I got a “sanity check” call from a client recently. The problem was, he called a state’s taxpayer help line because he had a simple question, but the advice he got didn’t sit right with him.
In this particular case, the state official advised him to absorb the sales tax that his company should have been charging. In other words, the official advised my client to not charge any sales tax and just pump up the price of the goods/services so his company could pay the tax at the end of the month.
Sounds simple…but it’s illegal!!
So, the advice he got from the state was 100% wrong. In that particular state, there’s clear statutory language that says tax absorption is prohibited. Thank goodness my client decided to phone a friend and get a sanity check!
Bottom line – there’s a reason why the advice you get over the phone from a state is not legally binding. Unfortunately, you roll the dice when you call their taxpayer help lines.
If you can’t afford any degree of risk, hire a specialist (wink wink).
Have you ever been burned by the verbal advice given to you buy a state taxing authority? If so, please feel free to share your story!