comments on tax issue
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I have owned an alarm business in Missouri for 12 years. Had an IRS issue several years ago, before using an accountant. I gave him the IRS letter, he took care of it, never heard another word, and never had to talk with the IRS. Accountant: Mike Meade, Alliance Financial and Income Tax, LLC Blue Springs, MO. www.AFITonline.com.
Brian
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Ken,
This question is in response to Al from Texas. Al was not charged sales tax on equipment that he purchased from a distributor in Texas. As with most tax issues the answer is not simple, but fortunately it is not complicated. In Texas materials are either sold pursuant to a "Lump Sum Contract" or a "Separated Contract." Under a Separated Contract the Contractor (Alarm Company) must collect State and local sales taxes from the customer, based upon the location of the job site, for new residential construction, new commercial constrution or for residential repair and remodeling. Under a Lump Sum Contract the Contractor (Alarm Company) is considered the end user of the equipment and must pay the tax to the distributor and the Contractor does not charge the customer for the tax.
The above is not an interpretation or an opinion it is word for word from the Texas Sales and Use Tax Code. The distributor must have assumed that Al's company had a resale permit and that the equipment was being purchased for resale under a Separated Contract. If Al installed the material under a separated contract, charged the tax to the customer, and paid the tax to the state, he should send a resale certificate to the distributor and assure them that the tax has been paid. If Al installed the material under a lump sum contract, he should have paid the tax on the cost of the material to the distributor at the time of purchase.
There is more here than just a simple dispute between an alarm company and a distributor. The State Comptroller Auditors review wholesalers' files for valid resale certificates for all of their customers. A company that does not have a resale certificate and has not paid sales tax to the distributor is a good candidate for a sales tax audit. During the audit the State will look not only at the alarm company's transactions with that distributor, but at all of the purchases made from all sources. We have represented companies that didn’t know the law before they came to us and the audits can be very nasty. The auditor will most probably look at every sale and purchase invoice for all periods that are open.
The distributor made a mistake, but if the distributor is audited, the auditor will most probably go after the alarm company. Someone has to pay the tax, and in the audtor's eyes, the alarm company is going to be a target rich environment.
Al should show this to his tax professional, or give us a call. J's Missouri problem is not as simple, but I would be glad to help him. All of our clients are alarm companies and we have several in Missouri.
Mitch Reitman
S.I.C. Consulting, Inc.
817 698 9999
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Ken,
Just a reality check, If not sending in a check for $953 will get the Texas Dept of Revenue interested in auditing my company, DUH!!! Write the Check, NOW!
Since both the seller and buyer are in Texas, sales tax is due on the sale from someone. That would be either the wholesaler, the dealer or most likely the end user who actually ends up with the stuff. If the buyer sells CCTV to customers, it would seem that they should be collecting and remitting sales tax from the end user and would have the necessary resale certificate to give the distributor. In Florida the seller is responsible for collecting and paying over the tax to the state from the "Ultimate Consumer" of the product so tax is collected unless selling to a reseller (Dealer) with a resale tax number but during an audit the state auditor can look to a company that did not pay and use that as cause to trigger an audit of the buyer. Avoid that at all costs. Note, I am not an accountant but I have survived an audit from the Florida Dept of Revenue. (they look back 5 years) On another note, if you buy tools, programmers, computers, invoice or work order forms (NEBS) etc. that you USE in your business and they come from out of state, YOU owe the tax on that stuff and if you get audited you will pay the tax and penalties etc. Out of state purchases are not tax free the responsibility for the tax just moves to the buyer. Auditors always find unpaid taxes due from out of state purchases. Did I mention NEBS??
Best to all.
Mike Fletcher
Florida Alarm School
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re: Sales Tax Issue
In Texas it is your obligation to pay the tax, not the company you buy from. First you have two different type tax, a use tax and new construction. If you are installing in a new construction you are suppose to pay on the material only that you put in, but make sure that if you are doing it under a contract that you pay at time of purchase and you have to file it that way. Second if you are not doing new construction then you pay on labor and material. Your CPA should be able to help you with this. But remember it is your obligation to file all taxes not the company you buy from.
Bill H
Austin TX
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Here's a note to Al in Texas regarding state sales tax (April 17, 2012)...
In Pennsylvania, the seller is responsible for collecting sales tax and ascertaining the taxable vs. tax-exempt status of the purchaser. Without a resale / exemption certificate in hand, if the seller fails to collect the tax and it's spotted in an audit (which of course, it will) the tax is assessed by the department of revenue against the seller, who will indeed have to pay the tax himself with virtually no practical recourse. Can't tell you about TX, but a lot of states probably have similar practices.
The seller can if he wants, ask the purchaser for reimbursement of the tax in hopes the purchaser will do the right thing. However, obvious factors may cause that reimbursement not to happen or to require a lot of effort. The probability of any recovery depends mostly on the seller's leverage with regard to future business.
