Did You Pay Use Tax?

A Michigan-based article states that the state is expected to lose $482 million in revenue this fiscal year as a result of taxpayers not reporting use tax on purchases completed online, over the phone, or through catalogs. The state law requires residents to pay an equivalent 6% use tax on remote transactions. The state relies on voluntary reporting, however, and very few residents follow through.

Many people don't realize that they're supposed to pay the tax. When Michigan first put a use tax line item on 1040 tax forms in 1999, it saw revenue jump from $240,000 the previous year to $2.9 million.

Michigan is not alone when it comes to this problem. Every state with a sales tax has a companion tax for remote purchases, but the collection gap has widened in recent years due to the explosion of online sales. Internet retailers are not required to collect or remit sales tax like local brick-and-mortar stores, who say they are at a price-point disadvantage as a result.

Make sure your small to medium-sized businesses is sales and use tax-compliant. Vertex Inc. offers a cloud-based solution that is designed to save time, effort, and risk associated with calculation, return, remittance, and compliance. Complete and submit the form on the right for more information.