Humid Football Land

[00:00:07] Speaker A: Welcome to Taxing poetic. I am your co host, Tim Howe. [00:00:10] Speaker B: And I'm your co host, Jenny Carter. [00:00:12] Speaker A: With our infamous producer, JB. [00:00:14] Speaker C: Hello. [00:00:15] Speaker A: And today we are going to be talking about sales taxes in humid football land, which is going to be covering the states of Arkansas, Louisiana, Texas, and Oklahoma. [00:00:29] Speaker B: Where the wind comes sweeping down the. [00:00:31] Speaker A: Plain and the waving wheat can sure smell sweet when the wind comes right behind the rain. Oh, right. Okay, that's enough. [00:00:38] Speaker C: I did not know you were going. [00:00:39] Speaker A: To do it that long. [00:00:41] Speaker C: I thought you were just going to do the Oklahoma. [00:00:43] Speaker A: No, we can go ahead and cut that. Some of it. [00:00:45] Speaker B: But just a reminder that when we do these regional series, that JB has looked these up on Wikipedia and they have grouped them together. Did this have an actual name? [00:00:57] Speaker C: This one I can't remember. [00:00:59] Speaker A: Was it the South Central, western, north central portion of the Southwest? [00:01:04] Speaker C: That sounds correct. At some point in the episode, I will let you guys know. [00:01:08] Speaker A: In all honesty, folks, Wikipedia groups our states into the most interesting collection of states ever. [00:01:14] Speaker B: But if you look at our regional series and their titles. We didn't pick those. Wikipedia did. [00:01:19] Speaker A: No, we didn't. [00:01:19] Speaker B: Very reliable source there you. So today, like Tim said, Arkansas, Louisiana, Texas and Oklahoma, we're not going to sing again. Dang it. Wait, did you hear something? [00:01:30] Speaker A: No, I did not. [00:01:31] Speaker B: I think it's Broadway calling. [00:01:32] Speaker A: Oh, my goodness. [00:01:33] Speaker B: Yes. Oh. To fulfill my lifelong dream. [00:01:36] Speaker A: Yeah. Which is right after haiku. Which today, are you going to be doing a haiku for us? [00:01:41] Speaker B: I'm not doing a haiku because I actually got one sent in to me from a fan. This is from Dr. Frank Ross in Indianapolis. And Dr. Frank Ross says, tax season arrives, numbers dance on paperwork. Wallet feels lighter. I thought that was very well done. [00:02:01] Speaker A: Good. [00:02:01] Speaker C: Yeah, it's generic. He didn't know what we were going. [00:02:04] Speaker A: To, what our topic was. [00:02:06] Speaker B: Of course. [00:02:06] Speaker A: I'm going to completely give Dr. Frank a solid B plus on that. That was really good. [00:02:11] Speaker B: He didn't know what we were going to talk about today, so I thought it was a great haiku. And we encourage you. Please send us your haikus. [00:02:18] Speaker A: So did you capture that haiku during your recent drinking escapades in Indianapolis? [00:02:24] Speaker B: It was actually in West Palm Beach. [00:02:27] Speaker A: I love it. [00:02:29] Speaker B: For your information. [00:02:30] Speaker A: For your information, yes. [00:02:31] Speaker B: So please, if you have a haiku you'd like to send in, if it's up to par, B plus or above, maybe I'll read it on the podcast. [00:02:37] Speaker C: Or review. [00:02:38] Speaker A: Oh, I love it. Give us a review. [00:02:40] Speaker B: Or review. [00:02:41] Speaker A: Yeah, give us a review. That'd be great. [00:02:42] Speaker C: A good one, though. [00:02:43] Speaker B: Oh, yeah. Only good ones. We don't want your bad ones. [00:02:45] Speaker C: Yeah, Tim, actually, you were very close. It's west south Central. [00:02:49] Speaker A: West South Central. There we go. [00:02:52] Speaker B: Which is that? The bloods or the Crips? Or which ones? [00:02:55] Speaker A: Oh, my goodness. [00:02:56] Speaker C: And apology number one. There we go. [00:03:00] Speaker A: Think it might be MS 13. [00:03:02] Speaker B: Anyways, LA Kings. [00:03:04] Speaker A: Okay, so we're going to be mixing things up today and going to be jumping right into pop quiz hotshots. [00:03:11] Speaker B: And why are we doing this, Tim? [00:03:13] Speaker A: Because JB tends to get a little frustrated when we actually cover the quiz material during the show. [00:03:18] Speaker B: Because we're too smart. That's exactly because we are already answering our own quiz questions, as we discussed. [00:03:23] Speaker A: Right. [00:03:23] Speaker C: Wicked smart. [00:03:24] Speaker A: