News and Insights

Idaho Vision Care Provider’s Tax Collection and Remittance Failures Lead to Assessment

Tax Development Oct 12, 2016

The Audit Tax Bureau of the Idaho Tax Commission (“Commission”) audited an Idaho vision care provider. During the course of the audit, the auditor found that the taxpayer had not remitted all of the sales tax it collected from its customers. The taxpayer had collected Idaho sales tax but then reduced the sales tax amount paid to the state because insurance reimbursed the taxpayer for a lower amount. As a result, a Notice of Deficiency Determination, identifying sales tax along with interest and penalty was issued.

The taxpayer appealed, arguing that the auditor’s method of calculating and interpreting the sales tax due was unreasonable. The taxpayer further argued that the audit itself was the result of an unfair targeting of the ophthalmic industry. In response to the taxpayer’s protestations, a tax policy specialist was assigned to review additional taxpayer-provided invoices. The tax policy specialist’s findings ultimately supported the original audit findings.

The Commission ultimately upheld the original audit findings, stating that the information provided did not show a miscalculation of tax by the auditors. The key takeaway from this decision is any taxpayer that collects sales tax from a customer has a fiduciary obligation to remit the full amount to a state or local jurisdiction.

The full analysis can be found in Idaho State Tax Commission, Decision No. 39152.