Sales and Use Tax Audits - part one
(The following is reprinted with the permission of Mark Maiman.)July 13, 2008
I’m writing to all of you concerning the State of Wisconsin’s “money grab” which comes
in the form of an audit by the State’s Department of Revenue – Sales & Use Tax
Division.
Many of you have heard either Robb or myself speak at frustrated length about this over
the years. I say, “over the years” because the audit of The Electric Sun Corporation
started in April of 2004! Many of you have been through, or are currently going through
this same audit yourselves. Wisconsin has specifically targeted our industry. The laws
and regulations concerning our industry in regards to sales taxes and use taxes are
vague and subject to interpretation. This makes us an easy target for auditors ordered by
their superiors to “make the state some money.” It’s outrageous.
So what is this all about? What does it mean? Actually, this is precedent setting. The
DOR claims that production companies cannot have and issue resale certificates to
rental companies, and therefore need to pay tax on all rentals. I can hear some of you
making the argument that “This is how we’ve done things for 20 years.” We made the
same argument. The DOR just states that our whole industry has been doing things
‘wrong’ all this time. But isn’t the DOR and Wisconsin complicit in this? Wisconsin issued
seller’s permits to all these companies. And how could we, as a rental company,
accused by the way of accepting the certificates in “bad faith” since we just should have
known production companies couldn’t issue them, not accept the certificates? It took
over three years of our audit for the DOR with their accountants and bureaucrats to
figure out their stance, but we were just supposed to know?
As you read this some of you may be thinking that it “doesn’t affect me, why should I
care?” If you were thinking that you’d be wrong. If you think you’re safe from being
audited you are wrong. There are other areas involving taxes that the DOR is looking at.
Purchases by rental companies of equipment for their rental inventory were thought to
be non-taxable since the rental company would be charging the tax on the rental so no
need to pay tax on the purchase. Wrong! Now they’re saying there’s a difference
between ‘sales’ and ‘use’ taxes. Another area is LABOR. Specifically, the State is
claiming that taxes should have and need to be paid on the labor of Director’s of
Photography, Videographers, etc. This stems from a 1975 interpretation of a law. The
need for the interpretation came about because of the new field (at the time) of wedding
videography. Why the DP or cameraperson and not ANYONE ELSE on the set? I can’t
tell you and neither can the DOR. If this radical interpretation holds up a lot of
companies, and a lot of individuals will owe Wisconsin a lot of money. And that my friend
is what this is all about. A “money grab.”
ESC has hired a tax attorney and we are attempting to “fight the power.” Instead of the
State of Wisconsin being a haven and incubator for our industry as claimed by those
championing the Film Incentive law, the State of Wisconsin through conveniently
misinterpreting vague regulations is trying to stifle if not cripple the indigenous film and
video industry. And contrary to what some people think there is an indigenous film and
video industry in Wisconsin. The work didn’t start with a film incentive bill. I’ve worked in
this business for 25 years now supporting my family and myself. This is not a hobby, but
my craft and profession.
I urge each and every one of you reading this to call AND write your state senators and
representatives. Complain, make some noise. Tell them we need an amendment or
addition to the film incentive bill that specifically and unambiguously spells out what is
and is not taxable in our industry. The bill should grandfather everyone in so we all start
with a fresh slate and can start from ground zero. Ask your elected representative if he
or she believes in keeping our indigenous businesses alive. The time and effort needed
to deal with these audits puts an undue amount of stress on a business.
Thanks for reading this, and remember that no one is immune to the “money grab.”
Stand up for our industry and livelihood before it’s gone.
Sincerely,
Mark J. Maiman
Small Business Owner
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| Why not form a coalition of rental companies and collectively hire a LOBBYIST?! We did that successfully in the mall industry! Bill Tucker Author, Screenwriter, Producer, Director |