If by coincidence, the purchaser were also audited, the nonpayment of sales tax would be easily spotted there, too, resulting in a similar assessment against the purchaser, who properly should have paid either sales tax to the seller or "use tax" on the acquired materials directly to the commonwealth. Anyone in PA can pay "use tax" any time using a standard form. You don't need a PA sales tax number to do it.
Al, the oversight sounds like found money, but it could easily bite you in the butt later. You may already be on the radar. After you have a sales tax audit you will definitely want to operate 100% by the book. The audit is utterly microscopic. They audited four years of business plus all of the fixed plant. They sent me scrambling for receipts on all kinds of off-the-wall things like my office equipment, furniture and an old beat up lawn mower. Keep your receipts where you can retrieve them. Any time I spot an invoice on which I should have been charged sales tax, I'm on the phone to make sure it gets fixed and that the oversight won't be repeated. (Listen to me squeak!)
FYI, in PA, the freight on any taxable shipment is also taxable. They got me good on this one about 15 years ago.
Lou Arellano
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comments on Tel guard issue
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"radio troubles"
In response to any and all dealers that are experiencing problems with the tg-7. i can assure you that the problem is with at&t and not any one radio manufacturer. we currently have 1500 plus gsm radios (from different manufacturers) in place, 99.9% of them are being carried by at&t. we are constantly getting "radio not responding" or "radio fail to test" on dozens and dozens of radios every single day. some of these radios are in fringe areas, but the vast majority have 3-5 out of 6 bars of signal and yet they are dropping off the at&t network.
pinging the radios is of little help, and we too find the only way to get them back up and running is to go to the location and power cycle the radio. we have been battling, indirectly, with at&t for at least 2 years and have pretty much gotten nowhere. all of these radios are 2g and i feel that at&t is prematurely winding 2g down. the scary part of all of this is that many of these radios are primary, with no landline. when a radio drops off the network, we have to make a mad dash to correct the issue. would love to be able to bill someone (homeowners not only refuse to pay, but question radio reliability) for all these unnecessary trips.
ralph aiello
ess, llc
vineyard haven, ma.
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Ken,
We are also having a problem with the Uplink units that don't do there check in and found we also need to go to the site and power the units down and they will work untill the next time. This is not for all unit just some. At some location we set up the panel so we can call the panel by phone and power down the units and reset them remote.
John Maire
Maire Company
Clearwater, Florida
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Ken,
In response to the issues with the Telgaurd TG-7 radio; I have had similiar issues with Uplink radios in that we had failed radio tests & had to go out & re-boot the radios to re-wake them into working again (& again, the manufacturer said it was due to 'carrier' changes & that's just the way it is). In terms of Uplink, they have supposedly addressed the issue with some kind of auto-re-boot in their newer radios so we don't have to absorb the cost of rolling a tech. out to the site which, when it's all said & done, probably cost as much as the value of the radio.
If the manufacturer acknowledges an issue by developing a 'fix' in their newer radios shouldn't they be helping us absorb the cost of this with existing product in the field?
Harry,
Security One
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Regarding the Telguard TG-7FS Sole Path Fire Transmitter:
We have been installing this product for 12 months and have experienced our fair share of problems like many other commercial fire alarm contractors. Even when following all guidlines including signal strength, dual pathways and using external high gain antenna this product is like a high maintenace girlfriend.
The list of issues include 2 incidents of widespread (National) system outages. The first time for multiple days and the second for between 24-48 hours. All communication between the TG-7FS and Telguard became non existent thus all fire alarm systems utilizing this network could not relay daily test, fire trouble and fire alarm conditions. When the network did come back up a visit to all subscriber locations was required in order to clear communication failure conditions and or to reboot TG-7FS as it would not log back on to Telguard network.
It seems like the older TG-7FS units are the units that require reboot if they go off network and won't automatically log back on.
More recently in the last month we have had numerous TG-7FS units that have not reported off network signals yet the fire panel daily timer test signal is accepted by the TG-7FS, is sent to the Telguard Relay Center but nevers leaves the center thus timer test failure occurs at the central station. Telguard Tech Support aknowledges that the signal was received but never relayed to the central station. The following day the same accounts will get the timer test relayed to the central station. I might also add that sometimes the timer test is relayed up to 2 hours late thus timer test failure still occurs at the central station.
Telguard Tech Support tells us that they are in the process of installing additional T1 lines to accommodate more traffic but can't explain why the timer test signal does not get sent to the central station.
As mentioned by Johnny Richards of Best Fire & Security, LLC of Albany, Georgia, the amount of unpaid man hours, subscriber concerns and liability that this product is creating is not acceptable.
If you are experiencing problems with this product like many others, I can only suggest that you post your comments on this forum and include a copy to Telguard Attention: Melody Parham Director Of Sales mparham@telular.com.
It is time for Telguard to address these issues, come up with a solution and stand behind their product. Johnny Richards - If you have the email address for George Broady or Joe
Battie please post on this forum.
Thanks Ken for providing this forum.
Harry Leubling
UltraSafe Security Systems, Inc.
Newfoundland, NJ