And that basics. Wicked smart. So. [00:03:27] Speaker C: Yeah. [00:03:27] Speaker A: And basically makes JB actually have to work instead. Know, sitting here and listening and gathering knowledge. [00:03:33] Speaker B: Heaven forbid. [00:03:34] Speaker A: Heaven forbidden. So, JB, take it away. [00:03:36] Speaker C: Okay, so our first question is for Jenny. Let's see if she remembers our pre pro meeting. Which jurisdiction operates under Napoleonic law? [00:03:46] Speaker B: Napoleonic law is. Louisiana. [00:03:49] Speaker C: Louisiana. That is correct. So, for those of you keeping track at home, Jenny's still losing. [00:03:56] Speaker B: Because we don't know that yet. [00:03:58] Speaker A: And I have my disappointed. [00:04:00] Speaker B: No. Yes. [00:04:01] Speaker C: No. Jenny's probably. [00:04:03] Speaker A: Yes. [00:04:03] Speaker B: Yes. [00:04:04] Speaker C: Okay. [00:04:05] Speaker B: In life. [00:04:05] Speaker C: At least in life. All right, Tim, which is a home rule state? [00:04:10] Speaker A: Of these three, that would be Louisiana. [00:04:12] Speaker C: Is that true? [00:04:14] Speaker A: Yes. [00:04:15] Speaker C: I just realized I didn't write down the answer. [00:04:17] Speaker A: That is 100% correct. [00:04:19] Speaker B: JB. This is an important part of a quiz. [00:04:23] Speaker A: Jenny, give the definition of home Rule. [00:04:24] Speaker B: Why is Louisiana one job? Because they want their own. The locals want to collect their own tax at their own jurisdiction level, enough to rely on the state to remit it to them. [00:04:33] Speaker A: There you go. [00:04:33] Speaker B: Bingo. [00:04:34] Speaker C: Do we like that? [00:04:35] Speaker B: No. As tax. Well, at least for. I'm sure the local home rule jurisdictions like it. [00:04:40] Speaker A: It makes tax administration that much more difficult. [00:04:42] Speaker B: No, we don't like it. Tim and I do not like it. [00:04:44] Speaker C: It seems like it would make it more complicated. [00:04:46] Speaker A: Just more returns, right? I mean, you have to file more paperwork and you have to do more stuff. So it's a little bit more difficult. [00:04:51] Speaker B: We object. [00:04:51] Speaker A: Yeah. [00:04:52] Speaker C: So it's like when I have to do the quiz after you've been talking, you just have to do more work and you don't like it. [00:04:57] Speaker B: Oh, snap. In your face. [00:04:59] Speaker A: I believe that was a little bit of a burn. [00:05:01] Speaker B: I know. [00:05:02] Speaker A: That's second degree. We haven't reached third degree. Okay. [00:05:06] Speaker C: Okay, Jenny, which jurisdiction has no state income tax? [00:05:12] Speaker B: Texas. [00:05:14] Speaker C: Texas. [00:05:14] Speaker A: Wow. Good job. [00:05:16] Speaker C: Yeah. [00:05:16] Speaker A: Good job, Jenny. [00:05:17] Speaker C: We're doing well here. We know a little bit about the humid states. All right, Tim, which two states are full members of the SSTA? [00:05:27] Speaker A: That would be Arkansas and Oklahoma. [00:05:29] Speaker C: That is correct. You guys are killing state. And for your boy here, what is the SSTA? [00:05:34] Speaker A: That is the streamline sales tax, basically agreement. It's a bunch of states that got together to create uniform definitions of products and also try to try to effectively align themselves in the treatment of sales tax within those states. Now, they don't have uniform rates, they don't have uniform methods of remittance or filings or things of that nature. But as far as the definitions of their products, they all kind of agree as to what is the definition of software, what is the definition of candy, things of that nature. [00:06:10] Speaker B: I don't understand. It's like unless you're going to get all the states in, why do you even have it? [00:06:14] Speaker A: Well, they had a great idea in principle and it's just been a tough road to sled for them. Frankly, everybody has always said until you get the really difficult states, which is like New York, California, Colorado, Louisiana, AlabAMA, you know, Texas, until you get those larger states or the more difficult tax administration states on board, it's kind bit, I don't want to say pointless. [00:06:45] Speaker B: It is pointless. That's what I'm trying to say. And you're saying it nicely and I'm not. So it is pointless because I feel like it would be the most helpful if it involved those. [00:06:54] Speaker A: But to all the folks from