Any Tax accountants here?

WolfeMacleod · 02-09-2006, 07:09 PM

My tax accountant told me something yesterday that didn't sound quite right...but, she used to be one of those IRS people who audits the auditors so I dunno....

I run a small sole-proprietorship business. I do a lot of overseas sales, mostly to Japan.
Tax accountant mentioned yesterday they out of country sales do not have to be claimed on Federal income tax...so it's like you didn't make that money. I can take off over $10k from last year's income, she said.
She said it's similar to the state-to-state sales. If I sell something to someone in California, NY, etc.. I don't have to claim it on my WA state busines filings. Lucky for me, 99% of my sales are out of state. And it'll stay that way.

If my accountant is correct, I'm damn tempted to tell my Japanese distributor that they can have worldwide distributorship, and that everything runs through them....

Does her claim seem fishy to any tax accountants here?

vanwyk4257 · vanwyk4257's Garage

I'm not a tax accountant, but I am a commercial banker. I have a couple of customers that sell products to overseas companies, and as far as I know they do have to claim the revenues from those sales as income. I would definitely consult another very qualified CPA before you go with that advice. She may be right, but better not to find out she was wrong by getting audited. Good luck!

WolfeMacleod · 02-09-2006, 10:58 PM

Quote:

Originally posted by vanwyk4257
She may be right, but better not to find out she was wrong by getting audited. Good luck!

Totally agreed. I don't need to get screwed by some idiot!

EdT82SC · 02-09-2006, 11:15 PM

I don't see how this can be right. Think about it. How many companies here in the U.S. do a LOT of business overseas? They all have to pay taxes on the money they make from those sales.

State to state you don't have to charge sales tax on out of state sales. Your customers are responsible for paying the sales tax in their state. Now your state (or city) tax laws might be very different from CA's laws, but I bet your out of state sales will incur business tax. Your operations based in Seattle did the work of selling the product, and earned the profit from the sale. So your state can tax those in state business operations even though the product left the state.

I would see a another accountant.

WolfeMacleod · 02-09-2006, 11:41 PM

Quote:

Originally posted by EdT82SC
Your operations based in Seattle did the work of selling the product, and earned the profit from the sale. So your state can tax those in state business operations even though the product left the state.

I've duscussed that with our state tax system. They don't tax me for out of state sales. I've done $1100 worth in in state sales last year, and that's what I'll have to file on my state business tax.
That's why I restrict most of my sales to out of state only.

VaSteve · 02-10-2006, 05:36 AM

That's the whole idea behind why states want to start taxing internet sales.

Generally, the tax forms require you to report *all* income and then back off what doesn't get taxed in a particular area (State or Fed).

She's either trying to oversimplify it to the point of misunderstanding between you and her or she really doesn't know what she's doing.

Did she do your taxes last year?

I'm not a tax accountant, but I am a CPA. All the tax accountants are too busy to surf this time of year.

PM if you want to discuss it privately.

K.B. · 02-10-2006, 09:30 AM

If the money doesn't ever enter the states it can't really be taxed. (Like if it stays in a swiss bank account.) There are some complex rules about how much you can take in each year, but there is some allowance for untaxed funds.