Hey all,
received a notice for a certified letter from the NYS taxation and finance dept. No idea what it could be but I naturally assume the worste and figure they want to audit. Anyone here ever have to go thru this? if so what was the outcome? what documentation did you have to provide.
Just nervous,
Jason
“it aint the work I mind,
It’s the feeling of falling further behind.”
Bozini Latini
Look closely at these common locations for hazardous materials in older homes.
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Replies
No, I never have. But I'm getting audited next week by my Worker's Comp. Insurance carrier. Not looking forward to it. I feel for ya!
CaliforniaRemodelingContractor.com
As long as you have your "sub certs" you'll be fine. The worst part is if you have a better than expected year. Then you get hit with your short fall bill.
One year my ex heat guy dropped his insurance, by the time of my audit he still had not produced a new cert and if cost me about $1500.
Yeah, he's gone now.
Family.....They're always there when they need you.
30 years ago in WA state.
All the guy did was tell me what I owed and then said "pay it".
If not, better have every receipt and not miss even one that they have a copy of!
Wholesale sellers here have to report all sales.
We also have a 'use tax' thingy for material you use for yourself, so you may need to have an up to date inventory list of items you have not yet used on a job. but that are in your possesion.
As long as you have been collecting sales tax on items that need taxing and sending them their cut...
no problem.
Edited 8/14/2008 7:43 am ET by sledgehammer
Here's what goes on in Illinois. They ask for all your sales tickets and invoices for items purchased.
Sales tickets must meet the rules and are state by state. In Illinois, builders pay sales tax to suppliers and do not charge sales tax when they bill a job. An auditor would check to see if you paid sales tax on all your materials.
Equipment purchased. He/she would check all invoices and be sure sales tax was paid. If you purchase over the internet and are not subject to tax, in Illinois you are suppose to remit approprate sales tax to them.
You get out of life what you put into it......minus taxes.
Marv
Edited 8/14/2008 8:29 am by Marv
Edited 8/14/2008 8:29 am by Marv
hvtrimguy
Audits can be caused by several things.. typically it's done when your profile doesn't meet the reported numbers.. (you own a Rolls Royce and Live in a mansion but only declared $19,000 in income)
Or you own a business that should be capable of capable of generating 6 figure recepts but you claim only 5 .
one other source is someone reported you..
It could be a disgruntled employee or customer who paid you in cash etc..
I've known people in your position and if the state really feels like you've been skimming you'll not only need to show every receipt but they will have to be in proper sequence.. missing receipt numbers will assumed to have been used for cash payment.
One other possibility is your accounts at the bank don't jive with the numbers you claim.. For example if you have deposits of $230,000 and you only declared$110,000 they are wondering where the extra $120,000 went..
It's probably too late to dummy up recepts but I'd do a general audit of your personal fincial situation. If you have a decent money trail story you can avoid a lot of tax, fines and interest.
The tax is one thing what will really hurt is fines and interest.
Most of these people know what they are looking for and it's not acceptable to dismiss anything to them.. It's time to sit down with your accountant and prepare for the audit.. the absolute worst thing to do would be to toss them a box of recepts all jumbled up and make them go find it..
There is a form in NY that is supposed to be filled out by homowner when you do capital improvements. That work is nontaxable as long as you pay the tax on the materials.
Somewhere I read that a couple of years ago in NY the tax authorities were going after painting contractors as that is not capital improvements.
I have seen several painting contractors in Syracuse that got nailed.
I think if you have any questions it would be best to visit your lawyer ahead of time. The sales tax laws can be confusing.
Having said that, I was audited by every tax authority that NY and the fed gov could come up with. I owned up and worked out payment schedule. That was the last time I ever played games with the tax authorities!
My little advertising business got audited last year...lady said it was a random pick. She came in and sat at my office for two days, going through all the job folders for the last three years. Kind of scary. I ended up owing $138...whew!
Todd
Yeah, I did about 20 years ago in Virginia. Which was interesting being a 100% service company (architects).
Of course we came up clean....well duhh!!!
Runnerguy
"Which was interesting being a 100% service company (architects).Which was interesting being a 100% service company (architects)."Not always.I worked for a manufacturing company that had a sales tax audit. And in there there is always a question of what materials are consumed and which end up in finished goods.I don't know what the over all outcome was, but in engineering we got a memo that sales (use) taxes need to be paid on magazine subscriptions to the library..
