April 23, 2011
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Comments
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Ken,
In response to the Florida sales tax issue. It is illegal to charge sales tax on real property in Florida which includes alarm systems. Monitoring and fire alarm inspections are required to be taxed, but there are "exceptions" written into the law that give multiple scenarios of instances where you do not need to charge sales tax. I have my distributors tax me at the time of the sale so the tax burden on equipment is already paid. I just have to recoup it in my sale price.
Florida Dealer
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Ken,
For what it's worth...
Here in Arkansas, we have to collect state and local sales tax on each
monitored account and remit it to the State of Arkansas. But note that
while the state tax is a fixed rate, the local sales tax varies by
municipality, which makes it necessary for us to have multiple tax rates
set up in our accounting software (and have to change every time a
particular city changes its sales tax rate). As it was explained to me,
we are providing a service (monitoring) and services are taxable the same
way that goods are. But we do not pay excise-type taxes on
telecommunications. I used to be an Internet Service Provider (until
2005), and while it may have changed since then, at the time we did not
have to charge sales tax to our subscribers because we were already paying
taxes on the telecommunications services every time the telco billed us
for our T1 lines (plus those onerous Universal Service Fund taxes).
A question worth asking would be whether ISPs are exempt from collecting
sales tax from their subscribers. If so, then I would think that the
telecommunications from alarm panels should be exempt from sales tax as
well, since the alarm subscriber is paying any applicable taxes on the
phone line when he pays his phone bill and the Central Station, regardless
of where it is located, pays any applicable taxes on its phone lines when
it pays its own phone bill. To me, any additional taxes imposed, since
both ends of an alarm communication are already paying their applicable
taxes, seems like unwarranted double-dipping by the state. I'm glad
Arkansas just taxes monitoring as a service. While it does create more
work for our accounting staff and it does make monitoring cost more for
our subscribers, it's still revenue-neutral for us. We collect it with
our left hand and give it to the State with our right, and few of our
subscribers have ever objected since they are used to paying sales tax on
everything else. The few who did object when we had to implement it all
left and now live on a compound somewhere in Wyoming.
Lee Hearn
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This tax stuff is over my head and likely not of much interest to you guys but IÂ’m not sure. I donÂ’t think weÂ’re facing this issue here, yet. The first section is complicated. Second personÂ’s comments make it much more simple.
Regards,
Kevin Buckland
True Steel Security & Care Link Advantage