Archive for Sunday, December 6, 2009

Taking aim at exemptions: Recession may make tax breaks a target

Tax exemption on electricity, gas and heat utilities for residential and agricultural use: $128.28 million per year

Tax exemption on electricity, gas and heat utilities for residential and agricultural use: $128.28 million per year

December 6, 2009

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When a plumber is needed at Watkins Community Museum of History, the bill doesn’t include sales tax. Neither does the bill for the boxes the museum purchases to store its collections.

For the hundreds of thousands of Girl Scout cookies sold in Kansas each year, the $3.50 price tag doesn’t include a state sales tax. Coin-operated laundry services and bingo cards receive sale tax exemptions, too.

Since the 1990s, there has been an explosion of tax exemptions. For sales tax alone, Kansas has a list of more than 100 exemptions, which means each year the state foregoes about $4 billion.

The biggest chunk comes from the tax not paid on raw materials that go into making products, such as the steel Boeing purchases to make an airplane.

“Random” is how Douglas County United Way Director Erika Dvorske describes the way the state picks and chooses who is exempted from its taxing system.

For the record, the United Way isn’t exempt from paying sales tax. But state statute specifically names more than 20 organizations that are, such as Habitat for Humanity, Special Olympics and the Missouri-based nonprofit Wayside Waifs.

“They’ve been giving (tax exemptions) to anyone who asks for them,” said Kent Eckles with the Kansas Chamber of Commerce.

In the wake of another round of state budget slashing — including $260 million made by Gov. Mark Parkinson last month — one top-level state official said it’s time to review where these tax breaks are going.

“It’s a question of priorities and balance. In a time when we can’t fund schools and in a time when we can’t meet obligations to even keep prison beds opened, I don’t know if we can afford to keep these,” Kansas Department of Revenue Secretary Joan Wagnon said.

Out-of-whack tax code

A review from Kansas Advisory Council on Intergovernmental Relations, a group within the Department of Revenue, recommended repealing tax exemptions that could save the state close to $200 million a year. Those suggestions include:

• Setting a moratorium on new tax exemptions and an automatic three-year sunset for any exemptions granted.

• Repealing all exemptions to specific organizations. The exemption should either be replaced with one to include all similar organizations or be revoked.

• Tax all admission to recreation activities.

• Require all nonprofits and religious organizations to pay sales tax on purchases.

• Repeal the sales tax exemption on electric, gas and heat utilities and water used for residential and agriculture purposes. If repealed, the these two exemptions would bring in $140 million of revenue.

“We put these in the tax code and then we forget about them,” Wagnon said of the long list of exemptions. “They are tax expenditures. They are expenditures just like the appropriation process. And we ought to be examining these on a regular basis.”

In the past six weeks, Wagnon has given more than a dozen talks across Kansas about the state’s out-of-whack tax code.

It’s an issue that has resonated with other public officials, including Lawrence public schools Superintendent Rick Doll, who learned of another $3.3 million worth of state cuts last month. That lost funding spurred talks of school closings.

“It’s gotten out of hand,” Doll said of the tax exemptions, which he believes have had a negative effect on schools.

He sees a system where special interest groups are granted tax breaks during a time when the state is flush with cash.

“It seems to me, if good times allowed us to give tax exemptions, then during bad times we should be allowed to take those exemptions back,” he said.

A help to nonprofits

The amount saved at Watkins Museum from not having to pay taxes isn’t much, a few thousand dollars at most, administrative assistant John Jewell said. But it adds up.

“It would be quite a crunch come budget time,” Jewell said of what would happen if the exemptions went away.

The sales tax exemption for the Girl Scouts allows the organization to keep around $375,000 more in profit from its cookie sales.

“It would be a huge impact,” said Gina Garvin, spokeswoman for Girl Scouts of Northeast Kansas and Northwest Missouri. “Really, to us it would mean cutting a program.”

As for the nonprofit that Wagnon calls a particular bone of contention — the Kansas City, Mo., humane society Wayside Waifs — the organization said that if the tax exemption wasn’t granted it would move its biggest fundraising event from Kansas to Missouri.

The nonprofit doesn’t have to pay taxes on food and rent for the annual Fur Ball at Overland Park Convention Center. It’s an exemption that costs the state around $10,000 each year, according to Department of Revenue numbers.

