Issue link: http://psai.uberflip.com/i/1316653
ASSOCIATIONINSIGHT Portable Sanitation Association International News BIWEEKLY EDITION DECEMBER 9, 2020 Page 5 Continued on page 6 Sales Tax Issues Frustrate Portable Sanitation Companies By Karleen Kos, PSAI's Executive Director Like most businesses, portable sanitation companies are required to pay sales taxes in states and locations where these taxes exist. According to the Tax Foundation: • Forty-five states and the District of Columbia collect statewide sales taxes. • Local sales taxes are collected in 38 states. These taxes can be minor, or they can be so high as to exceed state rates. • The five states with the highest average combined state and local sales tax rates are Tennessee (9.53 percent), Louisiana (9.52 percent), Arkansas (9.47 percent), Washington (9.21 percent), and Alabama (9.22 percent). When the taxing scheme is straightforward and simple, there isn't much difficulty. For example, if sales tax is a simple percentage of total gross sales, that is easy enough to calculate and remit. In the world of portable sanitation, though, things can get complicated when state and local governments make a distinction between how and when merchandise, equipment rental, and service are taxed. More than once, the PSAI office has received calls from owners and accountants who have had to pay hefty back taxes and penalties because they either didn't understand when and how to charge sales tax, or because their taxing authority didn't accept the way they chose to split rental fees versus service fees. A Case in Point Currently, in Missouri, there is a case being decided in the state Supreme Court regarding a matter like this. Here is how the matter was reported by Daniel Tay for Law360.com: Gross receipts from renting portable toilets should not be subject to Missouri sales and use tax because customers are really paying for waste removal services and not physical toilets, a portable toilet rental company told state justices on [November 10]. Gott's to Go, a portable toilet rental company operated by John Gott, should not have its gross receipts taxed because the true object of the transaction that customers were paying for was the nontaxable service of removal of human waste, B. Edwin Bloomfield, Gott's attorney, told the Missouri Supreme Court at oral argument. Bloomfield asked the justices to reverse the determination of the state Administrative Hearing Commission that Gott owed $56,900 in sales tax. "To say Gott's customer is only looking for a porta-potty ignores what the customer really wants," Bloomfield said. "That is a way to dispose of the human waste that often accompanies groups of people."