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President Trump recently unveiled some details of his tax plan and with this will come many articles purporting this solely as a plan with “tax cuts for the rich”. The problem with this view is that it over-simplifies a complex tax system and distracts from the true debate.
Take, for example, Bruce Murphy's recent piece Tax Handout For Rich Kids where he focuses on the tax deduction students at University School (the wealthiest school in our area) receive. Never mind that the deduction has been around for over 3 years or that it applies to all private school tuition, a writer needed some page views on a current issue, so he took the low hanging fruit. I mean, very few are sympathetic to those taxpayers who can afford in excess of $20,000/year, right? Easy target. Most of our clients fear an audit by the Internal Revenue Service and wonder what “red flags” they may be raising on their personal tax returns. In reality, there is a higher chance of receiving a sales and use tax audit from the State, than a visit from the IRS.
Sales tax is generally charged on revenue from the sale of tangible property (items you can touch and see) and service revenues are (typically) exempt. As with most laws, the exceptions to these general rules provide confusion and often times lead to violations - albeit unintentional. For example, repair services are generally taxable (even though it’s a service) whereas construction of a home or building is generally exempt (even though the end result is tangible property). Many of our clients provide a service and thus, sales tax is not a big issue. However, the Use tax can trip them up. Use tax is supposed to be submitted on any purchase you make where sales tax is not charged at least at the rate of your local municipality. For example, if you purchase supplies for your office and live in Milwaukee County, you must make sure that you paid at least 5.6% in sales tax on that purchase. It sounds like a nit-picky rule, but we’ve actually seen auditors add the tax to purchases when the client was inadvertently charged the Waukesha County tax of 5.1% by the vendor. |
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November 2017
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Suite 820
Milwaukee, WI 53202
(414) 759-9629
Suite 820
Milwaukee, WI 53202
(414) 759-9629
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342 North Water Street, Suite 820
Milwaukee, WI 53202 (414) 759-9629 © 2017 Bull Moose Financial |