Re: AllYall's Games and lies exposed.

AllYall isn't very bright, is he?

First off, the purchaser is only relieved of liability for the sales tax
imposed under Section 101(a) of H.R. 25 if, and only if, two conditions
contained in Section 101(d) are satisfied, namely, (1) the purchaser
actually paid the tax to the seller, and (2) the purchaser received from
the seller a "purchaser's receipt" within the meaning of Section 510.
Such a "purchaser's receipt" must show: (a) the property or services price
exclusive of tax; (b) the amount of tax paid; (c) the property or service
price inclusive of tax; (d) the tax rate (the amount of tax paid (per
paragraph ([b])) divided by the property or service price inclusive of tax
(per paragraph ([c])); (e) the date that the good or service was sold; (f)
the name of the vendor; and (g) the vendor registration number.

Further, all "purchaser's receipts" must be kept for 6 years. See Section
509. If you don't keep your receipts, and the relevant tax administration
authority comes after you, then guess what, you owe the tax (regardless of
whether it was collected from the seller) because you failed to satisfy
both of the conditions under Section 101(d) to be absolved of liability.

Does this matter in practice? You bet your sweet hiney it does. In
particular, Section 901(d) provides for a de minimus exception for sales
that constitute casual or isolated sales and that, together with all such
other sales (presumably by the same seller, although the bill does not
make that clear), do not exceed $1,200 per calendar year. Guess what?
You're going to get a lot of little vendors claiming at the time of sale
that they don't have to collect sales tax because they'll meet the de
minimis exception and none of their sales will be subject to tax; as a
result, they will neither collect the tax nor (most likely) give you a
"purchaser's receipt" for the sale. What happens at the end of the year
if, lo and behold, that vendor makes sales exceeding the de minimis amount
(e.g., a guy who sells a used car in January for $1,100, buys another used
car with the proceeds, and then sells that second car in October for $600
because he didn't realize how bad a shape it was in, and just wants to get
rid of it - he's now had taxable sales of $1,700 in one calendar year, and
no longer qualifies for the de minimis exception - do you really think
he's going to worry about issuing proper receipts or collecting sales
tax?).

Further, what's the definition of a "casual or isolated sale?" In the
context of sales of real estate parcels, and whether you've sold enough to
be engaged in the trade or business of selling real estate, an area for
which there is much federal precedent in the income tax area, the
precedents are all over the board. Same with the issue of whether stock
trading by an individual with another job is, or is not, at a level that
constitutes a "trade or business." This is really fertile ground for
audits and litigation, and it will only be exacerbated by the fact that
H.R. 25 relies on the state sales tax administrators to administer and
collect the federal sales tax. There will be volumes of litigation over
whether or not that lemonade stand your kids set up for a couple of weeks
during summer break was, or was not, a series of "casual and isolated
sales" or instead, a taxable business endeavor.

Further, suppose a person is making what he thinks are casual and isolated
sales, but which ultimately, by the end of the year, end up being
sufficient enough that, upon audit, the relevant state sales tax
administrator determines that none of the sales made during the year where
"casual and isolated" and therefore the seller should have been collecting
sales tax - even if gross sales didn't exceed $1,200 for the year. In
this case, if you want an example, is someone (and I've seen a few) who
runs a monthly garage sale on the weekends. One garage sale is probably
an isolated and casual sale, a regular garage sale held on the first
weekend of every month for each month in the year is probably not -
where's the dividing line?

Again, because that person probably thought at the beginning that they
weren't required to collect the tax, they probably didn't, and didn't
issue receipts. Which means that if you bought something from the garage
sale, you're liable for the tax (no Section 101(d) exception because you
didn't get a Section 510 receipt). Guess what? You're liable for the
tax.

Boy oh boy oh boy. Every tax attorney and cpa in the U.S. should be
salivating over the amount of extra income they'll earn if the National
Retail Sales Tax is ever enacted.

Which gets us back to the audit question. In each of the cases described
above, the average consumer who makes one of the described purchases is
liable for the tax, and therefore a proper subject for an audit.

So, you tell me, whiz-kid, do you think it'd be wise to not keep your
receipts?

The more I look at this misbegotten abortion of a bill, the more I'm torn
- it'll play havoc with the ordinary consumer, but oh my, think of the
extra income I'll earn representing all of these ordinary consumers who
get audited.

Anyone who says that the sales tax is going to decimate the field of tax
attorneys or cpas is either ignorant, a damned-fool, or a liar. It'll
change the focus, sure, but it won't change the basic problem, and it will
magnify the number of people who need assistance to navigate the maze, or
defend against a claim of unpaid sales taxes.

Finally, just to put a final nail in the coffin, take a gander at Section
506 of H.R.25. That section puts the burden of production on the consumer
in any dispute with a relevant taxing authority - in other words, if your
state taxing administrator assesses a deficiency against you for unpaid
sales tax, you have to produce the records necessary to prove that you
don't owe the tax. You know what that means? It means that, if you don't
keep your receipts, you will lose the case, regardless of whether or not
you can "prove" otherwise that you paid the tax - remember, you only get
an exemption from Section 101(a) if, under Section 101(d), you can prove
that you received a "purchaser's receipt" from the seller - no tickee no
absolution.

Enjoy.


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