Walk Faster Please

[00:00:08] Speaker A: Welcome to Taxing Poetic. I'm your host, Jenny. And I'm Tim, and today we are going to have another regional series for you. We're going to be talking about New York, New Jersey, and Pennsylvania. And of course, the title of this regional series is Walk Faster, Please. [00:00:26] Speaker B: Yeah, exactly. Get out of my way. [00:00:27] Speaker A: Everything is faster. I'm in a yeah. So we're going to talk about what some weird stuff later on in the episode. [00:00:36] Speaker B: Yeah. And I think we're going to end up starting off today with a pop quiz. We're coming right out of the gate with pop quiz. [00:00:41] Speaker C: We have a pop quiz, hot Shots. Okay. Written by Donna McMurray. So you don't know the answers. That's great. Thank you, Donna, for doing that. [00:00:49] Speaker B: Fantastic. [00:00:50] Speaker C: Okay, first question, and I'm just going to randomly say, jenny, which of these states exempts clothing exempts clothing out of. [00:01:03] Speaker A: New York, New Jersey, and Pennsylvania? [00:01:05] Speaker C: Yes. [00:01:06] Speaker A: I'm going to say New Jersey. [00:01:09] Speaker C: The actual correct answer is all of them do. [00:01:12] Speaker A: That's a trick question. [00:01:14] Speaker C: Yeah, there's some exceptions, but they all. [00:01:17] Speaker B: Have some form of exemption, and it could be either. There's also, like, a floor and a ceiling and stuff of that nature, like yes. [00:01:25] Speaker A: Rehee Healy. All right, well, zero for me. [00:01:29] Speaker C: So, uh, Tim, which of these is not a state? [00:01:34] Speaker B: That would be Pennsylvania, isn't it? The Commonwealth of Pennsylvania. [00:01:38] Speaker C: It is a commonwealth. [00:01:40] Speaker B: There you go. It's not a state. [00:01:41] Speaker A: Oh, wow. [00:01:42] Speaker C: Does that change any rules or laws? [00:01:44] Speaker B: No, it's just something kind of like there's a couple of commonwealths that we have in the United States. [00:01:49] Speaker A: Very English. [00:01:50] Speaker B: I believe that's exactly. It comes from old school days. [00:01:53] Speaker C: Okay, Jenny East question. Only two jurisdictions in Pennsylvania have local taxes. [00:01:58] Speaker A: What are oh, okay. Philadelphia is one of them. [00:02:02] Speaker B: Me. [00:02:03] Speaker A: No, not gonna I don't even know which way to say it. Is it Allegheny or Allegheny? [00:02:09] Speaker B: Allegheny. Allegheny. [00:02:12] Speaker A: Oh, my goodness. [00:02:13] Speaker B: We're going to get hammered by somebody in Pennsylvania on that. That was not Tim Howe, but she. [00:02:19] Speaker C: Did get it, right. That is correct. In Allegheny, they have a 1% and Philadelphia 2%. [00:02:24] Speaker B: There you go. [00:02:26] Speaker C: Okay, Tim, which state has an sut sut prepayment called prompt tax? [00:02:33] Speaker B: Oh, a sales and use tax prepayment called the prompt tax. That's our great friends in New York. [00:02:38] Speaker A: Oh, it's so easy. [00:02:39] Speaker B: Really stupid. [00:02:40] Speaker A: And you get OOH, which dates not a state. I think these are supposed to be switched. [00:02:46] Speaker B: Hammer the producer, not me. Okay. I'm not the one doing the selections here. [00:02:51] Speaker A: Okay. All right. [00:02:52] Speaker B: Okay. [00:02:52] Speaker C: Jenny, true or false? [00:02:55] Speaker B: Turs or flays? [00:02:56] Speaker C: You got a 50% chance. New York City and New York State tax the same things. [00:03:03] Speaker A: That has to be false. [00:03:05] Speaker C: It is. Do you know what some of the things are that they tax differently? [00:03:10] Speaker B: Clothing. Oh, clothing is one of them. Right? [00:03:13] Speaker A: Asking me. Go ahead. You're like me, teacher. [00:03:19] Speaker C: You already got it, right? I mean, you already got the point. [00:03:21] Speaker A: No. Well, now he's just rubbing it in. Okay. [00:03:24] Speaker C: Commercial rent some services. [00:03:26] Speaker B: Oh, nice. [00:03:26] Speaker A: Would soda be one? [00:03:27] Speaker B: I didn't know. Commercial rent really? That's