“For us to pay taxes on it would really cut into proceeds from the event and really limit what we do for the animals of the Kansas City area. And we serve both sides of the state line,” said Ashlee Parker, communication relations manager for Wayside Waifs.

A hard battle ahead

Any time changes are made to the tax code, there are winners and losers, said Richard Carlson, a Republican from St. Marys who chairs the house tax committee.

Carlson predicts a bill repealing tax exemptions surfacing at the next legislative session.

But he sees passing one as “very difficult.”

If there is a bill, Eckles, from the Kansas Chamber, expects to see a slew of lobbyists and groups camped out at the capitol.

“It is pretty ugly when you try to do this kind of stuff,” he said.

The chamber is open to having discussions about the tax structure, Eckles said. But he warned there would be a fight if the tax exemptions on raw materials and professional services, such as engineering, advertising and architecture, were threatened.

But Doll thinks once communities start seeing the aftermath the budget cuts have on education and social services, the political climate could change.

“We can’t make $3.3 million in cuts without hurting,” Doll said. “And the more it hurts, the more political willingness there will be to look at this.”

Comments

just_another_bozo_on_this_bus 5 years, 5 months ago

How about a sales tax on services, particularly legal services?

Kookamooka 5 years, 5 months ago

Instead of targeting the little guys how about nailing the egregious use of tax exemptions and rebates the big boys get. You know...the racetracks, casinos, malls. Nail the out of control developers who get tax breaks for building more multifamiy housing developments our town doesn't need. How about those guys for starters. Leave the freaking churches and cultural institutions alone. What a stupid article.

OutlawJHawk 5 years, 5 months ago

Taxes stink, but there should be fairness. Tax all cooperatives, churches and non-profits. Just because their ownership is different or someone feels their cause is more "just" should not exempt them from contributing money to fund government. Credit Unions and churches should be the first taxed. Many of these are big business on the most grand scale. Check out the big-time executive-style perks preachers, executive directors, and presidents of these businesses make; most peope would be shocked how their donations and offerings are used. The tax exemptions are no longer valid as it is not about helping a poor local small group of people getting together to worship and pray or to help others, nor is it about small group of associated people pooling their money in a cigar box to loan to each other.

Bob_Keeshan 5 years, 5 months ago

LarryNative - the answer to your question is yes.

tomatogrower 5 years, 5 months ago

We don't really have more educated people, we just have them educated in the wrong way. We expect everyone to get a college degree, even though many people aren't academically inclined. Big business has taken the jobs that were for people who just wanted to earn a living at a job, not at a profession out of the country. When I mentioned to some young people that I use to work in a factory, they snickered like it was a bad thing, yet I could afford to rent a house and buy new, not used cars. Now that job is gone (I saw the light and went to college, before it went away). Now I look at young people who don't really want or need to go to college, and they would kill to get the same pay I got 25 years ago, but their rent for a lousy apartment is triple what I paid for renting a house, and they are paying more for a crummy used car than I paid for my little Ford Festiva brand new. We need more vocational training. We need two levels of secondary training, one for the future professionals, and one for the people who used to work in the factories and support a family doing it. Or just bring back those jobs. Sure, you'll have to pay $20 for tshirt, instead of $10, so you'll have only 10 tshirts instead of 20. Just do laundry more often. At least we'll have a real economy then.

tomatogrower 5 years, 5 months ago

In the printed LJW, there are many pictures of charities that are tax exempt and how much revenue the state is missing because of that, but they fail to mention how much revenue is missing from companies who are exempt from paying sales tax on raw materials. That would be probably be billions and not just a few hundred thousand. The governments everywhere give huge tax breaks to businesses, because they say that the businesses will then invest and create jobs, but where are these jobs? I say the companies need to produce the jobs first, then get the tax break. We are doing this backwards, and those CEO's bonuses just keep on getting bigger. Hmmm, could that be where the tax breaks go? Obviously we aren't educating people enough. They haven't got it through their heads that our economy and government is now run by large corporations who could care less about the people or stability of our country. They just feed us sports and celebrities so we don't pay attention to the man behind the curtain.

Boston_Corbett 5 years, 5 months ago

sales tax on haircuts. that will save the world.

Bob Burton 5 years, 5 months ago

The problem is not tax exemptions!! The problem is state spending which has gone up, way up, inflation went up 20% and the state spending went up 40%.. If we stop the over spending we would have plenty of extra cash..