the SSTA that are actually listening, I personally apologize for my co host. I know you put in a lot of work. I've been to your meetings and listened to you argue about definitions. [00:07:05] Speaker B: But yes, it's appreciate, I do appreciate what you tried to do, but if you can get, I don't know, California on board, that'd be awesome. [00:07:13] Speaker A: Yeah. Good luck with that. Let me see how that works out for you. [00:07:16] Speaker C: Okay. Jenny, which state sales tax is capped at 8.25%? [00:07:22] Speaker B: Texas. [00:07:23] Speaker C: She loves Texas and Louisiana. [00:07:25] Speaker A: I mean, dude, do you want to give her more softballs? Come on. [00:07:27] Speaker C: You're going to have to take it up with Donna. [00:07:29] Speaker A: Donna? Yes. [00:07:31] Speaker B: Thank you, Donna. [00:07:32] Speaker A: Secret research person. [00:07:34] Speaker B: Yes. Thank you, Donna. [00:07:35] Speaker A: Thank you, Donna. [00:07:36] Speaker C: Does that make your job harder or know? [00:07:40] Speaker A: You would think in Texas that it would make know easier, but no. Why is that not easier in Jenny? [00:07:47] Speaker B: It's. I was going to say it first of all, I think he asked me that question, but it's fine. So it's easier for if you're a remote seller because then it's the single rate 8.25. But if you're not a remote seller, then you do have to report with the localities. So then you're doing location and there. [00:08:05] Speaker A: Are hundreds of them. And it's weird stuff like, you got Houston, Harris county, then Houston, MTA, Harris County. I mean, just all these weird different classifications. [00:08:17] Speaker B: You have Dallas Crime control. I was like, I need a TV show called Dallas Crime Control. [00:08:21] Speaker A: There you go. You got municipal utility districts, mud districts and all that other fun stuff. It gets really weird. [00:08:26] Speaker B: Yes. But we do appreciate the single rate remote seller rate. There you go. [00:08:32] Speaker C: Yeah, that's great. Okay, Tim, last one. [00:08:35] Speaker A: Here comes the tiebreaker. [00:08:37] Speaker C: Which of these states has a single local use tax rate for remote? Sure did. And I was just like, keep going, Jenny. [00:08:48] Speaker A: Let me take a guess. Texas. [00:08:49] Speaker C: Okay, so hold on. Let me just. [00:08:52] Speaker B: You asked me. [00:08:53] Speaker C: I know it is my fault, but you still did. [00:08:57] Speaker B: No, no, it's not my asked. [00:09:00] Speaker C: I asked. But the. [00:09:02] Speaker A: It's not like Tim GPT needs any assistance. [00:09:04] Speaker C: I also just asked, is it you. You text poetic way deeper into, like, I'm just. Is it easier? It could have been a simple yes. [00:09:10] Speaker A: No. [00:09:12] Speaker C: Okay, so Tim's actual question then. What is it? [00:09:16] Speaker A: It's Texas. [00:09:17] Speaker C: What's a single local use tax? [00:09:18] Speaker A: Oh, what's the rate? Is it 8.25%? No, it's 8%. What is it? [00:09:23] Speaker B: Oh, 6.25. [00:09:25] Speaker C: Way lower. [00:09:26] Speaker A: 6%. [00:09:27] Speaker C: 1.75%. [00:09:29] Speaker A: Wait, what? [00:09:29] Speaker B: No, that doesn't make any sense. [00:09:31] Speaker C: What is that? How is that possible? [00:09:33] Speaker A: So let's distinguish this. So Texas has a cap on the total sales tax rate. Their total sales tax rate is 8.25%. But the question that Donna asked at the end, so that the single local use tax rate is 1.75%, which brings the state rate of six and a quarter, plus the single local of one seven, five to the total state of 8%. You apparently love Texas, and we're going to get into the complexities of Texas even more. A little bit. [00:10:01] Speaker B: God blesses it, right? [00:10:02] Speaker A: Exactly. Don't mess with it. [00:10:03] Speaker B: And don't mess with it. [00:10:04] Speaker A: Yeah, don't mess with. [00:10:05] Speaker C: Stars and Stripes are big and bright. [00:10:06] Speaker B: All right, we're going to take a quick break, and when we come back, we're going to do a quick history lesson on all these humid football land states. [00:10:12] Speaker A: I love it. All right, welcome back, everybody. And now we are going to start with some lessons from humid football land on each one of these individual states. And let's start off with the great state of Arkansas. Here we go. Calling the Hogs. Giddy up. So what is the funny thing about Arkansas? You