Shopping online has become a big part of our consumer's economy. In fact, anything you can purchase in a store, you can almost always buy online and this is great news for those people in Oklahoma who own a business, don't have the time to go out shopping for goods, or are not close enough to a brick and mortar store that has what they need. Online shopping fills the gap for consumers, both business owners and individuals.
But as you sit down with your computer, lap top, or mobile phone to purchase goods online, have you ever noticed whether or not sales or use tax was added to your purchase? Chances are, sales tax may have been included, but probably not use tax. Let's look at the following example of an individual or business owner buying goods online from a vendor located in Texas. The business owner purchases a wholesale amount of napkins for their catering business but there is no use tax associated with the purchase. This could turn out to be a problem once the Oklahoma Tax Commission (OTC) catches on.
Why? Because the OTC requires that when a business located in Oklahoma purchases goods out of state and uses those goods in the State of Oklahoma, the business owner must pay a 4.5% use tax on the goods. The OTC can not charge sales tax on goods purchased out of state, but the use tax always applies.
Now, let's say you've been in business for a year or more, and you've been purchasing goods online from Texas, dutifully paying sales tax for that state but not paying use tax for Oklahoma. When it comes time to do your business taxes and you list all of your expenses, including the napkins you bought for your catering business and any other goods purchased online from Texas, the OTC will see a big red flag and wonder why you didn't pay use tax.
The problem now is that once the OTC figures this out, you will owe the entirety of the use tax on the goods you purchased. At this point, the OTC may audit you and calculate an even larger amount owed for the use tax. To avoid paying higher amounts on use tax to the OTC during an audit, it is important to hire a tax attorney before moving forward. When it comes to dealing with your taxes in Oklahoma, things can get complicated. However, hiring the right tax attorney will help you through the maze of an OTC audit in regards to use tax. This is especially important to business owners who need help navigating the tax world while keeping their business running successfully and profitably. If you have been audited by the OTC concerning use tax, don't hesitate. Contact a local licensed attorney who deals with the OTC on a daily basis. Call Travis W. Watkins Tax Resolution and Accounting Firm for your Free consultation at 800-721-7054.
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