Richard Heckler 5 years, 5 months ago

How about calling in all of delinquent local property taxes not being paid by local developers on new construction projects,empty structures etc etc?

How about no more Free Lunches locally? http://www.democracynow.org/2008/1/18/free_lunch_how_the_wealthiest_americans

Taxpayers it is not our job to bail out local speculators!

verity 5 years, 5 months ago

While I think that churches which are actually businesses should pay taxes on income, I do have a question.

If churches and non-profit charities are supposed to be taking care of our less fortunate people, rather than the government (as a number of people have suggested on these comment boards in the past), isn't this going to cut into their ability to do that? Also, if money that I have already paid income taxes on is going to be taxed again when I give to a charity, I may be less inclined to do so.

I agree that taking away some tax breaks makes sense, but isn't some of this just robbing Peter to pay Paul?

gl0ck0wn3r 5 years, 5 months ago

"Lawnmower man (Anonymous) says…How about calling in all of delinquent local property taxes not being paid by local developers on new construction projects,empty structures etc etc?"

How about a tax on cutting and pasting? Or a tax on the misuse of the comma? More realistically, would you support a tax on the lawn mowing services you provide? These services are environmentally destructive and a luxury for the bourgeoisie class.

devobrun 5 years, 5 months ago

There is very little steel in a Boeing airplane.

Phil Minkin 5 years, 5 months ago

Now is the time to start taxing internet sales. Millions of dollars are lost nationwide and this hurts local businesses as well as state and local governments. I'm sure a program could be devised to return money to the states where items are purchased. When internet sales began, they needed a break and figuring a system could have been hard. That's over. States need that revenue stream.

Richard Heckler 5 years, 5 months ago

Local voters need the power to vote on new projects that which impact our tax bills and our cost of living which is most every agenda item with the city commission. Our governing body,the city and planning commissions, are loaded with conflicts of interest.

USD 497,City Commission and County Commission purchases of real estate need approval of the taxpayers.

I say voting taxpayers can make the most fiscal responsible decisions. Certainly cannot be anymore irresponsible. Give taxpayers power over their tax dollars and the ability to create economic growth NOT economic displacement. This vote can happen every second Tuesday in November.

Tune in on Tuesdays at 6:45 PM to see what elected officials are doing. The same goes for the school board. All governing bodies NEED very active watchdogs.

Over built retail is anti economic growth and bad for business = more irresponsible government decisions.

It is imperative that communities conduct market capacity studies to understand their market potential, before any vote can be taken on USD 497, retail,residential or light industrial proposals.

Communities are increasingly demanding applicants to underwrite the cost of an independent analysis to determine the market capacity and the economic impact.

Citizen taxpayers deserve to know how new development will impact USD 497, property taxes, sales tax revenue and other businesses in the community.

All new development is often mistaken for economic development when instead it is likely promoting economic displacement instead of economic growth thus reckless spending of tax dollars. Generally the people it affects the most are least likely to understand it.

Could this be a reason for our extraordinarily high taxes? Could this be a reason Lawrence is the most expensive place to live and do business in Kansas?

The big box corporations are waging a war of indoctrination. They need us as accomplices in the destruction of our own hometowns.

Every developer that comes before a City or Planning Commission make their projects sound like they were written in Lake Wobegon where all the site plans are good looking and the economic impacts above average.

The symptoms of retail saturation are everywhere aka empty buildings = economic displacement

Our governing bodies must remember there are still only so many tax and retail dollars available in any community and Lawrence is but a small town surrounded by established commercial competition aka kcmo/joco ,Olathe,The Legends and Topeka Metro.

Richard Heckler 5 years, 5 months ago

Taxing internet sales = YES!

I would be more than willing. In fact I do ask however the majority are not set up for Kansas.

getreal 5 years, 5 months ago

If we intend to keep services to the disabled, and fund public schools and maintain our highways it requires money, plain and simple. I know that the Girl Scouts and the Animal Shelter provide valuable programs, but are we to really subsidize them over providing a quality public education? Are we really to increase the number of disabled on waiting lists so that some hotel in Overland Park can keep the Wayside Waifs gig? The United Way which provides services that are much more important to our communities isn't receiving a tax break. Wayside Waifs received a tax break because Johnson County businessmen involved in the Overland Park Convention Center asked their friends in the legislature to help them land a gig. This is fair tax policy? Every time these sort of exemptions occur, hardworking citizens pick up the tab. Enough is Enough.