know what, when you look at their tax return, what do they actually call their sales tax? [00:10:38] Speaker B: Jenny, I know you just pointed this out the other day and I felt kind of dumb for not knowing it. I was like, yeah, of course they have state sales tax. And you said, no, it's actually a gross receipts tax. [00:10:47] Speaker A: They call it gross receipts, but it actually is a sales tax, which is really kind of funny. It's like a nomenclature difference. Yes, because there's a ton of exclusions and deductions and there are certain exemptions and things like it. So it's not really a gross receipts tax, but they just like to call it gross. [00:11:04] Speaker B: I know. That's so interesting. [00:11:05] Speaker A: So somebody from Arkansas, if you want to call in or at least email us and tell us why they actually called it a grocery seats tax to begin with, that'd be pretty interesting to know. [00:11:14] Speaker B: That would be helpful. Yeah. [00:11:15] Speaker A: But they actually tax some very interesting services. That's something to be very aware of when you're actually in Arkansas. They tax like landscaping and lawn care services. They tax wrecking services, tattooing and piercing services I think were actually taxed at some point, or they still are. Yeah. Arkansas, it's a very interesting state, just with some of the individual regimes and some of the localities like Fort Mill and Little Rock and stuff like that, they all have local level taxes you have to be aware of, especially in the prepared food and beverage and the hospitality space. [00:11:52] Speaker B: Pop quiz. Hot chat. What is the huge company located in Arkansas? [00:11:57] Speaker A: Wally world. [00:11:58] Speaker B: Oh, yes, Marty Moose. [00:12:01] Speaker A: Marty Moose. No, it would be Walmart. Excuse me? Yes, our friends at Walmart. And what city are they in in Arkansas? [00:12:08] Speaker B: Oh, I don't know if I know this. Is it Little Rock. [00:12:10] Speaker A: It's Bentonville. [00:12:11] Speaker B: No, I never would have gotten that. [00:12:12] Speaker A: Yeah, Bentonville, Arkansas. [00:12:14] Speaker C: If you had said name two cities in Arkansas, I would have been like, okay, so Little Rock and Hope. [00:12:20] Speaker B: I know. Hope. [00:12:21] Speaker A: There you go. [00:12:22] Speaker B: Yeah. [00:12:22] Speaker A: Fayetteville. [00:12:23] Speaker B: Fayetteville. [00:12:24] Speaker A: Fayetteville. [00:12:25] Speaker B: Way to go. [00:12:26] Speaker A: Springfield. [00:12:28] Speaker B: What? [00:12:29] Speaker C: Probably. [00:12:30] Speaker B: Okay, sorry. Arkansas. We'll apologize to you later. [00:12:33] Speaker A: Philadelphia. [00:12:34] Speaker B: Yeah. Tampa. Allegheny. Oh, no, not going there. Okay, so are you going to talk about. [00:12:46] Speaker A: You know, very, you know, multiple large companies that are actually located in Arkansas? But it's a beautiful state, great place to do business. Walmart's headquartered there. Tyson's food's headquartered there. Hey, Stuart Bray, if you're actually listening, but anyways. [00:13:00] Speaker B: Oh, okay. And you have a great website, Arkansas. So I appreciate that you make tax reporting very easy. So good stuff. [00:13:06] Speaker C: Congrats. [00:13:07] Speaker B: All right, so we're moving on to Louisiana. [00:13:09] Speaker A: Yes. [00:13:09] Speaker B: Okay. Napoleonic law. [00:13:11] Speaker A: So, yeah. What's the difference between Louisiana law and everywhere else? Jenny? [00:13:15] Speaker B: Oh, yeah, we talked about this the other day. And aren't the counties. The counties are all called parishes. [00:13:25] Speaker A: Right. But the difference in the form of law is that everywhere else in the United States uses common law or English common law, and Louisiana uses Napoleonic code. [00:13:34] Speaker B: Okay. [00:13:35] Speaker A: And the big deal. The big difference between Napoleonic code or Louisiana civil law versus common law is the fact that in common law, judges typically have to rely on judicial precedent, and they typically do rely on judicial precedent in past cases and case law. [00:13:53] Speaker B: Basing their decisions on previous decided decisions. [00:13:56] Speaker A: Starry deceases. [00:13:57] Speaker B: Right. [00:13:58] Speaker A: Latin terms. But when we're looking at Louisiana, Louisiana actually allows a judge to rely on his or her interpretation of the codified statutes. So even though they typically