Donna Bordeaux walks through sales and use tax for campground owners facing audits. Sales tax rates vary by state, so document what's taxable. Resale certificates only work for items you resell, not supplies you use. Use tax is what you owe when you buy something tax-free from out-of-state vendors, and auditors often catch campgrounds missing these payments.
Hi, I'm Donna Bordeaux with campgroundaccounting.com Welcome. I wanted to talk with you about sales and use tax today. A fun topic, of course. First off, let's start off with sales tax. I've had several audits for clients on sales tax and I want to show you how you can protect yourself and make sure that you don't have a big sales tax liability if you're ever audited by your state. First off, sales tax is what you collect from your customer. So you'll want to know for your products and services that you're selling, what is taxable in your particular state. Every state is very different, so you'll want to make sure you have good research. If you need to call the state to ask them, never just take the word of somebody who talks to you on the phone. Always ask them, where can I find that? In the Sales and Use Tax Guide online. Get physical reference to what they're talking about or if possible, have them email you where they found that information or email their answer as to whether something is taxable or not. You'll always want to have proof in case you're audited that there is some legal backing, not just a person who told you because they could be gone by the time you're audited. So verify the things that you sell. Especially when we talk about electricity, propane, things that you're selling at your campground, those are going to be different state to state, so verify that. The second really big hole that I see is use tax. Most people don't even know what use tax is, so I'm going to tell you what that is today. If you purchase materials to be used in your campground, you may purchase them with a resale certificate. Resale means you're going to buy something and resell it. So if you buy supplies for your store and that you're going to resell and collect sales tax from the end user of those products, you don't have to pay sales tax when you buy those from your vendor if they're going to be resold. However, if you're going to use that product to provide services or to provide the sites in your campground, you should be paying sales tax on them and because you were the final end user of the product. So for example, if you go buy lumber to build some new walls around your sites and you go down to your Home Depot or your Lowe's, you're going to pay sales tax on that product. However, if you go buy canned drinks that you're going to resell in Your store, you're going to not pay sales tax on those because you're going to sell them to the final end user of that product, collect the sales tax there. So that clears up a little bit about resale. You should not be taking a resale certificate with you to Lowe's and Home Depot so that you can buy things cheaper. That'll just get you in trouble with the sales and use tax folks. All right, use tax, I alluded to this before. Use tax is sales tax in disguise. Use tax means that you bought a product and somebody wasn't liable to collect sales tax in your state, so they didn't charge you any. So the biggest place where this happens is if you buy something from an out of state vendor. There are a lot of vendors that campground owners use on a routine basis that are national vendors, people like utility supply, like your vendors for buying s' mores kits and things like that. When you buy products that you don't pay sales tax on, but you are the end user, you must voluntarily remit the sales tax to your state. Isn't that fun? Most people have never done this. This is the biggest point of contention in a sales tax audit that they will nail you for every time. Another kind of the examples are when you buy the jumpy pads that you're going to put in at your campground, that vendor is most likely not in your state. You may pay for 4, 6,000, $10,000 for that product, but you haven't paid any sales tax. You need to mark that and catch that so that when you file your monthly sales tax, you remit the use tax on that purchase, just like if you had bought it in your state and paid sales tax to your vendor. So that is the biggest place where I see problem areas in sales and use tax audits. So go through and take a look at who you've purchased things from. Especially, especially your larger purchases from some of those bigger campground vendors. Or if you are on the border of two states, you may have a little more fun to have to work out about paying sales and use tax. If there's anything that we can do to help you, please let me know. I'll be happy to help. Bye bye.
