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ALL WRAPPED UP IN SALES TAX
BUSINESSES SEEK BIGGER SHARE OF TAX THEY COLLECT FOR STATE

There are lots of costs that businesses pass onto customers -- parking, security and stolen merchandise to name a few.

Add to the list making sure the state gets its 4 percent of most sales.

In return for collecting $8 billion in state sales tax, New York gives businesses a small credit to cover the cost of gathering all that money and sending it to Albany.

It's currently 3.5 percent of the amount of sales tax they send the state -- up to a maximum of $600 a year. That means companies must have $430,000 in sales to get the full credit.

The state reimbursement "is just too small to be helpful to the very small retailers," said Mark P. Alesse, New York State director for the National Federation of Independent Business. "This is meaningless for the Macy's of the world," Alesse said. "This is for the small Main Street store."

Both his organization and Assemblyman Robin L. Schimminger, D-Kenmore, are working to make the credit more meaningful to small businesses by letting companies keep 10 percent of the sales tax they collect -- up to $1,000 a year. Schimminger has introduced similar bills in the past that failed to go anywhere.

"We should somehow pay respect to the small businesses that serve as sales tax collection agents for our state," Schimminger said.

All Wrapped Up, which makes and sells customized candy bar wrappers, is about as small as businesses get.

Owner Tammy Rutland operates All Wrapped Up from her Lockport home. The decorative wrappers are used on candy to mark the birth of a baby, Valentine's Day and other special occasions.

In return for all the sales tax she collected for the state last year, New York let her keep $7.13 to cover her overhead. Under Schiminnger's proposal, her credit would rise to $20.37.

"You're really not getting much," she said.

And it wouldn't come close to paying for an accountant.

"If the intent of this vendor collection credit it to cover
the cost of preparing the return, the break even point is probably $300,000 in sales, said Bill McGowan, a manager at Fiddler and Company and head of the firm's small-business department.

The Amherst firm accounting firm charges roughly $75 to complete a quarterly sales tax form -- which is two pages and takes about an hour and a half, he said. But that doesn't include the cost the business incurs tracking sales tax, programming cash registers and keeping records.

"You never want to give back free money, but if they want us to appreciate it, they ought to triple that," McGowan said.

Even businesses that do the books themselves say the state needs to increase the credit.

Oneida Sales and Services in Lackawanna sells enough concrete and fences each year to get the maximum credit of $600.

But even if it were bumped to $1,000 it wouldn't cover all the paperwork that's required when they sell concrete for a not-for-profit job or to a not-for-profit company.

"That credit wouldn't touch the amount of work we put into this," said the company's controller, Jeff Kramer.

And a recent audit required them to produce four year's of paperwork backing up the amount of sales tax they sent the state. It took four months and two part-time employees to get all the documents in order. The auditor found nothing amiss, Kramer said.

"The state should get its fair share," Kramer said. "The part when it becomes cumbersome is audit time. It's a lot of cost and time employers have to eat."

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