do look at precedent and precedent comes into their deciding factor, Louisiana cases tend to change from time to time, which is why it's very important when you're doing tax research in Louisiana to look at case law, because a judge can look at something and say, you know what? I completely disagree with this. I think that we should actually opine on it in this manner. I think that I should take this position because these folks have made a much stronger argument and that's it. And allows them to do that. [00:14:34] Speaker B: Is it because Napoleon was basically a dictator, so he just got to make all the decisions? [00:14:38] Speaker A: I have absolutely no idea. That's a really funny thing, but. [00:14:41] Speaker B: Oh, well, we need to do some French history research because. Yeah, that's what it sounds like. [00:14:47] Speaker A: Okay. Waterloo. [00:14:49] Speaker C: Does it make it easier to pass the bar in Louisiana then? [00:14:52] Speaker B: No, they have a separate bar, don't they? From what I understand, if you pass the Louisiana bar, it doesn't count any other mean. [00:15:01] Speaker C: Remember Frank Abignail Jr. [00:15:03] Speaker B: Yes. [00:15:03] Speaker C: He passed the bar in Louisiana. So I was just wondering if maybe that was just easier and that's why he was able to do that. [00:15:09] Speaker B: Louisiana attorneys give us an email or a call, let us know. So counties and parishes, we discussed that. Okay. [00:15:15] Speaker A: Yeah. What's the difference between a county and a parish? There is really one, right? [00:15:18] Speaker B: Right. They just call a parish. [00:15:20] Speaker C: Sounded like a joke. I thought it was no county. And a parish walk into a bar. [00:15:25] Speaker B: Yeah. [00:15:27] Speaker A: And one comes out of county. [00:15:30] Speaker C: What's an example of something that can happen specifically in Louisiana that maybe couldn't happen because of the parish versus County? [00:15:40] Speaker A: I wouldn't say that it couldn't happen in other jurisdictions. But what's very interesting, in a number of parishes in Louisiana, you actually cut tax checks to the sheriffs or whoever is the presiding individual over tax collection within that jurisdiction. So you may be cutting a check to Sheriff Joe Smith or know Jerry Walker. And there's history of significant embezzlement and things of that nature in Louisiana, which is quite people. I mean, you can look this up. There's stories of police walking into people's homes and finding freezers full of cash because tax checks were just not being deposited because it was cut to this person. [00:16:27] Speaker B: So I am Googling, where can I be elected sheriff in Louisiana? That sounds like it would be a lot of fun. [00:16:34] Speaker A: Jenny, you have some ethical concerns we need to take offline. [00:16:38] Speaker B: Oh, okay. Well, you can catch me in Louisiana. [00:16:41] Speaker A: All right. So you want to move on to Surrey with the fringe on top? [00:16:43] Speaker B: With the fringe on top. [00:16:45] Speaker A: All right. Oklahoma. [00:16:46] Speaker B: Yes, there will be always. [00:16:49] Speaker A: Yeah, we've definitely covered the singing bit. Jenny and I are huge fans of Oklahoma. [00:16:53] Speaker B: Yes. Just a great musical and a great state. Oh, yeah, it is a great state. Do you have any opinions, I'm sure, about NCAA football in Oklahoma? [00:17:02] Speaker A: Boomer sooner. Yeah, actually, one of the very first away games that I'd ever been to was at Oklahoma State. And Eskimo Joe's bar is absolutely amazing to sit inside. And Stillwater, Oklahoma. And the Oklahoma State Band actually comes in and plays their fight song. And it's like 9000 decibels. It almost makes you deaf. But it's a really cool stadium, cool football environment. Good stuff. Haven't been to Norman, haven't been to sooner land. But hopefully now that they're part of the SEC, we'll be making a pilgrimage there at some point. [00:17:32] Speaker B: Oh, boy. So, Tim, for real, let's talk about some tax stuff. Yeah. [00:17:37] Speaker A: This is a great chance to bring up First Nation taxation, tribal taxation with Native Americans. Oklahoma is full of tribal communities just like some of our other states. Arizona, Washington, what have you. Dealing with Indian tribes and specifically with sales tax exemptions can be very difficult. Right. And it's not that they're trying to fraudulently use their exemptions, it's