Hop2It 5 years, 5 months ago

This seems like a very fluffy/soft article..especially with the pictures in the print version and the exemptions they chose to highlight. Maybe it was just meant to be an introduction, but I was very disappointed by the content and lack of focus.

tomatogrower 5 years, 5 months ago

If they have brought school funding back to 2007 levels, then they should bring tax cuts back to 2007 levels at the very least. But they really need to go back to Graves era, when he supported anything the big businesses want. Even then they didn't create the jobs they should have been creating, or paying a decent wage.

kugrad 5 years, 5 months ago

The State exemptions exceed $1,000,000,000. Yes, One BILLION dollars. These aren't just things like Girl Scout cookies and museums, these are going to industries and the business sector as well. Internet taxes are a bad idea. This exemption is a two-way street; out of state businesses don't collect taxes either. Our Kansas businesses can compete well against the higher overhead of other states. If we were among the first states to charge taxes, Kansas businesses would lose revenue and competitiveness.

Surely enough of these exemptions can be reconsidered and rescinded to fund our schools adequately and restore some of the excessive cuts made this year. We are talking about under 10% of all exemptions to more than solve the problem. Just 4% would erase current cuts.

Boston_Corbett 5 years, 5 months ago

a nickle-a-post tax on any post from Jackripper would balance the budget. And this would exempt any Jackripper post that is positive about anything whatsoever.

Sigmund 5 years, 5 months ago

Two characteristics you should remember about taxes. Increases a tax on an activity or item and you generally get less of it and every dollar in taxes is one less dollar removed from the private economy.So I pay more taxes on Internet sales and that means I have less money to spend in Downtown Lawrence or less money for tuition and books.

Besides, Internet sales are already taxed by the State of Kansas. While the State of Kansas can not force an out of state retailer to collect and remit Kansas sales taxes, Kansas residents are still required to pay them! If you are not reporting them, like Richard Heckler or foodboy, you're breaking the law. Now what was the number, 1800-TURN-IN-ATAXCHEAT? http://www.ksrevenue.org/perstaxtypesccu.htm

In fact the "Consumers’ Compensating Use" tax is due if the seller does not charge a tax of at least 5.3%. Here is a copy of the simple online form for your convenience! http://www.ksrevenue.org/pdf/forms/ct10u.pdf

araker 5 years, 5 months ago

It's been a few years since I studied it, but there might be some legal ramifications to taking away the tax exempt status from religious organizations. If it were to pass, the state would most likely get caught up in litigation.

OutlawJHawk - I don't know of these ministers with corporate salaries you write about, and I know plenty in Lawrence (and around the country). In fact, I've been in board meetings at three different religious organizations where the boards voted to give cost-of-living pay increases to the staff over the objections of the staff, who did not want them.

pace 5 years, 5 months ago

Cut the exemptions, simplify the tax code. TAX the churches.

Fixed_Asset 5 years, 5 months ago

TABOR? Seriously? Colorado suspended it a few years ago due to the negative impact on their economy. Adopting TABOR anytime would be detrimental to our state's economic growth - adopting it now, during a recession, would be a devastating blow to Kansas.

pace 5 years, 5 months ago

I know plenty of churches, I don't belong to them, I don't support them. I just pay their share of their taxes. I have donated to charities, I like choosing which ones. For the government to choose for me is a real irk.

headdoctor 5 years, 5 months ago

foodboy (Anonymous) says… Now is the time to start taxing internet sales. Millions of dollars are lost nationwide and this hurts local businesses as well as state and local governments. I'm sure a program could be devised to return money to the states where items are purchased. When internet sales began, they needed a break and figuring a system could have been hard. That's over. States need that revenue stream.


Apparently you and Healthcare_Moocher are not very observant. Internet sales are already taxed where possible. Have you looked at your Kansas Income Tax Forms in the last few years. The Government is doing what it can but as they found out the cost of compliance can very quickly out weigh the amount of Sales Tax collected.

notajayhawk 5 years, 5 months ago

OutlawJHawk (Anonymous) says…

"Tax all cooperatives, churches and non-profits. Just because their ownership is different or someone feels their cause is more “just” should not exempt them from contributing money to fund government."

