🚀 go-pugleaf

In article <1991Sep11.015831.26299@usenet.ins.cwru.edu> tlg4@po.CWRU.Edu (TJ Goldstein) writes:
>
>Seems to me that if someone obtains Shareware and then pays for
>it, it would be the AUTHOR, the recipient of the money, who
>should remit the sales tax.  The BBS is just a "library" where the
>stuff can be obtained.  It's like a university library.

In California the State Board of Equalization collects the taxes from
whomever they are most easily gotten from, and leaves that person to
collect from whomever else may be involved.

For example, if I buy something for resale and resell it to another reseller
who is later discovered to not have bought the property for resell or
did not resell it, guess who pays?  Yep you got it. I do.  Then I can
spend more dollars trying to collect the unpaid tax that is owed me.

Actually the SBE's interpretation of this liability changes by the minute,
and by rearranging our billing procedure we have been able to substantially
reduce this problem.

The NY equivalent of the CA SBE and the CA SBE probably consider the BBSs
to be resellers on behalf of the shareware authors.  Therefore the authors
are not liable for sales/use tax and the reseller/BBSs are.  It matters little
that the money goes directly to the author and if a BBSs wants to lose
money distributing (reselling) the authors product, that is the BBSs
business, but it doesn't free them from the tax liability.

By the way I agree with you.  I think the system/interpretation of sales
tax liability is bogus.  In California they are using sales tax to
restrict free speech/press by requiring that "free" publications pay
sales tax on the "true value" of the material.

I believe the sales/use tax system is being used to restrict/reduce
alternative and possibly more efficient forms of sales and distribution
of products in favor of "BIG" companies methods.

==========================================================================

The rest of this article deals with another liability case that I ran
across.  If your interest in this article in waning you might as well
stop here.

I have also ran into another interesting case.  We got a PO for what we
and the customer believed was a non-taxable transaction.  We provided
the product to the customer and did not charge tax.  The customer was not
required to have a re-seller permit (called sales permit in CA) because
the transaction/item was not a taxable transaction.  For example,
designing something. I.E.  labor is non-taxable in CA.

Well, the SBE decides that the transaction was taxable and we owe taxes
on the design contract.  Reasoning?  Designing something for someone is
taxable because we delivered a product, the schematics.  This is unlike
someone who is hired to shovel dirt.  The shoveler does not deliver 
anything and is thus purely labor.

However, it has been standard business practice not to charge tax for
layouts and designs for years if not decades.  But with a 10 Billion
dollar state budget shortfall I guess interpretations change.

So we payed the tax because the SBE had a lean against our account, then
we called up the customer and said they owed us for the tax.  The customer
said "no deal cuz labor isn't taxable".  We tried to explain the situation
but the various CFOs didn't really  care and the SBE wasn't going to call
them and explain either.  They got their money.  The only way to recover
the money was to sue our own customers.  Was that going to happen?

You can, however, somewhat fix the problem in California.  You just make
your invoices read X dollars for design time, Y dollars for schematics.
Then your customer only owes taxes on Y dollars.  The SBE is currently
satisfied with this arrangement.  Of course, this probably only applies
in our local SBE office, others probably have different policies.

However, we were not allowed to change past or current invoices to reduce
the tax liability.  Only new business was allowed to use the new arrangement.

-brian
brian@apt.bungi.com