Too_Many_Tools
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Great way to make new money for the State coffers...
Patriotic Americans agree.
But will the NRA support it?
They will if they believe in America.
TMT
Some states asking the tax man to get tougher
Associated Press - Sun, 27th May 2012 03:55 PM
MONTPELIER, Vt. (AP) — Dentist Frank Illuzzi was stunned when Vermont
tax collectors began demanding a 6 percent sales tax on the value of
toothbrushes and floss he hands out to patients. Senior care facility
operator Jay Grimes was similarly surprised to get a USD 350,000 bill
slapping a 9 percent restaurant tax on the meals served to residents
in the dining room. Landscaper Richard "Buckwheat" Lowe got USD 18,000
in bills taxing him for the first time ever on the mulch he sells.
Vermont is among a handful of cash-strapped states getting more
aggressive about collecting every tax owed — hiring more collectors,
hounding scofflaws and exploiting corners of their tax laws that
haven't been enforced in years. It's an effort to avoid what
politicians from both parties are dead set against: raising taxes.
"You don't want to raise taxes until you're very sure the taxes that
people are supposed to pay are being paid," said Rep. Janet Ancel,
chairwoman of Vermont's House Ways and Means Committee.
Under adamant no-new-tax Democratic Gov. Peter Shumlin, Vermont has
added about 10 new tax compliance auditors and has stepped up efforts
to scour records in rural areas, and add greater scrutiny to
businesses ranging from auctioneers to Internet-based cloud-computing
services.
But for all its aggressiveness, Vermont's results have been mixed. The
state reaped about USD 57 million during the 12 months that ended in
June, up from about USD 50 million five years earlier — a net gain of
USD 7 million. That's a tiny fraction of the state's USD 1.3 billion
general fund, but it has helped lawmakers close a budget gap that at
the beginning of this year was projected to be USD 46 million.
Other states have had much more success.
Idaho hired 48 temporary auditors and collectors in fiscal 2011 as
part of Gov. C.L. "Butch" Otter's effort to boost revenues without
raising taxes and narrow the so-called "tax gap" — the amount of taxes
in the state that are due but go unpaid, either by error or by intent.
The added staff brought in more than USD 26.3 million, more than
double the original estimate of USD 11.5 million. All the positions
were made permanent this fiscal year.
Idaho's additional tax receipts are just a sliver of its roughly USD
2.7 billion budget, but they helped the state post a budget surplus
for the first year since the Great Recession began in 2008, money that
helped give state workers their first raises in five years.
Oklahoma added about 30 people to its tax collection staff since 2010
in an effort to help close a USD 900 million budget shortfall. The
state collected nearly USD 35 million in delinquent taxes during the
12 months that ended in June, and overall sales tax revenues jumped by
about USD 159 million from the first 10 months of fiscal 2011 to the
same period in fiscal 2012.
States have a variety of strategies for following up when audits find
tax scofflaws. One tactic in California is public shaming: The state
publishes lists of individuals and businesses behind on income or
sales taxes.
Others take a kinder approach. New York responded to the recent
recession by stepping up its program to forgive parts of back payments
due from taxpayers in economic distress.
Gale Garriott, executive director of the Federation of Tax
Administrators, a Washington-based group that tracks state tax policy,
said the handful of states that have taken a tough approach by hiring
more auditors have generally been rewarded with more revenue.
"The return on investment is quite good. They bring in several times
more than their salaries," he said.
Vermont's get-tough approach, however, is measured in hard feelings as
well as dollars. Some aggrieved taxpayers have been contacting
lawmakers, and debates in which legislators try to rein in what some
see as an overzealous tax department have become a regular occurrence.
Illuzzi, a Brattleboro dentist, complained to his brother, state Sen.
Vincent Illuzzi, about the demands for sales tax on the free
toothbrushes, toothpaste and floss he gave out.
He won an amendment to a tax bill just before the Legislature
adjourned in early May — a bill Shumlin later signed into law — that
exempts the dental goods from the sales tax.
"Some dentist wants to give a kid a toothbrush and they want to tax
it. That's outrageous," the senator said.
A similar legislative change came after The Gables at East Mountain,
an independent living community for seniors near Rutland, was hit with
a USD 350,000 back-tax bill dating back eight years, with the state
saying the meals it served should have subject to the 9 percent state
meals tax for restaurants.
Lawmakers protested that the Gables' dining room wasn't like a
restaurant, because it served residents of the facility, and people
aren't taxed when they eat at home.
As lawmakers changed the law affecting the Gables going into the
future, the state canceled its past tax bill.
"We were obviously flabbergasted to get a tax bill like this the week
before Christmas," said Grimes, executive director at the Gables. "It
was absolutely crazy."
But Grimes said he was pleased with the outcome after local
legislators intervened.
Lowe, the landscaper, hasn't been so lucky. He operated his
landscaping business for nearly all of its 36 years with the
understanding that bark mulch, soil additives and similar products he
sells were exempt from Vermont's 6 percent sales tax.
That changed in 2006, but no one told him, Lowe said, until he got
past-due tax bills for USD 18,000 last year, which he is now fighting.
"You don't just change the taxes and laws and not tell somebody," he
said.
Steve Jones, owner of the Metowee Mill Nursery in Dorset, said he also
missed the 2006 tax law changes that removed the agricultural
exemption from sales tax for several of the products he sells.
Vermont's tax department sent out a letter at the time talking about
changes affecting beer and footwear, he said, nothing about garden
products.
He said he didn't realize there was a tax until he got a letter
demanding USD 41,000 in back taxes, interest and penalties in
December.
"Just educate me, tell me. I want to pay my fair share," said Jones,
who is appealing the bill.
State Tax Commissioner Mary Peterson acknowledged some taxpayers might
be confused about the changes, and she said her agency is working on
improving how it educates the public about tax policy. But she also
defended the tougher tax collections.
"It certainly is your responsibility when you have a business to be
keeping up on the rules," she said.
___
Associated Press Writers John Miller in Boise, Idaho; Sean Murphy in
Oklahoma City; Judy Lin in Sacramento, Calif.; and Michael Virtanen in
Albany, N.Y., contributed to this report.
The latest installment in a joint project by The Associated Press and
Associated Press Media Editors on the fiscal crisis facing U.S. states
and cities and how American lives will change because of it.