just we often get a lot of questions of, hey, somebody's buying something from me. And they've told me that they're part of the Indian tribe and that they need to be exempted or that they're part of the Navajo Indian Nation or they're part of the Swimwimish Indian Reservation in Washington. They need to be exempted. Well, you need to make sure that you have the appropriate documentation and obviously be asking the question, well, what are you using this stuff for? Right. If they're using it for tribal community usage or if they're actually taking it and using it for personal use, that's obviously potentially it may not qualify. You have to understand the specific rules within those jurisdictions. So it's a very interesting topic of sales tax as it pertains specifically to exemption certificates and just general exemptions, period. [00:18:55] Speaker B: And, Tim, I was going to drop a little bit of IPT knowledge on you. [00:18:59] Speaker A: Oh, boy. [00:18:59] Speaker B: One of the major cases we study for sales tax school is Jefferson lines versus Oklahoma. So a major second prong case came from that state. [00:19:09] Speaker A: When was that? [00:19:10] Speaker B: 1995. [00:19:12] Speaker C: Oh, look at that. [00:19:12] Speaker B: I know. A major internal versus external consistency test. So, yeah, it's just a major landmark case. So way to go, Oklahoma. [00:19:21] Speaker A: There you go, Oklahoma. I love it. [00:19:23] Speaker C: So thank you. What's something people have to be, if you're from Oklahoma and you're collecting sales, what's something you have to be worried about when it comes? That seems very confusing, the lines with regards to just collecting and knowing, like, you have a tax exempt card, but it's for certain things and not, in. [00:19:42] Speaker A: All honesty, a lot of it has to pertain to the seller's obligation to make sure that they understand, first off that they're taking an exemption certificate in good faith. Right. So, like, if somebody's coming through a drive through a McDonald's and they're like, hey, I'm part this nation or this tribal authority, I want to buy, know, Big Mac meal or whatever, to be completely tax exempt, it's like, no, not so much. But if they're coming into a tractor supply or if they're going into a Home Depot or something, they're buying a large quantity of building materials and other things, and they want to. Okay, well, at that point, you can kind of make the safe assumption that, yeah, this is probably going for some form of First Nation activity or something else that I think I can accept this in good faith and be good to go. Always ask the appropriate question, what are you using this for? And it's your duty, and frankly, your right to be able to do that as an agent of the state, because we all know that when you register to collect sales tax in jurisdictions, you're registering as an agent as an extension of the state to collect the tax on their behalf. So it's technically your duty to ask those questions to make sure that you know what's occurring or how somebody's going to be using a product and you can say, no. You can say, hey, I'm sorry. And it may not be the best customer service decision, right, to make a customer upset, but until they prove or make you comfortable that the exemption is valid and that they're using it in an exempt manner, you don't have to grant it. You're the state. Effectively, at the end of the day, JV, it really is a great area. Exemption certificates are a major discussion under every audit that we typically service for a number of our clients. How do you know that's what the auditors love to say? Okay, here was a $30 transaction, and you exempted it with an exemption certificate. How did you know what that person was doing with it? From the name of the company, it doesn't look like they would be using an exempt fashion. How do you prove. [00:21:38] Speaker B: And JB, you're right, though. The laws, they seem specific in black and white. Like you say, we can't and can't do this, but it's how they get applied to Tim's point that it makes it become gray. That's right. [00:21:51] Speaker A: And how auditors enforce it, too. And a lot of times we may come to an end pass and we may have to say, you know what? We'll get a letter from the customer if the customer still even exists. Right. Or we'll get documentation to see, like, a PO that shows how this was particularly being used. Other times, we may just come