Just out of curiosity, would that include Healthcare Access?

And why is it that the constant cries for separation of church and state only work in one direction?


tomatogrower (Anonymous) says…

"... how much revenue is missing from companies who are exempt from paying sales tax on raw materials. That would be probably be billions and not just a few hundred thousand."

There's a reason why they don't pay taxes on raw materials. The sales tax is paid by the end user on the final product, which includes the cost of those raw materials. Anyone, not just big corporations, can take advantage of this if they have a tax number - you get exempted from paying sales tax on anything that you will re-sell because the purchaser pays it.

Take a moment to consider how many separate materials went into making how many individual components that went into how many subassemblies that made up each of the major assemblies on that computer you're typing on. Wanna' give a thought as to how much that computer would have cost if each piece was taxed at each stage? Yes, you're right - it's billions that goes uncollected. Um - who do you think it would end up being collected from, tomato?

And have any of the lunatics calling for a tax on raw materials considered the unintended consequences? If I'm going to purchase a product made locally that's going to be taxed on every part at every stage, why wouldn't I buy the same product made in a different state or even another country, where I only have to pay the tax once? What do you think that would do to the competitiveness of local businesses?

Phil Minkin 5 years, 5 months ago

Sgmund and headdoctor: I was not aware of that law. thanks for the education. I don't buy over the internet and I'm curious to know what % of people you think actually comply with this or even know about it? Is there a way of knowing how much was collected in this manner?

Centerville 5 years, 5 months ago

Why get out the violins for the school lobby? They have over $1 billion squirrelled away.

Sigmund 5 years, 5 months ago

headdoctor (Anonymous) says… "Internet sales are already taxed where possible. Have you looked at your Kansas Income Tax Forms in the last few years."

Just to be clear, not only Internet sales are taxed but "Individual Kansas CONSUMERS buying goods in other states or through catalogs, mail-order companies, over the Internet, or from television, magazine or newspaper advertisements must pay Kansas Consumers Compensating Use Tax on these purchases if the seller does not charge a tax of at least 5.3%." http://www.ksrevenue.org/perstaxtypesccu.htm

Sales taxes are not taxes on the retailer, but the consumer. If the business has a significant presence in the state then Kansas forces retailers to collect sales taxes from the buyer and send them to the Department of Revenue.

If the state cannot compel a retailer to collect Kansas sales taxes, the residents of the State of Kansas are under a affirmative legal duty to self report their avoidance of the sales tax, calculate how much they did not pay, add it to their income taxes, and pay it by the end of the year along with any interest or penalties. Here is the form that is to be attached to your income tax form. http://www.ksrevenue.org/pdf/forms/ct10u.pdf

Sigmund 5 years, 5 months ago

Just to insure you take the "Kansas Consumers Compensating Use Tax" seriously. Here is the some of the interests, penalities, and jail time anyone, including you, face.

(b) If any taxpayer fails to pay the tax required under the act of which this section is amendatory at the time required by or under the provisions of the act of which this section is amendatory, there shall be added to the unpaid balance of the tax, interest at the rate per month prescribed by subsection (a) of K.S.A. 79-2968, and amendments thereto, from the date the tax was due until paid.

  (c)   For all taxable years ending prior to January 1, 2002, if any taxpayer due to negligence or intentional disregard fails to file a return or pay the tax due at the time required by or under the provisions of this section, there shall be added to the tax a penalty in an amount equal to 10% of the unpaid balance of tax due.

  (d)   For all taxable years ending prior to January 1, 2002, if any person fails to make a return, or to pay any tax, within six months from the date the return or tax was due, except in the case of an extension of time granted by the secretary of revenue or the secretary's designee, there shall be added to the tax due a penalty equal to 25% of the unpaid balance of such tax due.

  (e)   For all taxable years ending after December 31, 2001, if any taxpayer fails to file a return or pay the tax if one is due, at the time required by or under the provisions of this act, there shall be added to the tax an additional amount equal to 1% of the unpaid balance of the tax due for each month or fraction thereof during which such failure continues, not exceeding 24% in the aggregate, plus interest at the rate prescribed by subsection (a) of K.S.A. 79-2968, and amendments thereto, from the date the tax was due until paid. Notwithstanding the foregoing, in the event an assessment is issued following a field audit for any period for which a return was filed by the taxpayer and all of the tax was paid pursuant to such return, a penalty shall be imposed for the period included in the assessment in an amount of 1% per month not exceeding 10% of the unpaid balance of tax due shown in the notice of assessment. If after review of a return for any period included in the assessment, the secretary or secretary's designee determines that the underpayment of tax was due to the failure of the taxpayer to make a reasonable attempt to comply with the provisions of this act, such penalty shall be imposed for the period included in the assessment in the amount of 25% of the unpaid balance of tax due.

