Q: I have been told by one of our clients that is located in Oregon that the state has no sales tax. As a result they do not utilize or have available tax exempt certificates. In order to protect ourselves during a tax audit what paperwork would we need to have on hand?
Kevin J. Kohut
Chicago
From your question, I presume that your company is selling and shipping tangible personal property into Oregon.
I also presume that the seller is seeking protection from an Oregon audit. Sales tax is triggered based on the destination state. So, if your Illinois company is shipping into Oregon, then Oregon’s sales/use tax, if there was one, would apply. Since Oregon does not have a sales/use tax there is no protection needed from an Oregon auditor.
If you are seeking protection from an Illinois auditor, then the documents needed to support the exempt sales would be a purchase order indicating that the goods are shipped to Oregon, that title and possession pass in Oregon. Illinois would not look at the transaction.
Don Orr, Tax Manager
PricewaterhouseCoopers LLP
See previous “Ask the Experts” columns:
Licensing Fees in Japan
Software Leasing
Buy-out Legal Fees and Treasury Stock
A Merger Accounting Scenario
Use Tax
A FAS 133 Example
Leasing Accounting
Goodwill Taxing
Recognizing Upfront Fees
Proving Tax-exempt Status
The ABCs of OECD
Credentials for Credit
Big Five Audits and Venture Funding
GAAP for Private Firms
Transfer-Pricing Guidelines
Insurance for E- business Infrastructure
401(k) Brokerage Links
Navigating the Rough Waters of Sales Tax
Ask the Experts is a weekly column that aims to help finance executives like you find answers to difficult questions.
Submit your questions by E-mailing them to [email protected]. Unfortunately, we cannot answer all questions individually.
While we will enlist professionals to try to answer your questions, Ask the Experts is meant only to create a dialogue on the topics. Consult legal or financial professionals before acting on any of the advice given by our expert panel.