interesting. [00:03:30] Speaker A: You didn't know something. [00:03:34] Speaker B: All right, can we rewind this segment? [00:03:36] Speaker C: All right, Tim, last question. Which state ranks 50th on the Tax Foundation? State business tax climate index. [00:03:45] Speaker B: That has to be New York. [00:03:48] Speaker C: It's New Jersey. [00:03:49] Speaker B: It's New Jersey. [00:03:50] Speaker C: 50Th. [00:03:51] Speaker B: 50Th. Wow. [00:03:52] Speaker A: Wait, what even is that? What is climate what? [00:03:56] Speaker B: I have no idea what the tax climate index is. I have to ask Donna about that. Yeah, you know what it's got to be? It's got to be, like, as far as favorable tax treatment and stuff like that. I don't know. Let's go to the Internet or maybe. [00:04:08] Speaker A: Because wait, and the answer is New Jersey. Is that right? Yes. Ask your Google machine. [00:04:15] Speaker B: The index is designed to show how well states structure their tax systems and provide a roadmap for improvement. Well, let me tell you, new Jersey's tax system is criminally suquad. [00:04:26] Speaker A: So that's why they're 50th. [00:04:28] Speaker B: That would be why they're 50th. Wow, look. And look who's 49th. [00:04:32] Speaker A: New York. I know. [00:04:35] Speaker B: You got to bring that up. [00:04:36] Speaker A: So now we know we should probably change the title of this episode to Crappy Climate States. I mean crappy, tax climate states. [00:04:44] Speaker B: You might want to take that out because I think you've just offended every single human in the New York greater tax know. [00:04:53] Speaker A: I'm sure New York would agree with me about know. They pay a lot of know. Okay, so pop quiz. So how do we do on so. [00:05:01] Speaker C: Yeah, you got two each. [00:05:02] Speaker A: Yes. In your face. [00:05:04] Speaker B: I think she should get partial credit because she couldn't pronounce that's. Just that's wow. Sorry. To my friends up in Pittsburgh in that whole area. [00:05:16] Speaker C: Yeah, that's definitely on our apologies list. [00:05:18] Speaker B: It's all good. It's all good. [00:05:19] Speaker A: Whatever. [00:05:19] Speaker B: Hey, man, PNC Park. It's one of the greatest baseball stadiums in the US. Gonna go check it out. [00:05:24] Speaker A: Okay. [00:05:25] Speaker B: Go Pirates. Good stuff. Hey, you want to take a quick break? [00:05:28] Speaker C: Yeah, take a break. [00:05:28] Speaker B: Take a break. [00:05:32] Speaker A: All right. Welcome back to walk faster, please. We're talking about New York, New Jersey, and Pennsylvania today. [00:05:38] Speaker B: Awesome. [00:05:39] Speaker C: We actually got another letter email from Taxi Mctaxface. [00:05:46] Speaker A: Oh, goodness. [00:05:48] Speaker B: This is fantastic. [00:05:49] Speaker A: Do we decide, is it a Miss Mctaxface or a Mr? [00:05:54] Speaker C: I think it's androgynous yes, we don't just Taxi Mctaxface. There's no profile image. [00:05:58] Speaker A: So this person is always mad at us. Let's see what happens here. [00:06:02] Speaker B: See what's going on today in Taxi's world. [00:06:04] Speaker A: What do we do now, Tim? [00:06:06] Speaker C: Okay, again, I'm just reading this verbatim. [00:06:08] Speaker B: Okay. [00:06:08] Speaker C: I am starting to see why I'm the only person who's writing into this show. [00:06:12] Speaker A: Oh, jeez. Ouch. [00:06:15] Speaker C: Off the bat. I was visiting New Jersey and got a box of kniche, and they would not give me any Utensils. They said I cannot have any because they would have to charge me sales tax. I told them they were full of and instead they forced me to sit in the restaurant, eat the whole box with my bare hands, like a feral animal. Are they right. [00:06:35] Speaker B: Sorry. The image of somebody gobbling down a box full of ganache in a restaurant. [00:06:40] Speaker A: Do they have any thumbs then? Yeah, they will be gobbling it like an animal. [00:06:44] Speaker C: I don't know why they would force them to sit in the rest you can yeah, I know. [00:06:49] Speaker A: Oh, that's true. [00:06:49] Speaker C: They may