Sales and Use Tax: Transactions in Virtual Electric Market Not Taxable in New York

A market participant's transactions in the New York Independent System Operator (NYISO) virtual electric market are not sales of electricity or electric service subject to sales tax. Virtual bids are separate from bids for the physical purchase and sale of electricity in the NYISO physical markets. The taxpayer does not purchase or sell any taxable items or services when the taxpayer merely buys or sells in a NYISO virtual transaction. In addition, when the taxpayer acts solely as a participant in the NYISO virtual market, the taxpayer is not a vendor and is not required to register as a vendor for sales tax purposes.

TSB-A-07(20)S, New York Commissioner of Taxation and Finance, July 26, 2007.

Avoiding, not evading, home-sale taxes

Bankrate.com: Avoiding, not evading, home-sale taxes
When it comes to taxation there is always room to avoid taxes, at least in the short-term. CPA George Saenz suggests two options when it comes to home sales.

Sales & Use Tax Email

Every month, Olivier & Associates sends out a newsletter that contains free Sales & Use Tax tips. I'm sure to save them to my computer every month, as they are very helpful and I never know when I may need them in the future. Here is August's tip which I recieved today:

Sales & Use Tax Tips for AUGUST 2007
Sales Tax Audits - Are you prepared?
Dealing with a Sales Tax audit can be intimidating and full of costly pitfalls. However, with proper representation, you can walk away from an audit with a favorable outcome. A field Sales Tax audit begins when an auditor contacts you by letter or phone to schedule a pre-audit meeting. In this meeting, the auditor will typically:
-Present an audit authorization letter and other documents for you to sign.
-Explain what records are required to complete the audit.
-Ask you to provide additional information such as details of your accounting procedures.
To prepare for the scheduled audit, you will need to gather and organize various records that will be requested by the auditor. Auditors often request more than they actually need to see so it is best to have the information request reviewed by a qualified Sales & Use Tax specialist. Giving auditors too much or too little information is a quick way to get the audit off to a bad start. Too much information can potentially uncover liabilities that might otherwise have gone undetected and can also
unnecessarily take up a lot of your time; too little information might cause the
auditor to be suspicious and increase the scope of the audit.
O&A can review the auditor's information request and help you narrow it down to what is absolutely essential. Also, prior to the audit meeting, it is generally a good
idea to understand where you potentially have Sales Tax Exposure and
prepare associated defenses. This information will be useful for upcoming
discussions about the audit approach (e.g., detail vs. sample), test period
selection criteria, projection methodology, etc). Proper pre-audit planning
will make the Sales Tax audit process move forward quickly and smoothly for
everyone involved. Pre-audit planning can most efficiently be accomplished with
the help of a Sales & Use Tax specialist. For more information visit our Audit Assistance & Advocacy webpage. * This tip is intended to provide general information only and is not to be considered as a substitute for professional advice.

Taxability of Computer Software

Computer hardware is generally taxable, with certain exceptions for computers used in manufacturing, production, and research. Similar exceptions may exist for software that would otherwise be taxable. “Canned” (prewritten) software is also generally taxable. Many states distinguish between “canned” , which can be purchased off the shelf and used in a customer's computer without any modification, and “custom” software, which is generally a program created to meet a specific customer's needs. In some states, a canned program modified to meet a particular customer's needs qualifies as a nontaxable custom program. States that may provide exemptions for Custom software include: Alabama, Arizona, California, Colorado, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachussets, Michigan, Minnesota, Missouri, Nevada, New Jersey, New York, North Carolina, North Dakota, Oklahoma, Pennsylvania, Rhode Island, Utah, Vermont, Virginia, Washington, Wisconsin and Wyoming. Contact a Sales & Use Tax professional for more information.

Penalities on the Rise

We are noticing a recent upsurge in States implimenting penalties. The reasoning behind these fines is the fact that penalties increase taxpayer compliance, and penalities provide the State with additional revenue. Keep in mind that states do not always use penalties reasonably, and you have the right to attempt to abate such fines. A Sales & Use Tax specialist can help assess and abate penalties and interest.

Pre-Audit Game Plan

Dealing with a Sales Tax audit can be intimidating and full of costly pitfalls. However, with proper representation, you can walk away from an audit with a favorable outcome. To prepare for the scheduled audit, you will need to gather and organize various records that will be requested by the auditor. Auditors often request more than they actually need to see so it is best to have the information request reviewed by a qualified Sales & Use Tax specialist. Giving auditors too much or too little information is a quick way get the audit off to a bad start. Too much information can potentially uncover liabilities that might otherwise have gone undetected and can also unnecessarily take up a lot of your time; too little information might cause the auditor to be suspicious and increase the scope of the audit. O&A can review the auditor's information request and help you narrow it down to what is absolutely essential.

Who We Are

Olivier & Associates LLC, headquartered on Wall Street, is a highly specialized team of nationally recognized accountants, attorneys and former tax state auditors who understand Sales, Use and Transaction Tax law from both sides of the table. Our clients range from Fortune 1000 companies with annual revenues in the billions, to businesses with revenues closer to $250,000 annually.
Why do they choose us? Because they recognize that state Sales & Use Tax laws are complicated and ever changing, and sales tax specialists have a dramatic impact on their bottom line. Whether you conduct business in a single state or multiple states, the complexities of Sales & Use Tax require responsive Sales & Use Tax specialists who know the law, deliver solutions, and keep your business moving forward.