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Tax Facts Vol. 9, No. 2

Tax Facts Index

TAX FACTS

EAST BATON ROUGE PARISH

Department of Finance

Vol. 9, No. 2

April 1998

Use tax transactions

As part of the Total Quality Management (TQM) process, the City of Baton Rouge Auditing Division sampled its 1997 sales/use tax audits to identify the most common taxpayer mistakes. The most common audit issues are:

51%
33%
6.5%
6.5%
3%

Failed to pay use tax on taxable purchases.
Charged sales tax to customers incorrectly.
Collected taxes and did not remit them to the City-Parish.
Paid tax on non-taxable items (refund audits).
Mathematical errors occurred when the tax return was prepared.

Because Use Tax consisted of over half of our audit findings in 1997, we will discuss this tax compliance problem in this issue of Tax Facts.

Most retail dealers are familiar with the collection and payment responsibilities for sales tax purposes. Dealers collect sales tax on certain retail sales of tangible personal property and the sale of certain services. They remit these taxes directly to the City-Parish. However, many retail dealers are not aware of their responsibilities for use tax purposes. Dealers that are not familiar with use tax requirements may have a substantial tax liability. The purpose of this article is to advise dealers of basic use tax requirements.

Use tax applies to tangible personal property purchased for use, consumption, distribution or storage for use in this Parish. Use tax is due only when a sufficient local sales tax has not been paid on the purchase. The use tax does not apply to property on which a local sales tax of at least 4% has been paid. Nor does a use tax apply to property which is exempt from sales tax. The purpose of the use tax is to insure that all articles of tangible personal property used in this Parish are uniformly taxed, regardless of where the items may have been purchased. It is based on the actual cost or the reasonable market value, whichever is less. All purchases subject to use tax must be reported on line 14 of the Sales and Use Tax Report.

Situations in which local sales tax is frequently not paid include:

  1. Purchases from out-of-parish vendors or out-of-state vendors. These vendors may not be registered to collect our tax when such purchases are delivered in this parish.

  2. Items purchased for resale taken from inventory for use by the business.

Some examples of items which are frequently subject to use tax because local sales tax has not been paid include:

  1. Office furniture, equipment, computers and supplies.

  2. Advertising specialty items such as T-shirts, caps, pens/pencils, and calendars.

  3. Construction tools, equipment and materials purchased by contractors and sub-contractors.

  4. Items purchased for lease or rental purposes.

  5. Tools and equipment purchased by repair dealers.

  6. Medical tools, equipment and supplies purchased by physicians, dentists, and hospitals.

  7. Items ordered from out-of-parish or out-of-state catalog companies.

Property which is purchased for resale is not subject to use tax.

It is very difficult to discuss all aspects of use tax transactions in this newsletter. If you have any questions, contact the City-Parish Revenue Division.

Sales tax due dates

Following are the sales tax due dates for the second quarter of 1998:

For the
Month of

April
May
June

Tax Due
Date

May 1
June 1
July 1

Delinquent
Date

May 21
June 23
July 21

Returns bearing a U.S. postmark on or after the above delinquent dates will be assessed penalty, interest and loss of vendor's compensation. Remember to mail your return early.

Taxpayer topics

Tax Facts is issued quarterly by the Department of Finance/Revenue Division to provide information concerning developments and policies regarding the collection of local sales tax within East Baton Rouge Parish.

The Revenue Division invites any suggestions, questions or comments that you would like addressed in future issues of Tax Facts. Please address these items to:

City of Baton Rouge
Department of Finance
P. O. Box 2590
Baton Rouge, Louisiana 70821-2590

ATTENTION:
Steve Thomas,
Assistant Revenue Manager

Need help?

Taxpayers may call the Revenue Division to receive assistance at the following telephone numbers between the hours of 8 a.m. and 5 p.m., Monday - Friday.

Sales/Use Tax
Occupational License Tax
Business License and Permit Office
Fax Number

(225) 389-3084
(225) 389-3278
(225) 389-3278
(225) 389-5369