have locked your own utensil. So the question, I guess, is that true that if you have a utensil, you get sales tax and if you. [00:06:57] Speaker B: Don'T, technically, in the state of New Jersey, yes. If you're actually selling bakery items, at least historically, that's how it was treated in New Jersey and is still treated. From my understanding today is if you're selling bakery items and you afford somebody or give them the opportunity to have utensils excuse me, to eat those items, it's food to be consumed on premise, and it's prepared food, and it will be taxable in the state of New Jersey. Whereas if you just say, hey, here's your box of kniche, go on your merry way, walk out of here, guess what? Then it's food for take home or food for general consumption out to off premise, and ultimately it would not be. [00:07:36] Speaker C: Taxable even if you eat in. [00:07:38] Speaker A: Yeah. And isn't this one of those instances where if the auditor's there and they catch it, then they get in trouble? [00:07:44] Speaker B: Yeah, I mean, typically typically they're going to look to see if utensils are provided. If you have a dining area and this isn't just New Jersey, you don't want to just pick on New Jersey. There's actually a number of states that have this rule. North Carolina used to have this rule, and I say used to. Haven't researched it in a couple of years. And we obviously are in a dynamically, changing environment. Right. Which is why we have this podcast that always depends on the instance and the legislative changes within the state. But historically, these states, number of them have said food for home consumption means you cannot give someone utensils and you cannot have a dining area. [00:08:21] Speaker A: Okay. [00:08:23] Speaker B: Obviously, it helps business help with consumer. In some instances, it can be construed as a competitive advantage because you're not having to charge sales tax on your kniche or your donuts or your bagels or your croissants. Right, okay. Or as you would like to say, croissant. [00:08:39] Speaker A: Croissant. [00:08:40] Speaker B: There you go. [00:08:41] Speaker C: Oh, thanks. Taxi. McTax face for riding in, I guess. [00:08:45] Speaker A: I know. Again, we don't make the rules. Taxi. [00:08:48] Speaker B: Just chill means settle down. [00:08:50] Speaker A: Yeah, settle down. Okay. All right. So now we're going to move into our segment of, you know What's Weird. [00:08:56] Speaker B: What's Weird. [00:08:57] Speaker A: What's weird, Tim? We're going to talk about our first what's weird, which is clothing, which is also pertinent to all three states and walk faster, please. So please text poetic about what's weird. [00:09:11] Speaker B: With know, it's just kind of interesting, especially if you look at a state like Pennsylvania, right. And look, we don't know all this random mistress right off the top of our heads. We have clients that deal with these issues. That's why it's very familiar to us. We're constantly answering these types of questions, even dealing with prospects. But at the end of the day, Pennsylvania, there are certain types of clothing wearable apparel is how they generally like to define it, that would be exempt from tax. But you have things like formal wear, tuxedos that would be taxable. You have fur clothing that is considered to be taxable. Costumes. Right. Costumes are considered to be taxable items. [00:09:49] Speaker A: All my favorite things, right. [00:09:51] Speaker B: Safety equipment, not so much. [00:09:54] Speaker A: Costumes, yes. [00:09:55] Speaker B: Your face shield. Yes, exactly. While you're filing out returns. Oh, my God, watch out for the flying ink. But yes, no, at the end of the day, there's a number of different classifications of items in Pennsylvania that would be considered exempt. But you also have the taxable bucket that we need to be worried about. And then also, like we discussed, in New York, New York, New Jersey, both have very interesting rules as it pertains to clothing. They have dollar limits and thresholds that are set excuse me, on isn't there a minimum