Sigmund 5 years, 5 months ago

Just to insure you take the “Kansas Consumers Compensating Use Tax” seriously. Here is the some of the interests, penalities, and jail time anyone, including you, face.

Part Second:

  (f)   If any taxpayer, with fraudulent intent, fails to pay any tax or make, render or sign any return, or to supply any information, within the time required by or under the provisions of this section, there shall be added to the tax a penalty in an amount equal to 50% of the unpaid balance of tax due.

  (g)   Penalty or interest applied under the provisions of subsections (b) and (e) shall be in addition to the penalty added under any other provisions of this section, but the provisions of subsections (c) and (d) shall be mutually exclusive of each other.

  (h)   Whenever the secretary of revenue or the secretary's designee determines that the failure of the taxpayer to comply with the provisions of subsections (b), (c), (d) and (e) was due to reasonable causes, the secretary or the secretary's designee may waive or reduce any of the penalties and may reduce the interest rate to the underpayment rate prescribed and determined for the applicable period under section 6621 of the federal internal revenue code as in effect on January 1, 1994 upon making a record of the reasons therefor.

  (i)   In addition to all other penalties provided by this section, any person who willfully fails to make a return or to pay any tax imposed under the Kansas compensating tax act, or who makes a false or fraudulent return, or fails to keep any books or records prescribed by the Kansas compensating tax act, or who willfully violates any regulations of the secretary of revenue, for the enforcement and administration of the Kansas compensating tax act, or who aids and abets another in attempting to evade the payment of any tax imposed by the Kansas compensating tax act, or who violates any other provision of the Kansas compensating tax act, shall, upon conviction thereof, be fined not less than $100 nor more than $1,000, or be imprisoned in the county jail not less than one month nor more than six months, or be both so fined and imprisoned, in the discretion of the court.

Chapter 79: Taxation; Article 37: Kansas Compensating Tax http://kansasstatutes.lesterama.org/Chapter_79/Article_37/79-3706.html

Sigmund 5 years, 5 months ago

foodboy (Anonymous) says… "Sgmund and headdoctor: I was not aware of that law. thanks for the education. I don't buy over the internet and I'm curious to know what % of people you think actually comply with this or even know about it?"

I assume everyone who lives in Kansas and who uses an accountant to file taxes is aware of it. I also assume everyone who knows about it complies. I only buy from the larger Internet retailers which collect and pay the tax for me.

Just for the record, ignorance of the law is not an excuse.

notajayhawk 5 years, 5 months ago

Sigmund (Anonymous) says…

"I assume everyone who lives in Kansas and who uses an accountant to file taxes is aware of it. I also assume everyone who knows about it complies."

Do you also assume everyone wears their seatbelts and obeys the speed limits?

Boston_Corbett 5 years, 5 months ago

This comment was removed by the site staff for violation of the usage agreement.

Sigmund 5 years, 5 months ago

notajayhawk (Anonymous) says… "Do you also assume everyone wears their seatbelts and obeys the speed limits?"

Unlike speeding or failure to wear a seat belt, tax fraud is a crime. Any accountant or tax preparer who neglects to mention a tax that their clients are subject, or taxpayer who fraudulently signs their tax returns is open to prosecution. Unless your name is Timothy Geithner or you are some other high ranking Obama appointee, I strongly urge you comply with the tax law. But my main point may have been lost so I will repeat it.

Those sales tax exemptions are not tax breaks for the Girl Scouts, the Internet, the providers of recreation activities, the nonprofits and religious organizations, or those that provide electric, gas and heat utilities and water used for residential and agriculture purposes. They are exemptions for Kansas residents that buy Girl Scout cookies, use the Internet, attend recreation activities, contribute to non-profits and religious organizations, or farmers, ranchers, and residents that use electricity, gas, heat utilities, and water.

headdoctor 5 years, 5 months ago

foodboy (Anonymous) says… Sgmund and headdoctor: I was not aware of that law. thanks for the education. I don't buy over the internet and I'm curious to know what % of people you think actually comply with this or even know about it? Is there a way of knowing how much was collected in this manner?


