I own a Maid Service in Arkansas. I was not aware that I am required to charge sales tax on my services. I was audited by the DFA and they gave me a bill for $ 31,000.00. I hired an attorney. He said we had 2 options. 1. The DFA said they would take the interest off and I would owe $ 28,000.00 to be financed by them for 5 years which is $ 600.00 per month (I am a small business and cant afford that). 2. Offer and compromise in which I give them all of my bank records and write in a amount I can pay to see if they accept it. I really cant afford to pay them at all. Due to the rising gas prices and groceries, I have lost several clients and am struggling myself. I did talk to someone that told me to find out if they could go after me personally. If they couldn''t, he said I might shut down my business and reopen it as a different name. Please help.
Optional Information: Van Buren, ArkansasAlready Tried: an attorney that I feel has not handled sales tax issues before.
Sorry for your situation...
That is correct - a service of providing cleaning or janitorial work (see GR-9.4) is a subject of Sales Tax in Arkansas - http://www.state.ar.us/dfa/rules/et2006_9.pdf
I would suggest to verify if DFA assessment is correct. You likely purchased some tools and cleaning materials and paid sales tax on those expenses - these amounts should be taken off from what you owe. If you provided any other services - please verify if such services are subject for sales tax. If your contracts and invoices do not separate such services - you may need to correct that.
Sales tax should be paid by your customers. If customers did not pay sales tax - they would be required to pay Use Tax any way - so you may contact customers in writing with additional sales tax bills. Some customers might response with payments and at least you would be able to reduce the tax pressure.
Unfortunately - you may not just walk away from tax debt - and open another business - DFA will try to collect the tax debt from you.
based on your information - having an attorney it might be more expensive that is required for your situation. The issue based on your information seems straight forward - but you do need representation. For dealing with DFA you may hire any local CPA or Enroll Agent experienced in the sales tax area.
Sorry if you expected better answer.