Tuesday, February 19, 2008

Retail Businesses and Sales Tax Police

The federal "know your customer" banking and insurance regulations are an outrageous infringement of our Constitutional right to privacy from unreasonable search. They turn your banker and your insurance agents into government assets who are required to report you to the feds if you engage in any of a number of activities that law-abiding citizens do everyday.

The situation on the state level is not as bad as all that, but it is still bad. Imagine this: a customer whose family owns several businesses has a tax exempt number. They make a significant purchase with the understanding that they would get a sales tax exemption. They sign an agreement stating that the items they purchased would be for re-sale. Let's say it was furniture.

Instead of taking the customers written word for it, the business who is selling him the stuff starts interrogating him, "Wait a minute. You commit fraud if you buy that stuff tax free even though you have no intention of re-selling." "I understand that, and we just signed your paper saying that is our intent. Now let's finish the purchase." The selling business says, "No. They make us pay the tax that they think we should have charged you. You signed our document, but we still don't think you mean it, and we are not going to sell you this stuff unless you pay the sales tax."

The customer protests that even though their primary business is in other ventures, they also own several homes which they might want to sell furnished. They are willing to sign that as their intent. No matter. The business cannot afford to take the customer's word for it. They refuse to sell unless the customer pays the sales tax because the customer's primary business, in the opinion of the store acting in behalf of the state, does not lend itself to re-sale of the product being purchased. Outrageous story? Maybe, but it happens all the time.

In my way of thinking, if the customer signs that they intend to re-sell, then if they don't the government should take it up with them, not the business who sold it to them. But the New Fascism does not work like that. The state requires retail businesses to scrutinize their customers, to question their intentions, and to challenge their word if they claim a sales tax exemption. It seems in the case of sales tax fraud, the state shakes-down the innocent business instead of the guilty customer simply because a business is easier to extort money from than an individual.

So tell me again who is working for whom?


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