One of the points I should have made earlier and didn't is that there are several companies who are already charging Kansas Sales Tax on internet purchases. Who knows if they are actually paying the money to Topeka that is collected. Some of those companies are complying with Kansas law even if they do not do business in a State that has a reciprocal agreement with Kansas. Mostly I suspect because of the broad wording in the Kansas law and it isn't worth their time to get cross ways with any sort of Government rule. There were several large internet marketers that wanted to comply on their own fearing that if they didn't the Government interference would be much worse. I don't know as I blame them. Having one State auditing your books is bad enough. Could you imagine 50 of them wanting to go snooping or dragging you through court for access?

So far a National Sales tax pact has failed approval but there are a couple of States that have agreements with each other and there is an 8 State or so group that make up the Mid West Sales Tax Pact. The latter is what has effected a lot of sales to Kansans on the internet because of the location of the warehouses and distribution points. Of course there is still a large number of orders that happen outside the Pact regions.

Centerville 5 years, 5 months ago

I think it's terribly sad that some who post here are implying that keeping the government fed should be our first priority.

Sigmund 5 years, 5 months ago

headdoctor (Anonymous) says… "One of the points I should have made earlier and didn't is that there are several companies who are already charging Kansas Sales Tax on internet purchases."

One of the points I should have made earlier is that requiring every retailer who makes a sale over the phone or on the internet to collect state and local sales taxes favors Big Business. Why? Best Buy already has the computers and systems needed to calculate all the different tax rates for every county and every city in every state and regularly sends the collected taxes to all 50 states. the costs of such systems are high but they are spread over huge number of stores.

Although the states have the authority to tax their citizens they don't have the authority to force out of state businesses to collect taxes from their citizens unless the retailer already has a significant presence in the state, like Best Buy. Obviously Best Buy wants every retailer large and small to play by the sames rules they play under, otherwise the smaller companies have a significant advantage of lower total price to the consumer.

However, the local T shirt or handmade chocolate shop has no such capability. Under current law they only have to calculate and remit taxes for local purchases, but if someone from out of state orders over the phone or the net, they aren't set up with the equipment to calculate the appropriate tax rate and then send it to the correct Department of Revenue. Forcing small businesses to have the systems needed to calculate and collect taxes for all cities in all 50 states is prohibitively high and would have to be absorbed by only one or two small stores. This would effectively prevent small businesses from making any out of state sales.

pace 5 years, 5 months ago

Poor pilgrim, likes to expand on what I write to include his issues. Write for yourself, don't piggyback on my remarks especially when change them to fit your vision. If you don't understand what I say, don't worry, just figure out what you think and stand for. I have no interest in nit picking that once again your extrapolation of my statement is incorrect. Boring.

notajayhawk 5 years, 5 months ago

Sigmund (Anonymous) says…

"Unlike speeding or failure to wear a seat belt, tax fraud is a crime."

Yeah, got that. However, fraud requires intent, does it not? Simple failure to pay is a civil matter, if I'm not mistaken. In which case, when it comes to deliberate fraud, ignorance IS an excuse.

Sigmund 5 years, 5 months ago

notajayhawk (Anonymous) says… "Yeah, got that. However, fraud requires intent, does it not? Simple failure to pay is a civil matter, if I'm not mistaken. In which case, when it comes to deliberate fraud, ignorance IS an excuse."

Lack of intent is not the same as ignorance. Bad luck for you, but ignorance is never an excuse.

notajayhawk 5 years, 5 months ago

Yeah, got that part too. And being a former tax examiner for the IRS, I'm also somewhat familiar with what's required for tax fraud. Are you going to dispute the fact that simple failure to pay (without fraudulent intent) is a civil rather than criminal matter?

This is why people bring their accountants, not their attorneys, to tax court.

I'm aware that lack of intent and ignorance are not synonymous. Now perhaps you'd like to explain how one can have intent to break a law he was not aware of? Bad luck for you, but knowledge of the law doesn't seem to have endowed you with a whole lot of common sense.

