Who is stealing from the gov't? 👀

Hello my trash loving friends!

I’m finally back in the states and, immediately, I have an utterly disrespectful run in with our sales tax system…

I’m doing my laundry, and I find a lucky $5 in my jeans. I get excited and immediately bop into my local burger joint, cash-only. I wait in a 15 minute line, fantasizing about my first bite. Watching others take theirs. With my senses overstimulated, I order my usual $4.99 cheese burger. I drop the bill on the counter, walk away.

Not a second later, my daydream was interrupted with a cutting “sir, that’s only $5, it’s $5.34”… and right there, my heart sank. Snack time was ruined. I had no change.

Paying sales tax hits harder when you’re paying it in addition to the sticker price. Why isn’t it just included in like everywhere else in the world?

On that note, let’s see what’s been piling on in the trash this week:

• Gov’t missing $350 billion in sales tax 🤯

• Don’t miss these 4 state changes 🚩

• NYC bodegas are finally innovating 🥯 

• Meme of the week 😂 

• Q from you - “Where to find state specific taxability rules?” 🙋‍♀️

US Gov’t missing $350 billion in sales tax 😳

The US government collected over $640 billion in sales tax from us last year. This is double from 20 years ago. Let that sink in. Some context:

1️⃣ Inflation has only risen ~60% in last two decades.

2️⃣ According to e-commerce volumes, the government thinks it should be collecting nearly $1 trillion in sales tax, so where’s the other $350 billion…?

Yes, this means many businesses are not sales tax compliant… and they know. Not surprising that the number of state auditors is expected to double in the next few years.

3️⃣ Funny thing is… the government tries to convince us they have actually reduced taxes on us, consumers.

And they’re right… to an extent. The average # of taxable products has decreased 70%… but the average tax rates have increased 25%.

Meaning most products the average American buys today… are still taxable, and they’re going to keep on collecting from us 💰

The ultimate guide to US sales tax → 

🚨  Key updates around the country 🚨 

The Texas tax agency has been sending letters reminding remote sellers of their obligations to remit tax, especially those with a history of late filings. There’s been a boost in compliance, but this doesn’t look like the end for sellers and likely not the last state cracking down.

On September 1, Alabama is reducing the state sales tax on groceries from 4% to 3% (separate from the local sales tax). This rate could be reduced to 2% next year… but let’s not get greedy just yet.  

Beginning next year, Georgia will require retailers to collect sales tax on in-state sales of digitally downloaded products. Mark your calendars: Jan 1, 2024.

In light of recent severe weather, Illinois governor has included 13 additional counties that can qualify for waivers of penalties and interest on state taxes.

NYC bodegas are FINALLY innovating 🤠 

If you’re from NYC or just visiting, pop into a local bodega (they’re on every block). You’ll see many trying to schmear cream cheese on a bagel WITHOUT slicing it.

Why? and how?

In NY, an unsliced bagel is NOT subject to sales tax, but... a sliced bagel is… because it's considered a sandwich. Hmm.

In today’s macro-environment, NYC bodegas are looking to save their customers money & themselves the extra sales tax hassle.

One savvy bagel shop came up with an idea — they started pumping bagels w/ cream cheese. Yes, that’s right. Many have followed suit. Not slicing them avoided the bagel’s sandwich classification and, most importantly, sales tax.

I want to learn more ridiculous product taxability rules →

😎 First, the meme of the week 😎

🌟 Partner Spotlight 🌟

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Interested? Just reply to this email and I can make an intro.

🙋‍♀️ You ask, we answer 🙋‍♂️

Q (Malia): What is an exemption certificate?

A: An exemption certificate is the form presented by an exempt buyer to the seller when making a tax-exempt purchase.

The Federal Government is an exempt organization. State and local governments are sometimes exempt organizations.

This can also apply to businesses if they are either (a) buying products to sell for resale directly, or (b) using them in the making of products for resale, permitting the they have a valid exemption certificate (aka resale certificate).

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Thank you for reading along. I’ll be back next Sunday with more sales tax shenanigans.

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Until next week’s 🗑 …

Rohit