floor? Yeah, there's basically a tax that that is on certain types of purchases or a dollar limit on certain types of items that it becomes taxable after X amount of dollars. Right. So you have to set up your POS system or you have to set up your online system to be able to know those types of rules so that when you sell an article of clothing, you can actually tax it appropriately. Okay, right. So clothing in these jurisdictions, and it's not just isolated to know new York and New Jersey. There are a number of states in the Northeast that have very interesting clothing rules. We like to say they all just must have went to New York's Fashion Week and got really upset and decided to tax high end clothing at some point. [00:11:05] Speaker A: But I don't that's my dream. New York fashion Week. How did well, you know, just a just to spectate. [00:11:12] Speaker B: Okay. [00:11:13] Speaker A: Yes. Not to buy anything, obviously, you don't pay me enough. So back to Allegheny. Do they tax it differently in Pennsylvania? [00:11:26] Speaker B: In Allegheny County, yes, because the commonwealth excuse me, in Pennsylvania, you would have to look at the specific rules regarding clothing. [00:11:37] Speaker A: Okay, that's what I wanted to know. Really? Out of that whole thing. [00:11:40] Speaker B: Say it with me once I know. Allegheny. [00:11:42] Speaker A: Allegheny. [00:11:43] Speaker B: There you go. You got it right on. [00:11:45] Speaker A: I know. Okay, okay. You know what else is weird is contractors. [00:11:51] Speaker B: Yeah, yeah. And you talk about capital improvement projects. That's what CIP stands for, specifically in New Jersey and New York, contractors and how they actually conduct business and the nature of the repairs or the nature of the work excuse me, should I say that they're actually doing could be taxable or non taxable? You sometimes have to get an affidavit that's signed by your customer that says that you're doing a capital improvement project. And what is that? A capital improvement project means that you're taking something and integrating it into the real property, or basically you're integrating it into the structure and it's becoming a component of real property. When you think about if I'm installing cabinets or if I'm installing a set of stairs or if I'm building a new wall, that would be considered to be a capital improvement project, and it would be non taxable. You would not have to collect tax from your customer, and you wouldn't have to pay tax on your materials or excuse me, you would pay tax on your materials when you purchase them up front. Whereas if you did a repair, like you resurfaced cabinets or if you came in and you patched a wall or if you painted or something like that, that would be considered a taxable project. You would have to collect tax from your customer and you would not pay tax on your materials when you purchase. [00:13:05] Speaker A: And this is in all three states. [00:13:06] Speaker B: Just New Jersey and New York. [00:13:08] Speaker A: New York. [00:13:08] Speaker B: Okay? [00:13:08] Speaker A: Not the commonwealth. Not in LEGone. [00:13:11] Speaker B: No. Okay, stop saying a LEGone. [00:13:13] Speaker A: I'm just going to keep saying it. [00:13:14] Speaker B: You're going to really frustrate me. [00:13:15] Speaker A: I know, bro, that's why I keep doing it. [00:13:18] Speaker B: It's literally like nails on a chalkboard right now. [00:13:20] Speaker A: You're welcome anytime. [00:13:22] Speaker B: Can you that is my OCD. [00:13:24] Speaker A: Okay, so the bakery rule. [00:13:27] Speaker B: Bakery rule? Yeah, that's what we were just talking about with taxi, right? Taxi, MC tax and having to deal with that whole if it's food for consumption, food for home consumption, or food for immediate consumption. New York's rules around that are really weird. New Jersey we just talked about has some very interesting rules regarding know, utensils are present, a dining area, things of that nature. But then you turn around and you talk about in New York, if know, buying something that's heated, if you're buying something