Met with a client this morning to prepare for an upcoming audit. General AP looked good. However, when we got to the corporate AMEX and VISA cards, there were significant use tax issues. Because of the nature of their business, the IT folks would just purchase some of the smaller items they needed from online vendors. There were also a number of Amazon transactions that showed up. There were also entries for subscriptions and some other fees. The volume of taxable transactions was surprising and no use tax had been paid. Since the audit is starting next Monday, there is not a lot to do with these now other than manage the audit process.
Just a reminder that credit card statements are common documents for review by auditors and that use tax is due on items purchased over the Internet. If the item would have been taxable if you purchased it locally, then it will be taxable if you purchase it online.
If you have questions about the taxation of items purchased or would like assistance setting up a use tax accrual system, please contact me and we can discuss your options. email@example.com
Ned Lenhart, CPA