than they’ve been in years, they will be pulling out all the stops to enforce even the craziest of regs.
Check out these wild compliance challenges:
In New York, goggles are taxable, unless they are prescription. Headbands are taxable, unless the headband is deemed a “sweat band.”
In California, cold foods — including candy, produce and snack foods — are generally not taxable, unless sold through a vending machine.
Also in the Golden State, fresh fruit is tax-exempt unless it’s purchased from a vending machine where it’s taxed on 33% of the price. Lesson: Watch how your company stocks its vending machines!
In Iowa, pumpkins as produce are usually a tax-exempt food item. But a decision from the Iowa Department of Revenue deemed them taxable if they are intended to be carved into jack-o’-lanterns. If consumers wanted to buy a pumpkin and eat it, they would need to state their intent to do so and fill out a sales tax exemption form.
In Utah, businesses where “nude or partially nude individuals perform any service” must pay a 10% sales and use tax. It applies to all revenue from admission fees as well as the sales of merchandise, food, drink and services.
In Kentucky, thoroughbred stud fees are subject to sales tax.
In North Carolina, members of racing teams and motor-sport sanctioning bodies can obtain refunds for sales tax paid on aviation fuel (used to get to a motor sport event) because the state is a tax-free zone for motor sports.
In Wisconsin, cloth diapers are exempt from sales tax, but disposable diapers are taxable.
In Texas, holiday tree decoration services are taxable, but only if the decorator provides the ornaments. The same is true for holiday pictures painted on windows, phone calls from holiday characters and greeting cards featuring Santa Claus or the Easter Bunny. Bah Humbug!
In Ohio, applying makeup in a beauty salon is a taxable service. The only exception? When it’s applied in a mortuary.
In South Dakota air ambulance services are subject to sales tax, but ground ambulance services aren’t.
In Pennsylvania, use of coin-operated vacuum vending machines, commonly found at car washes, was recently made taxable.
Does your state have any bizarre compliance challenges when it comes to sales and use tax? Share them here.
