Sales Tax Audit -- Need some advice please

Discussion in 'Business Operations' started by griffithtlc, Mar 21, 2006.

  1. griffithtlc

    griffithtlc LawnSite Member
    Posts: 50

    Got a call today that we are getting audited for sales tax here in Minnesota. I did not know that we had to charge sales tax for this service. I did some research and found out thre is a sales tax on everything that we offer except snowplowing. We run a legitimate business and have stayed as as legal as possible (until now). This will be our 3rd full year and have never charged sales tax. We have kept very good records so I am not worried about that part but if anybody has any advice on what they will be checking for or what exactly happens during a audit like this I would greatly appreciate it.

    We have a cpa do the taxes every year. We try to be as legal as we can and I know it is my fault for not checking on this. (I can only blame myself)

    Thanks for any advice you can give me.
     
  2. griffithtlc

    griffithtlc LawnSite Member
    Posts: 50

    Just in case you look at the profile, my brother put in his information. My dad owns the company and is family run.

    Thanks again
     
  3. Trinity Lawn Care  LLC

    Trinity Lawn Care LLC LawnSite Senior Member
    from NJ
    Posts: 946

    I would contact your CPA they would be able to better help you with this. All I know is that pretty much all services are taxable. I wish you the best of luck. Again, best advice would be contact your cpa.
     
  4. sheshovel

    sheshovel LawnSite Fanatic
    Posts: 5,112

    I am afraid you will be charged for all that tax you did not charge for and have to pay it out of pocket
     
  5. Trinity Lawn Care  LLC

    Trinity Lawn Care LLC LawnSite Senior Member
    from NJ
    Posts: 946

    Yeah, what Sheshovel said. I would still contact your CPA and have them put you on the right track for all your future biz.
     
  6. PGA

    PGA LawnSite Senior Member
    Posts: 710





    Check state law. Here in KS the only thing we charge sales tax on is something that is left on the property i.e. landscaping supplys, chemicals, irragation supplys etc.

    Things like mowing, cleanups, snow removal and others are not taxable items because techincally we arent selling a product.
     
  7. griffithtlc

    griffithtlc LawnSite Member
    Posts: 50

    That's what I was afraid of. That is going to put a big dent in the budget this year. I am going to talk to the CPA and definetly get it set up so this does not happen again. I found this page:

    http://taxes.state.mn.us/taxes/sales/publications/fact_sheets_by_name/content/BAT_1100109.pdf

    This explains what has a service tax here in Minnesota.

    This is going to be a spendy lesson. Hopefully other people see this and saves them the headache.

    You learn something new everyday

    Thanks again and I will let you know how it turns out.
     
  8. Trinity Lawn Care  LLC

    Trinity Lawn Care LLC LawnSite Senior Member
    from NJ
    Posts: 946

    They will probably let you pay on a payment plan. I am sorry to here that this happened to you. Hey, look at the bright side. At least it wasn't ten years down the road and you owed thousands and thousands. I hope everything works out o.k. for you.
     
  9. grasswhacker

    grasswhacker LawnSite Gold Member
    Posts: 3,873

    No taxes on services in KY, thankfully.
     
  10. griffithtlc

    griffithtlc LawnSite Member
    Posts: 50

    I wish this would have happened about 3-4 weeks ago becuase we sent out our contracts for this year and most of them have already been sent back to us. Now I will have to decide to either eat the sales tax charge this year or try to explain to our customers that we have to charge a sales tax even though they have signed our contract with there final prices.

    Might be time to move to KY! Or become a wal-mart warrior and forget about all the laws all together. Mabye not, just make the best of it and move on.
     

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