Wow, I had an unpleasant letter from the Florida Department of Revenue.  Apparently they are targeting photographers who buy equipment online and forcing them to pay sales tax on any online purchase of equipment where they did not pay sales tax.  

That means purchases from B&H, Adorama, Amazon, etc.  going back 36 months.  Even if you weren't in business 3 years ago they still want to charge back sales/use tax if you are using the gear to make money.  

I called for clarification after getting the letter and asked if it was just be because I recently incorporated.  They said no - they are combing their records for anyone doing business in Florida as a photographer.  My accountant suggested that perhaps B&H or some other online photo retailer is being audited.   I guess I won't ever know for sure how I turned up in their database.

So now I have to send them all my photo gear receipts dating back as far as 2006 and they will send me a bill for 7% tax.  They are waiving the interest and penalties because I am cooperating.    Oh joy.

I never even knew I was supposed to be paying sales tax on out of state purchases  

Anyone else in Florida had this happen?  If not, you may, so here's a headsup.

1. They're supposed to go after the retailer, for not collecting sales tax. Not the customers.

2. I thought the federal government forbid this - guess I'm wrong?

3. The retailer is in another state. So "where" did the transaction take place? Another case of clueless polititicans and bureaucrats who still don't understand the internet.

4. If they're not willing or able to go after the retailer's records, they're just naming some names and asking if you bought anything from them. You could say NO, at some risk of course.

I think this crazy action shows how desperate some of the states are for money right now. I believe Florida is in particularly tough shape.

This reminds me of a scam that happened recently in Ontario,

Phone calls from 'various' government agencies stating records need to be updated etc - and they confirm your identity by asking you for your SIN number, and address etc... basically they were just phishing by telephone for personal data.

If it is a true government agency phone call they should be able to tell you your sin and provide you with the personal information.

Ask for a phone back number that is verifiable in your government directory, and employee name, and reference number for the call - and call back the government agency from the telephone book - and try to verify the caller - do not give out personal info over the phone.

This reminds me of a scam that happened recently in Ontario,

Phone calls from 'various' government agencies stating records need to be updated etc - and they confirm your identity by asking you for your SIN number, and address etc... basically they were just phishing by telephone for personal data.

If it is a true government agency phone call they should be able to tell you your sin and provide you with the personal information.

Ask for a phone back number that is verifiable in your government directory, and employee name, and reference number for the call - and call back the government agency from the telephone book - and try to verify the caller - do not give out personal info over the phone.

I wish it was a scam, but no.  It was not based on a phone call, but a letter.  The information in the letter is also available on the Dept. of Revenue website.

Sad to say, this is the real deal.k

I totally agree with the comments about the state being cash strapped and that being a likely reason for this.  Right now it appears to be photographers being targeted but I am certain they will pursue other industries too. 

They're going to get a grand or so from me and multiplying that by hundreds of thousands or even millions of small business owners it will add up to quite the windfall.

Something about this sounds so wrong.. the retailer is meant to add sales tax to the item you buy, if there is no sales tax marked on the item, you presume it is included in the overall cost.. the the retailer pays the tax back to revenue..

I don't understand how they are chasing the buyer, it is the seller they should be chasing, and how do they know the sales tax was not included in the selling price? I think you should consult with a laywer..

You may be right.  However as it stands I owe around 1k.  Based on prior experience with lawyers, I would be damned lucky to get off that lightly in lawyers fees. 

Lisa,

It is generally known as "Use Tax" and has likely been written into your state sales tax code for a long time but few knew about it, or chose to ignore it. They are likely targetiing photographers because generally purchases run into in high volume dollars and can be repetitive. I am sure that somehow computer junkies will be found out as well, again, high volume and high price tag. After that, they will likely try to round up all of the soccer moms purchasing gobs of stuff on Amazon and Overstock.

Here in NY in they have gone on the campaign the past few years. There is now a line, even on the NY state income tax short form, for Use Tax. The line cannot be left blank. It must be either Zero or an amount of dollars. They explicitly state "online and all other out of state purchases" or something to that effect.

Amazon purchases are now taxed in NY State (Amazon took it to court and lost) no matter where the vendor is. It used to be that if a camera vendor was in NY, yes I would get charged tax if the item was not purchased for customer resale under a resale tax ID. A few months ago I had purchased some kitchen items from a specialty vendor in IL, and yes it was taxed through Amazon.

Even just a few years ago, you could purchase out of state items with no tax with no problem. But now with easy ordering on the web becoming huge business, larger vendors are being sought out and are being "persuaded" to abide by NY State Sales Tax reciprocal agreements. Florida may have a similar scheme in mind.

If you browse through your Florida State Sales Tax Code, I am sure that something called Use Tax, or something similar, is already in the code and has likely been here for at least a few years. It's just never been at the forefront though until now as states start to scrounge for revenue.

I am sure the tax gathering activity ramps up, the issue will make it big in your local media headlines, as more people are being made aware of the collection process. If they are going back 3 years retroactive, my guess is that's when it was written into your tax code.