to a managed settlement and say, okay, fine, maybe we didn't get the appropriate documentation and we need to. But most of their certificates will actually ask you on their certificate. How is this item being used? Is it being purchased for resale? Is it being used in manufacturing? Is it being used for a tribal committee meeting or something with the development of real estate or property or something along those lines on the tribal nation, fine, that's good. But in the absence of that, and sometimes we have customers that do grant exemptions without the appropriate documentation. They may have to pay tax under an audit. And it just happens. It's very gray. [00:22:46] Speaker B: Very gray, yes. [00:22:48] Speaker A: Agreeable gray. My favorite Sherwin Williams color. [00:22:52] Speaker B: Oh, I like agreeable there you. Okay, so, okay, last state. So, Texas, what are your thoughts on gonna. I know you just rolled your eyes. So are we going to talk football first or are we doing Texas first? [00:23:03] Speaker A: We can talk any sports in Texas. First off, to all my Houston disastrous fans out there, I'm not a big baseball. YeAh, we're going to move to baseball. Yeah. I don't like the Rangers or the Astros because they compete with my mariners. But anyways, all right. No, Texas, huge state, bigger sales tax problems. Very, very interesting across the state. Yeah, they have some very interesting tax law. [00:23:31] Speaker B: Yes. [00:23:32] Speaker A: Contractors dealing with contractors in general contractors is probably one of the most complex areas of sales tax that we deal with. Just because contractors are typically deemed to be the end consumer of products that they purchase. Right. That's why you don't pay sales tax when you buy a house. It's because your contractors basically paid sales tax on the cost basis of all his materials. [00:23:54] Speaker B: Get out. Really? [00:23:54] Speaker A: Yeah, that's right. [00:23:55] Speaker B: I didn't know that. [00:23:56] Speaker A: That's exactly right. You don't ever pay sales tax when you go buy a home. You don't pay sales tax when you typically buy a piece of large real estate. [00:24:04] Speaker C: You pay some other ones. [00:24:06] Speaker B: Yeah, you do. [00:24:06] Speaker A: You'll pay real estate transfer taxes and other things in other jurisdictions, but for the most part, you won't pay sales tax on a lot of real property services in most states because the contractor is deemed to be the end consumer of all those goods and their performance of quote, unquote, a service. But in Texas, we have some very interesting rules. They have to first look and say, okay, is this a residential project or is this a commercial project? And you answer that and you say, okay, well, if it's a commercial project, what are you doing? Are you repairing and remodeling an existing structure, or are you doing new construction? And what is the definition of new construction? Are you creating new usable square footage? And if so, then it's treated as a normal real property contract, like in other states where the contractor is the end consumer. If you're doing remodel or repair activities on an existing structure, then guess what? You actually get to buy your materials exempt, but you have to collect tax on the entire job, which includes labor and materials from your end customer. [00:25:11] Speaker B: Is there a decision tree on this somewhere? [00:25:13] Speaker A: Believe it or not, we can do decision trees for people, and we typically have for contractors that tend to do work in Texas. I'm going to throw one even crazier for you. So let's talk about SAS and software in. [00:25:23] Speaker B: Oh, please, please. Do we have to? [00:25:25] Speaker A: Yes, we do. [00:25:26] Speaker B: Please don't. [00:25:26] Speaker A: So SAS is software is a service. Very interesting and growing area of. JB likes to talk gray area. Gray area of taxation. A lot of states are trying to play catch up into how they tax SaaS based services. Basically, software as a service in Texas is something's deemed to be software as a service, you actually only have to pay tax on 80% of the value of the transaction. So Texas gives you a 20% quote unquote, credit. So if I paid $1,000 for a SaaS subscription, I would only have to pay tax on $800 of that subscription for that month. [00:26:09] Speaker B: Well, that's good, right? [00:26:10] Speaker A: It's good, but it just makes calculating