.
A-holes. Hey every group has to have one. And I have been elected to be the one. I should make that my tagline.
Yeah, some audits are crazy. We also got audited by the IRS. The guy spent 2 days in our conference room and turns out the net result of all that was we shouldn't have deducted as a business expense three parking tickets we got making client calls.
Even he said it was a waste of time. Told us to forget about the tickets. Filing all the paperwork wasn't worth the time.
Runnerguy
Sales tax is tough. If you are turning a thousand dollar pile of cherry boards you paid the tax on, into 50 grand worth of cabinets... the man wants his cut.
Been there, did that.... it wasn't pretty.
I work mostly as a renovation contractor. 99% of my work is capital improvement work. I seldom do a repair. However, last winter my computer died and I lost a lot of my invoices. Still have them on cd but can't open them. Also, I never have done those capital improvement forms at the end of the jobs. SO Even though I am up and up and haven't lied about any sales tax I should have collected or paid and didn't, I'm not sure I can prove a thing. I am going to get the certified letter tomorrow at the post office so hopefully my worst fears are just that-fears.Thanks for all of your support everyone"it aint the work I mind,
It's the feeling of falling further behind."Bozini Latinihttp://www.ingrainedwoodworking.com
About 15 years ago in Houston...audtor kept telling me I had to collect mass transit tax on sales outside of the Houston city limits, after the second time of explaining to her that I LIVED outside of Houston and actually made those sales outside of Houston, I asked for a supervisor and was on my way 15 minutes later.
I was nervous going in but as soon as I realized she did not know what was going on, I relaxed.
John
My experience is that dealing with tax authorities is like any other dealing in life. Stressful to say the least, but I have learned how to turn it into a learning experience.
Relax, and if you have played games admit and ask how to make it right. This works well if you are crooked and trying to cover something up. Admit the small stuff and let them find the big ones.
In any event, get you paperwork straighened up, and fly right. A lot less stress.
My brother in law did in Idaho he is a consultant, no sales tax on services just goods here. They got him on items he purchased mail order and did not pay tax on.
All told he owed 6 or 16 dollars can not remember which but he figures between their time his and his account it must of cost 800+ to collect the few dollars.
Wallyo
Edited 8/14/2008 12:53 pm ET by wallyo
Could be your NYS income tax too. I got a letter from them a few years back, well after April, saying that my tax calculations were incorrect.
I just called their 800 number and spoke to a friendly person who explained where the error was. Something to do with a property tax credit that I wasn't entitled to, as I recall.
It was all resolved amiably in a few minutes on the phone. Sent the check in the next day and never heard from them again.
Here in WA we have to charge sales tax on construction and it can be a real headache.
Suppose I go to the lumberyard and buy 2x4s and plastic sheeting. The 2x4s become a wall but the plastic is used to protect an existing surface. I do not have to pay tax at the source on the 2x4s, but I do on the plastic. As a result I have subaccounts of my lumberyard accounts and I have to get multiple tags when I go there. The 2x4s go on a non-tax account and the plastic goes on a tax account.
The owner pays tax on the whole shebang, even though I already paid tax on parts on it once.
I have been advised to be absolutely perfect on this in case the state comes auditing. Apparently they are very unforgiving.
We have some crazy things in Illinois too. Body shops for example. Paint is not subject to tax when you purchase it because you resell it to the car owner and collect tax. But...the thinner you use to spray the paint on is subject to tax when purchased because it evaporates and does not stay on the car! What a joke.
You get out of life what you put into it......minus taxes.
Marv
Edited 8/15/2008 8:52 am by Marv
>>the thinner you use to spray the paint on is subject to tax when purchased because it evaporates and does not stay on the car!
I had a lengthy discussion about this with my accountant and there are tons of similar examples here. Most of them in my business are fairly straightforward but they do split a lot of hairs.
The thing that is hard to explain is tax on rentals. Example: I rented a long reach forklift and the bill was $2000. The rental agency added sales tax to it at 8% so I paid $2160. When I billed it thru to the owner I added tax AGAIN so their total for that item was $2332.80.
The government's explanation: I was the end user of the forklift, therefore I pay tax on it. The fact that it was used to improve the customer's property is irrelevant to them. The owner pays tax on all improvements to their property, so I have to add it to my billing just like the rental place added it to theirs.
On the positive side we have no state income tax. In CA I was paying 5% to the state.