Archive for Thursday, July 3, 2003

New sales tax law collecting critics

July 3, 2003

Dixie Kelly can only shake her head at the name given the state's new sales tax legislation.
The streamlined sales tax law, which became effective July 1, mandates businesses collect sales tax at the point of delivery rather than at the point of sale. That meant, Kelly said, if Doc & Bruties delivered a pizza to Burning Tree Golf Club north of the river, it would have to charge the sales tax applicable to Leavenworth County rather than the Johnson County rate of its downtown shop.
Kelly is the accountant for Caprine Supply. From the corner of 83rd and Shawnee streets, Caprine Supply served the specialized goat supply market through its annual catalog, filling phone and Internet sales to all 50 states and several foreign companies, she said.
Although the out-of-state and overseas sales aren't affected by the new state law, complying with its reporting requirements for the small Kansas piece of the business just got a whole lot more difficult, Kelly said.
"There are 21 different cities in Johnson County alone," she said. "To comply with the law, we have to do 21 different reports. For the small businessperson, it's going to be a nightmare to comply with state law.
"If that's streamlining, I don't know what the word means."
With Leavenworth County just across the river, and the cities of Shawnee, Lenexa, Olathe and Eudora only miles away, the consequences of the law would be felt by many De Soto businesses, Kelly said. Flower shops, restaurants and home-based businesses could feel its brunt, she said.
Gary Matthews, owner of American Cedar and Redwood, said he is familiar with point-of-delivery sales taxes because of the business he does in Missouri. That might give him an edge over other Kansas small businesses, but he said the change would still add to his overhead.
"It's going to be a pretty good-sized headache for the Kansas business he does from Johnson County to Topeka.
"I guess it's something we have to do, but we sure don't like it," he said.
The legislation was passed late in the session. The Revenue Department has promised to provide the business community with sales tax information needed to program software that can be used to make the sales tax reports.
Business owners can find a sales tax calculator at the Kansas Revenue Department's Internet homepage at http://kansasstatetreasurer.com, but information promised by the state still wasn't available, Matthews and Kelly said.
"Because we are computerized, we'll probably have software that will generate reports for us," Kelly said. "But we'll have to get reprogrammed for that. Yes, it's going to be expensive.
"The state has said it would be lax the next couple of months on audits," Kelly said. "We hope they are."
It might not be a consolation to Kelly, but Johnson County Budget Director Doug Robinson shared her confusion. As he worked on the details of the county's 2004 budget, Robinson said he was ignoring the new law.
'We're not factoring in anything new at this point," he said. "Nobody can really tell you what the implications would be. We think it will help us in the long run, but we're not even thinking about putting a dollar amount on that right now."
In defense of the Legislature, Robinson said state lawmakers had to make the changes if the state was to take advantage of any federal action opening up catalog and Internet sales to taxation.
Kelly agreed Congress would probably act to tax Internet sales. But she said the legislation needed much more thought and study than the end-of-the-session new Kansas law received.
"If that goes through, and it isn't uniform . . .
"In the state of Ohio, agricultural products are exempt from sales tax, but the farmer has to have an exemption number. Texas has the same exemption. And believe me if a farmer went to the trouble of getting an exemption, they want it applied to their products."

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