In NY Sales Tax Code, the concept of Use Tax has actually been in place for many years. It was virtually unknown to those not in business. So NY went after all of the internet buyers who had no knowledge of the code.

Sorry to hear about that Lisa but honestly you'd be a lot worse off if you lived in Europe __ although that's probably precious little comfort right now.

But I would be able to comfort myself with the >$600/month my family would save by having National Healthcare...

Death and taxes eh?

Amen Brother!  

FWIW, here's the relevant part of the law from the DOR website.  Stormchaser is right, it is a Use Tax.

Most Florida citizens are not aware that this state has a "use tax." Use tax normally applies to items purchased outside Florida, including another country, which are brought or delivered into this state and would have been taxed if purchased in Florida. The use tax rate is the same as the sales tax rate, 6%.
Examples include:

    * Purchases made through the Internet.
    * Mail-order catalog purchases.
    * Purchases made in another country.
    * Furniture purchased from dealers located in another state.
    * Computer equipment ordered from out-of- state vendors advertising in magazines.

If an out-of-state seller fails to collect sales tax, it is your responsibility to comply with Florida law. You must submit payment directly to the Florida Department of Revenue. This payment is required by section 212.06(, Florida Statutes. To file and pay use tax, complete an Out-of-State Purchase Return (Form DR-15MO). If the tax owed is less than one dollar, you do not have to file a return.

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Before everyone gets all atwitter about scams or starts with the conspiracy blather here is my experience:

I got socked with a similar tax bill in Illinois when I sold an Illinois business about several years ago. When the state sales tax department reviewed and signed off that I didn't have any sales taxes due the state that my business collected, they also checked my expenses listed on my Illinois income tax returns. The line on the return was called "Use Taxes" and on that line I should have listed (verified by my CPA) out of state purchases that the sellers were not required to charge in their state. Thus my state would benefit from sales taxes on goods flowing into the state that weren't collected by the originating states.
 
So, yes it is all quite legal. And yes I paid the $2,000+ that was due. The odd thing about this tax is that virtually nobody bothers to pay it and unless you get audited or need the state to "sign off" on a business sale to another buyer, you will get billed for taxes on the out of state purchases, plus penalties and interest. In my case, gratefully, they were only interested in going back 3 years. And only charged me interest on the amount due.

I think you can anticipate more of these collections to occur as many states are scratching around for dollars.

Given the trillions of dollars in debt the current crop of politicians seem bent on amassing, hold onto your wallet for the inevitable federal collection onslaught. What you might really want to worry about is the US VAT tax schemes that are now making the Washington rounds.

Thanks for posting that legal information Lisa, wow, I'm also in Florida, so I guess my letter is already on its way...a fathers day gift from dear Uncle Sam  
Edited: Thanks for the links stormchase.

Same thing here in Washington. We have to pay 'use tax' for state and county taxes (8.3%) for anything bought for use in the business.  I pay it quarterly.

Something about this sounds so wrong.. the retailer is meant to add sales tax to the item you buy, if there is no sales tax marked on the item, you presume it is included in the overall cost..

That isn't how things work in many states in the US. First the price quoted never includes the sales tax. Second, most states have a use tax, meaning that if you are a resident in that state and buy something out of state for use at your residence, they expect you (the purchaser) to pay the use tax to the state directly.

I used to live in New Hampshire (no sales or income tax) which borders on Massachusetts (both) and a lot of businesses set up along the border (on the NH side) to pull in buyers who were Mass residents. One furniture store had to display a big poster of a blow up of a letter they had received from the Massachusetts Dept of Revenue, saying that deliveries of furniture to Massachusetts required payment of Massachusetts Use Tax and that they'd be monitoring the parking lot for vehicles with Massachusetts tags loading up furniture.

I'm sure that Lisa's letter is legit, but it's unfortunate they can go back 3 years to get the tax.

Lisa, if it's of any consolation, you can claim it on your federal tax return. Generally either state income tax or state use tax can be claimed on federal tax return as one of the itemized deductions. For most people, at least here in California, state income tax is usually much higher. Since there is no income tax in FL, you might be able to claim all of this on your federal tax return.

Florida has other taxes you're supposed to pay, but probably don't.  I remember something about being supposed to list investments and having to pay taxes just for having them.

I'd like to know how they would know how much.  "the only thing I bought was a lens cap".

I doubt they have any way to know for sure, but I am assuming that if they are targeting a large group of photographers, as they claim, that they will get a good feel for what is average consumption.

Also, I don't know if they have access to my federal return, but if so then they know the amount of business expenses I claimed.  Obviously the bulk of that was bought in state and paid tax on, but they may have a rough % in mind and if I fall way short of that it might get them curious.  

If I were to fudge they might very well audit me and then I get to pay the interest and penalties that they are waiving for now.  Not worth the risk to save 1k.

ETA:  Thanks for the tip Goldenangel.  I will definitely be deducting it