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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16559
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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I have a business doing tours in Arizona. I have never charged

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I have a business doing tours in Arizona. I have never charged tax because we provide a service, not a product. I've been told that I must charge tax. Do I need to charge tax on my tours? If so, am I liable to pay back taxes?

Megan C :

Hello! I am a CPA here to assist you with your tax questions. My goal is to provide you with excellent service today.

Megan C :

How are you today?

Megan C :

I hate to be the bearer of bad news, but you should be charging a Transaction Privilege Tax, which is also referred to as "sales tax" on the tours

Megan C :

The tax is not a true sales tax, but a tax that is imposed for the privilege of having a transaction in the state.

Megan C :

There are several exemptions to who is liable for this tax, but based on the information that I have in your question you would not qualify for one of the exemptions.

Megan C :

A flyer detailing this tax can be found, HERE

Megan C :

It is also possible that Arizona will want back taxes for tours that you did not pay the privilege tax on.

Megan C :

I can't guarantee that they will ask for back income, but it is a possibility.

Megan C :

I would start to charge this tax on your tours now, so that your customers are carrying the cost of the tax.

Megan C :

If it's been a significant amount of time that you have been in business and not remitting taxes, I would strongly suggest seeking the assistance of an Arizona CPA to assist you in filing your returns and navigating any back tax issue.

Megan C :

I wish I had better news for you - please don't shoot the messenger!

Customer:

Hi Megan,

Megan C :

Hello

Customer:

I kinda figured your answer was going to be what you said. I have no problem starting to charge a sales tax to my customers, but the idea of seven years (that's how long I've had the business...The business is actually over 12 years old. The previous owners never charged a tax) of back taxes puts me in an impossible situation. Should I consult an attorney to see if I can forestall or entirely avoid back taxes and penalties?

Megan C :

You don't need an attorney, you could get a CPA (may be cheaper). But, you will need a professional to tell you how to handle this delicate situation.

Megan C :

It's possible that perhaps you could get some of your penalties abated.

Megan C :

I'm truly sorry you're in this situation. Please let me know if you have further questions about this matter. If not, please rate as "excellent" so that I may receive credit for assisting you today

Customer:

Hi again Megan,

Megan C :

Hello

Customer:

Your prompt and heartfelt answer were much appreciated. Thank you for tyour professionalism and expert help. You certainly will get an excellent rating.

Customer:

Thanks again,

Customer:

Ed

Megan C :

You're welcome. Be sure you let me know how I can help you further.

Megan C :

Thanks, Ed. Best of luck!

Megan C and other Tax Specialists are ready to help you
Thanks, Ed for your positive rating. Although I didn't have better news for you, I am glad I was able to assist you today. If you need anything else, please come back and ask for me directly. It was a pleasure working with you.

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