that accompanies something that's actually ready for immediate consumption, it would normally be exempt. That would then change its nature and would be taxable. [00:14:07] Speaker A: My favorite example is you buy a single donut in New York and it's taxed in full because you're eating it there. But if you buy seven and bring them home, then you pay the grocery rate. [00:14:19] Speaker B: That's basically it. Yeah. It used to be a quantity based. [00:14:22] Speaker A: The grocery rate is lower, actually. [00:14:25] Speaker B: It would be exempt. It would be 100% exempt. Yes. It technically actually becomes an exempt based transaction. [00:14:33] Speaker A: Okay. You know what else is weird? I would like you to tax Poetic on is Pennsylvania software rules. [00:14:40] Speaker B: Basically that they tax everything with regards to software. [00:14:44] Speaker A: Yeah, and that's unusual for a state right. Have exemptions for certain types of software. [00:14:49] Speaker B: Yeah, this is really nerdy. So it truly depends. A lot of states, their definition of tangible personal property really is what defines software as being taxable or not. So, like, Georgia, where we're sitting right now, is a great example. Right. Historically, Georgia has said that the exchange of tangible personal property is considered to be a taxable transaction or the actual physical exchange of tangible personal property. So if I sold you software that was on a physical medium, like a DVD or floppy disks for all of you out there that can remember what a floppy disk was, it's a 3D. [00:15:29] Speaker A: Printing of a save icon right. Is what millennials think it is. [00:15:34] Speaker B: Oh, my goodness. Yes. That is the most ridiculous explanation of a floppy disk I've ever heard in my life. But, yes, that would be it. I love it. Yes. So that 3D printing of a save icon from Excel would be considered to be a floppy disk. But, yeah, if you exchange that in Georgia, it was taxable. Electronic transmissions of software have been historically non taxable in Georgia. Right. Georgia is actually trying to change that or is in the process of attempting to change that. They actually want to consider electronic downloads, things of that nature, to be taxable. [00:16:08] Speaker A: Transactions because they want the money. [00:16:10] Speaker B: We have a number of states that are chasing that. They're chasing those dollars. Pennsylvania is just on the forefront of it. They tax SAS, they tax electronic transmissions. Can software load and leave software? I don't know if custom software is taxable in Pennsylvania, but you generally need to take a look at the rules and understand it. But I will tell you, like, cloud based solutions, licenses for cloud based software, things of that nature, electronic downloads of itunes and things, those are all taxable in the state of Pennsylvania. [00:16:40] Speaker A: Okay, well, I have one more. You know what's weird? That I think a lot of you tax compliance people out there will agree with me on it is such a pet peeve. How about New York doesn't have a regular quarter for filing. They just made up their own special quarter. [00:16:57] Speaker B: Oh, you're talking about the off quarter filings. [00:16:58] Speaker A: Off quarter filings, yeah. [00:17:00] Speaker B: What is a good example of an off quarter? Jenny? [00:17:02] Speaker A: An off quarter would be instead of it being a traditional January, February, March that you file in April, you're actually filing December, January, February, and March. [00:17:12] Speaker B: There you go. [00:17:13] Speaker A: And that happens throughout the whole year. And you make prepayments for what, the first through the 22nd. [00:17:19] Speaker B: That's right. [00:17:20] Speaker A: The prompt tax. Prompt tax, yeah. So, New York, you know, I love you a lot for a lot of reasons, but come on, let's just get. [00:17:27] Speaker B: On the regular can we get on a standard quarter? [00:17:29] Speaker A: Can we get on a standard quarter? That's a little that's weird. [00:17:33] Speaker B: It was like our friends in California what? Requiring