9/24/2007 2:00:00 AM ACCOUNTING ADVICE: Are service sales taxes the answer?
Ed Hensley
Years ago a presidential candidate proposed a national sales tax and the elimination of the income tax. He was practically laughed out of the running and eventually withdrew from the campaign. Today, however, sales taxes are being brought up again on more of a state by state issue.
I have read much about and was reminded of in a recent professional issue update conducted by the INCPAS is the possibility of a sales tax placed on services.
The March 9 Kiplinger Tax Letter stated, gExpect states to focus on sales taxes. Theyfll target service industriesceverything from accounting to beauty salonscmany of which arenft taxed at all right now.h
Okay, I normally stay out of the political realm, but this just got personalcjust kidding, I wonft get political here. Many have felt that services should be taxed. After all, retail merchants have had to deal with it forever it seems. Although this would achieve its aim, to raise a tremendous amount of revenue for the state, at what cost? The bookkeeping alone would take a lot of time, not to mention the actual collection and remitting of funds. Then therefs the issue of different laws from state to state to deal with.
Some states are already taking steps this direction. The Florida legislature has, thus far unsuccessfully, tried to put statutes on the books making services taxable. The time is likely coming. The National Conference of State Legislatures met in August and although at this time Ifve yet to hear what came out of those meetings I am sure taxing of services was discussed.
So this is just a warning of sorts. I believe itfs more of a case of gwhenh rather than gif.h So if you are more politically inclined contact your state representative and let them know your opinion.
P. Edward Hensley, CPA is the owner of Hensley Accounting, a full service accounting and consulting firm in Crawfordsville. He can be reached at ehensleycpa@hensleyaccounting.com. His column appears weekly in The Paper of Montgomery County.
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