(long) Out-of-town License Discussion

[David ilvedson]

> Date:          Tue, 22 Apr 1997 19:12:29 +0000
> From:          Barb Barasa <bbarasa@mind.net>
> Subject:       (long) Out-of-town License Discussion
> To:            pianotech@byu.edu
> Reply-to:      pianotech@byu.edu

HI Barb,

I originally sent that post.  I have many customers through out
San Francisco and the numerous cities on the Pennisula below SF.
I realize now that if I hadn't been doing business with a city
agency, namely the Recreation Dept., the city would have no
record of me.  I did notify the Rec. Dept. and they looked into
it.  Their advice was to raise my prices to them to cover the
extra cost!  Go figure!!!!  That is what I will do unless the
city doesn't notify me of failure to pay the business
license..(I haven't paid it yet).  If each city I serviced pianos in
demanded a business license, I would be in big trouble.  My
prices would have to sky-rocket to cover the extra fees.  MY
ADVICE TO FELLOW TECHNICIANS IS NOT TO DO WORK FOR CITY
AGENCIES!!!  Once they have you on file they will never let go!

ilvey, RPT
Pacifica, CA


> A while back someone said he was notified that he would have to get a
> license in a town which was not where his business was located.  I
> saw the following article at my temp office job today, and thought it might
> shed some murky light on the subject, altho it refers to a trade show
> and sales tax rather than services and a license.
>
> If I knew who had the original problem, I wouldn't send this to the
> whole list!  Delete now if you're not interested!
>
> In this column in CFO & Controller Alert (newsletter), a situation is
> presented and readers are asked what the outcome was.  The outcome is
> published later in the same edition.
> =====
> DO TRADE SHOWS CREATE A LOCAL TAX LIABILITY?
>
> "If you hold another trade show here," said Joe Thomas of teh Florida
> state tax office, "you'll owe tax on sales in our state."
>    Blue Belle CFO Evan Shields shook his head.  "I don't agree," said
> Evan.  "Only about 15% of the attendees at our show are from Florida.
>  And most of them have been customers for years."
>    "The show establishes a businesspresence in Florida," said Joe,
> "which makes your sales in the state taxable."
>    "I don't see a trade show establishing a presence," said Evan.
> "We don't have an office or permanent reps in the state."
>    "Besides," Evan continued, "There are just as many people at the
> show from, say, New York as from Florida, and they don't tax us for
> mail order sales."
>
> STATE DECIDES WHAT IS TAXABLE?
>
>    "That's for New York to decide," huffed Joe, unimpressed.
> "Florida decides what is taxable within its borders and what is not."
>
> Blue Belle went ahead with the show, and Florida ordered it to pay
> sales taxes.  Did Blue Belle have to pay the tax?
>
> ...... No,  The Florida Supreme Court ruled for Blue Belle.  BUT THE
> RULING WAS MORE SYMPATHETIC TO THE TAX DEPARTMENT
> THAN IT FIRST APPEARS.  [emphasis mine]
>
>    The state tax authorities argued that by holding a trade show,
> Blue Belle created a "substantial nexus," or business presence, in
> Florida.
>    That's the test laid down by the US Supreme Court to determine
> whether a company is liable for a state's taxes.  But the court ruled
> that the mere fact of a short trade show does not create a business
> presence.
>    The court noted that most of the attendees were from out of state,
> and that many were already long-standing customers of Blue Belle.
> Thus the company didn't create a customer base in Florida as a result
> of the show.
>    THERE'S THE RUB.  The case could have gone the other way if
> Florida had proved that the show created a substantial customer base
> in the state.  And what is or isn't  "substantial," of course, is a
> subjective judgment.
>
> ======
> Apparently the "substantial nexus" test applies thruout the US as
> far as state tax departments.
>
> Barb Barasa
> Ashland OR
>
>