Thursday, March 08, 2007

Some more impacts and questions about the Gross Receipts Tax

From the PDF (page 32)

Alternative taxes - Gaming and insurance activities will be exempt from gross receipts taxation. Insurance products are subject to retaliatory taxation, and gaming activities are subject to other existing taxes, so that the receipts derived from these activities will not be subject to gross receipts tax. State tax rates on riverfront gambling will be modified, and a franchise fee assessed on license renewal. In addition, the taxation of utilities will be amended to clarify its treatment under the gross receipts tax.

The Lottery Sale
So the first thing that comes to mind, is the state lottery considered gaming? Is a store that sells lottery tickets subject to the tax if their total receipts are over $1,000,000. Would the party that leases the lottery be subject to the tax as well. This is going to have an impact on what someone is willing to pay to lease the lottery.

Is it software or a service and regardless how do I figure out what is exported?
Now a case where it gets more than a bit confusing, lets say for example you are 37 Signals a company that has software that you pay for by the month to use. Is that a service taxed at 1.8% or does it fall under the 0.5% rate? If the party paying to use the software is from out of state is the service considered an export then and if so do they not have to pay tax on that even if the hosting machine is in Illinois?

What if I provide services to someone like United but send my consultants out to Denver to do the work, is that an export? How about if my consultant works from his basement but remotes into a server in Cleavland is that an export? How about my consultant who works from Wisconsin and remotes into a server in Chicago?

Home Sales:
First would new construction that is sold be subject to the 0.5% tax, I am guessing it would. However that is just the tip of the tax iceberg on a new home. If I use subcontractors, I am guessing they would be subject to the services version of the tax if I am not buying materials from them and their annual revenue is over $1,000,000 so now my subs are facing a 1.8% tax on labor.

Then I go to sell my house later, Casa Du OneMan does not sell for $1,000,000 so I don't have to pay the 0.5% but if the broker I use grosses $1,000,000 a year they would have to pay, right? That's the broker, not the agent.

Delivery Service:
So if you are UPS how does this work. It's a service, so you are subject to the tax on all intrastate revenues (I ship from Aurora to Springfield), however how about interstate, is only part of the revenue subject to the tax or just all shipments that originate from Illinois. If the shipment is from out of state how does that work, is it just the intrastate portion?

For Profit Education and Training:
If I attend a Microsoft training class in Springfield that is taxed at 1.8%, it's a service right? What about tuition at a for profit college like DeVry or the University of Phoenix is that a taxable service? What if I attend an on-line seminar (that costs money) is it my location that determines if it is taxable?

Still more questions to come, I just hope I am not the only one asking....


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