their annual payments in June this last month. [00:17:38] Speaker A: Yes. And you know why? [00:17:39] Speaker B: Yes. So that they could close out their fiscal year with a surplus. [00:17:42] Speaker A: Correct. [00:17:43] Speaker B: Gotta love it. [00:17:44] Speaker A: The literal answer we got from California when we asked, why is every client having to make an annual California prepayment this year? Never had to do it's. [00:17:54] Speaker B: Very interesting. [00:17:55] Speaker A: Sorry, that was but they do not walk fast in California, so they are not part of walk faster, please. So, anyway but that is what is weird about New York. So just keep in mind, it can be very confusing. The returns are due at different dates. The payments are due in different dates in New York. [00:18:11] Speaker B: So basically, I mean, kind of the whole tip for this entire segment would be if you live in New York, you need to move. Right. Effectively, we're seeing a lot of that. [00:18:26] Speaker A: Well, just from tax complexities. [00:18:29] Speaker B: Exactly. Tax environment. I mean, when we're talking about the tax environment, we said it earlier, number 49. Right. New Jersey is number 50. [00:18:36] Speaker A: Right. [00:18:37] Speaker B: It's quite difficult. Very difficult. Compliance environments. Very difficult to navigate those waters. But that's why we're here, right? You can call us and we can offer you some advice and some suggestions and help you guide you through some of these nuances within these states. [00:18:53] Speaker A: I bet the people in Allegheny County are very happy, though. [00:18:56] Speaker C: Well, that's a good segue into our apologies before we close up here. Obviously opening right up with everybody who lives in Allegheny County, I'm sure maybe. [00:19:05] Speaker B: Jenny, I think, has hammered that home. [00:19:06] Speaker C: New email from anybody who lives in Allegheny County. [00:19:10] Speaker A: If Tim says it annoys him, then I'm going to say it all the time. [00:19:14] Speaker C: Millennials. Actually, we have to apologize to because I'm a millennial. We know what a floppy disc are. Gen Z is who wouldn't know what. [00:19:20] Speaker B: A floppy disc is? [00:19:21] Speaker C: I didn't want to get lumped in. [00:19:22] Speaker B: You truly qualify as a millennial. [00:19:24] Speaker C: Oh, yeah. Come on, dude. We're old people. Whoa. [00:19:28] Speaker B: God, I am old. [00:19:30] Speaker A: You and I are old, Tim. Okay. [00:19:32] Speaker C: People who continue to live in New York. [00:19:34] Speaker A: There's a lot of apparently. [00:19:36] Speaker C: Yeah, I mean, apparently you got the quote. You know, anybody who doesn't live in New York has to be in some way kidding. [00:19:46] Speaker A: I Love New York by the yes. [00:19:49] Speaker C: Um, and just sort of new York, New Jersey, Pennsylvania. Jenny was not saying she doesn't like your places. She was just saying you have very crappy tax. [00:19:58] Speaker A: Yes. I thought that was clear the first time. [00:20:00] Speaker C: Yeah, I just wanted to make sure we have that. [00:20:02] Speaker A: In fact, we feel bad for you with your crappy tax. [00:20:06] Speaker B: Look, if you haven't been to the Hudson River Valley in the middle of the summer, it's absolutely one of the most beautiful places on the planet. It's gorgeous. I had a budy in the Navy that used to live there, and we all did a road trip and went and visited his family once. It was totally awesome. [00:20:18] Speaker A: It's cool. [00:20:18] Speaker B: Great weekend. [00:20:19] Speaker A: Yeah. [00:20:20] Speaker B: Good times. [00:20:21] Speaker A: Yeah. [00:20:21] Speaker B: All right wrapping this up. Please subscribe, check us out on Instagram, title on LinkedIn and please send in your questions. Taxi mctaxface cannot be the only person on the planet that somehow gets this emails. But for this point yes, I know. [00:20:39] Speaker A: You don't even have to say something nice. Just say something. [00:20:42] Speaker B: Say something. Thank you all very much and look forward to talking to you next time. Bye.