that tax really interesting. You have to have a tax engine that's strong enough to do that. [00:26:16] Speaker C: What's the benefit to the state? Are they trying to make, is that a benefit for the people? They're like, please use your software here, look at this break we're giving you. [00:26:23] Speaker A: No, it's more of just their interpretation of what services versus. They're saying basically there's like a 20% service based component of SaaS that shouldn't be taxed, but the other 80% would deem to be software, which is typically taxable in Texas at 100%. So they're saying we're going to give you a 20% reduction so that you're not paying tax on, quote unquote, the service component, but the other 80%, you're going to be fully subject to the tax. [00:26:50] Speaker C: Seems like a good guy move. [00:26:51] Speaker B: Seems like a good guy move. I also saw another good guy move here. Effective September 1, Texas is allowing exemptions on the following wound care dressings, adult and children's diapers and baby wipes, feminine hygiene products, maternity clothing, breast milk pumping products, and baby bottles. So yay. Yay for women and babies. [00:27:15] Speaker C: They weren't doing that. [00:27:16] Speaker B: I know. Already doing that. [00:27:18] Speaker A: Oh, my gosh. [00:27:18] Speaker B: I know. So now they are exempting it. So all your favorite things, Tim, your adult diapers are, you can buy them tax free in Texas. [00:27:29] Speaker A: No comment. I have no idea how we went from contractors to adult diapers. I apologize. [00:27:34] Speaker C: In two moves. [00:27:35] Speaker B: Just two moves. Just a legislative. [00:27:37] Speaker A: Congratulations, Jenny, for the checkmate. I'm left speechless. [00:27:41] Speaker C: Well, before we close out today, we've got a long list of apologies. Finally. We haven't had a long list for a while. So gang culture, we really were all over the map with West, South, Central. I think we said almost the name of every gang. [00:27:55] Speaker B: I'm just trying to fit in. [00:27:56] Speaker C: SSTA. Because we talked over it. I told you to redo it. You just didn't. So that part's going to be weird. Congratulations on Colorado getting yet another Easter egg mention because we cannot go one podcast without saying the word Colorado. We did it again. [00:28:14] Speaker A: What did we say about Colorado? [00:28:15] Speaker C: I cannot remember, but I was like. [00:28:16] Speaker A: We talked about it again at some point. We have. We always do. And they're just constantly on. Congrats. Are we going to send them a Christmas card? [00:28:25] Speaker C: We should do something. [00:28:26] Speaker A: Yeah, we should. [00:28:27] Speaker C: Arkansas cities, and that's one's from me. [00:28:29] Speaker B: Yeah. I was going to say for not. [00:28:30] Speaker C: Knowing any of them. And Oklahoma, Allegheny, Allegheny, we have to apologize again. [00:28:36] Speaker A: We're going to have to cut that at some point. But I'm sorry. Just Jenny's pronunciation, it's just amazing. [00:28:41] Speaker C: Oh, like, oh, we're here again. [00:28:44] Speaker A: Here we go. [00:28:45] Speaker C: Louisiana attorneys. I think I may have, like we did say, maybe it was easier. I don't know. It seemed like we did Puerto Rico law schools. That was me. I said yes. Oh, I went to the law school in Puerto Rico. Like, they were bad at law, probably. [00:29:03] Speaker B: As good as Oklahoma. [00:29:04] Speaker C: People who were probably over it. That there is a very popular musical by the same name on behalf of Christopher Columbus for being dumb because, like Tim said, Native American and Indian. But there are a lot of people that use both, especially interchangeable in the law and the thing. But yeah, just on behalf of Christopher Columbus and then the Houston Astros, who Tim called the Disastros. [00:29:25] Speaker A: I will never, ever apologize to the Houston diSastros, ever. [00:29:30] Speaker C: I knew he was going to rescind it immediately, so that was why our. [00:29:33] Speaker B: Last one, Tim, you are cancelled. [00:29:35] Speaker C: All right, Jenny, take us home. [00:29:37] Speaker B: Thank you so much for listening today. We would love for you to subscribe and follow us on Spotify, Apple, Amazon, Stitcher. You can also watch us on YouTube. Thank you so much. Looking forward to having you. Next time. [00:29:48] Speaker A: Hook them horns. [00:29:51] Speaker C: Good job.