Have a Tax Question? Ask a Tax Expert
The sales tax that you were required to pay was not part of your business income. Any sales tax you pay on a service for your business, or on the purchase or use of property in your business is treated as part of the cost of the service or property. If the service or the cost or use of the property is a deductible business expense, you can deduct the tax as part of that service or cost.
You were paying what the customer should have paid you and then you remit. It is not deductible.
The sale of your customer base is reportable in your business. If you initially purchased the customer list thne you can claim this as a capital asset and use the lower capital gains rates. If you developed the list yourself then you would show this as a sale but ordinary rates apply.
The penalty and interest are not deductible as an expense. Fines and penalties a business pays to a government entity for violation of any law are not deductible. That too acts as another penalty and is difficult for a business.
The taxes that fall under the "trust fund" rules for federal or states have stiffer penalties. It is unfortunate that you were not advised about the sales tax situation earlier. I sincerely ***** ***** could give you some good news.
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