State Credit Card Survey

By Harley T. Duncan, Executive Director of the Federation of Tax Administrators (FTA)

"FTA recently conducted a survey on how states use credit cards to facilitate the payment of taxes or fees collected by the states’ revenue agencies. The entire survey is attached to this bulletin.

Of the 33 states (including the District of Columbia and New York City) that responded, 30 currently have a program in place to accept credit card payments. (Note: Louisiana does not accept credit cards yet, but does accept e-checks.)

According to the survey, almost $700 million was collected from credit card, debit card and e-check payments over the course of FY 2003. This dwarfs the $190 million collected (as reported to the survey) by the states just two years earlier in FY 2001.

Also on the horizon, Louisiana is poised to begin accepting credit card payments next year. Tennessee plans to seek legislation authorizing acceptance of credit cards for all tax payment types in the 2004 legislative session."

COMMENT: I have no real problems with debit card and e-check payments. Businesses whose tax payments are above a mandated threshold routinely make payments via Electronic Funds Transfers (EFT). Even those below the threshold can voluntarily make EFT payments. Debit card and e-check payments for individuals require that the taxpayer have funds in an account in order to make the tax payment. Credit cards are a different story. In that case, we are talking about individual taxpayers who are short on cash at tax time. It is ridiculous for any state to tax its residents to the point of poverty and then, in effect, offer them a loan at 18 percent interest to pay the taxes they can't afford. So far, Louisiana does not accept credit card payments, and I hope they never do. Payment of taxes by credit card is one "Louisiana Purchase" that we can all live without.

- posted by Ronald @ 9:07 AM

 
Two Businesses Accept Maryland Tax Amnesty By Deadline

TheWBALChannel.com (WBAL-TV Channel 11)

"ANNAPOLIS, Md. -- The state Comptroller's Office reported Tuesday that only two businesses [out of 240] that are suspected of using Delaware shell companies to avoid Maryland taxes came clean by Monday's deadline.

Comptroller William Donald Schaefer had pledged to waive most of the penalties for companies that admitted they used Delaware tax shelters and paid their back Maryland taxes by the deadline.

The low response rate means the Comptroller's Office could be spending years in court pursuing the skipped payments. Monday's response garnered close to $2 million."

COMMENT:

A similar deadline passed January 30, 2004 for 70 companies previously found to be using the tax-avoidance scheme. Of those 70 companies, only 10 signed up by the deadline, with another 20 still negotiating with the state.

Our News & Comment for February 23 reported that the Comptroller has targeted nearly 240 businesses regarding this issue. The Attorney General claims to have 112 lawyers ready to litigate.

Now may be a good time to negotiate a "Private Amnesty" with the state. It may be possible to sign up on a "go-forward" basis, thereby avoiding tax, penalty and interest for prior years. Contact the experts at State Tax Central for more details.
- posted by Ronald @ 12:30 PM

 
The Uniform Sales and Use Tax Exemption Certificate­--Multijurisdiction

By Ronald K. Bodtcher, State Tax Central

"The Multistate Tax Commission is an organization of state governments that was created in 1959 by an interstate compact. It works with taxpayers to administer, equitably and efficiently, tax laws that apply to multistate and multinational enterprises.

The Commission has developed a Uniform Sales and Use Tax Certificate that 38 States have indicated is acceptable for use as a 'blanket' resale certificate and for similar purposes:

http://www.mtc.gov/TXPYRSVS/Cert7200.PDF

The Certificate itself contains instructions on its use, lists the States that have indicated to the Commission that a properly filled out form satisfies their requirements for a valid resale certificate, and sets forth specific limitations on its use."

COMMENT:

Note that while the certificate itself is only 1 page in length, it is accompanied by 3 pages of footnotes. Each state seems to have its own exceptions and variances regarding usage and validity of the certificate for certain purposes. We therefore recommend that you carefully read the footnotes before using the certificate. If you have any questions, direct them to the experts at State Tax Central.

Note also that the following states do NOT use the certificate:

Indiana
Louisiana
Massachusetts
Mississippi
New York
Virginia
West Virginia
Wyoming

- posted by Ronald @ 2:09 PM