Sigmund 5 years, 5 months ago

notajayhawk (Anonymous) says… "Now perhaps you'd like to explain how one can have intent to break a law he was not aware of? Bad luck for you, but knowledge of the law doesn't seem to have endowed you with a whole lot of common sense."

As a former IRS tax examiner claiming you were ignorant of the tax law is at best going to subject you to interest and penalties. As a former tax professional the Court could hold you to a higher standard of knowledge. If they then show a pattern of not accurately filing by "forgetting" to pay the Kansas Consumers Compensating Use Tax, tax fraud is a very real possibility no matter how ignorant you claim to be. And trust me, I believe you.

notajayhawk 5 years, 5 months ago

Thanks, Sigmund, but a simple "Yes, you were correct" would have sufficed. I realize it's inherently impossible for an attorney to give a simple yes or no answer to a direct question, let alone admit they were in error. But as I obviously wasn't speaking about myself here (it would have been difficult at best to claim I was unaware of a part of the statutes you had cited in the posts directly preceeding the one I responded to, my former profession notwithstanding), and the question was whether simple nonpayment, without intent to defraud, was a matter which does not involve criminal penalties other than fines (much like the traffic violations you tried to differentiate non-payment from), again, a simple "Yes" would have sufficed quite nicely.

Amusing you'd try to spin it as if I was the ignorant one while admitting I was correct. In reality, when it comes to proving fraud, ignorance is indeed a defense, isn't it? You might want to keep that one in your repertoire.

Have a good night, counselor.

Sigmund 5 years, 5 months ago

notajayhawk (Anonymous) says… "Amusing you'd try to spin it as if I was the ignorant one while admitting I was correct. In reality, when it comes to proving fraud, ignorance is indeed a defense, isn't it?"

No, ignorance of the law is not an excuse. It is a precept that once a statute is published, tax or otherwise, you have constructive notice of the law. If defendants were allowed to escape legal responsibility for their acts, merely by saying "I didn't know it was wrong/illegal", the system of using law to regulate human conduct would collapse. So the doctrine is a practical necessity in all legal systems that I am aware of.

If you are charged with tax fraud it is no use claiming you didn't know lying on your taxes returns was a crime. If you think simply saying "I am ignorant of the tax law" is an defense to the accusation of tax fraud, you are very seriously mistaken. If your point is not every mistake on a tax return rises to a criminal charge, no argument. But if you make so many "mistakes" that you are charged with tax fraud, claiming or even proving you're ignorant will not be a effective defense.

headdoctor 5 years, 5 months ago

Marion (Marion Lynn) says… The solution: Don't deal in taxable items. So simple even an LJW poster can do it.


Brilliant Marion, just brilliant. That has to be your butt talking because your mouth should know better. Do you have any idea just how many things are taxed? Just how is an economy suppose to prosper only dealing in what is not taxable? An individual might slide by that way if they deal in the right items otherwise there is no escape other than law breaking.

headdoctor 5 years, 5 months ago

Marion writes: Actually it is not brilliant but somewhat clever on my part!


Not really. There are a lot of things that people sell that are tax exempt until the State or the Feds catch up to them.


Marion writes: Do you, Dear headdoctor, know how many and the kinds of items which are “NOT” subject to sales tax?


As a matter of fact I do and I get to deal all the time with people getting mad because they want to buy tax exempt when they have no paper work proving that they are exempt, some not even producing proof of a tax number or on items that are quite obviously for personal use. The personal use isn't a problem if they have the proper paper work because then it is on their back to pay the tax for items used for personal use. While there are things that are exempt from sales tax there is a lot of products and or services that are taxable, it is just that many do not realize that and do not collect it and the State hasn't caught up with them yet.

The bottom line Marion, is not everyone can engage in business that involves non taxable items or services.


Marion writes: Neither of us has any control over the state of the economy and nothing that either of us do will affect it in any material or even detectable manner, so go fry that Red Herring, will you?


It would sure help if you learned the meaning of some of the words you love to throw around on your posts such as Red Herring. Considering the subject of the thread and the direction is was headed, I will give you a fine example of a Red Herring. ~~~~~~~~~~~~~ Marion (Marion Lynn) says… The solution: Don't deal in taxable items. So simple even an LJW poster can do it.

georgeofwesternkansas 5 years, 5 months ago

Bozo is right, tax legal services. And throw in a tax on higher education while you are at it, 10% should do...

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