As every business owner knows, it's important to comply with local, state and federal tax laws. But compliance can be a challenge. It's not always easy to figure out what taxes are owed on which items, even if you sell goods in one state only. If you operate in multiple states, that can complicate matters exponentially.
Tax rates and taxable item categories can vary considerably from state to state. Cities can also impose their own taxes on certain items and services. And sometimes, tax regulations just don't make much sense, which leads to confusion for business owners who are struggling to accurately collect taxes from customers. Here are seven examples of bizarre taxes found in states:
1. New York takes a bite out of bagels … but only if they're sliced or eaten in a bagel shop. In New York, bagels that are sold sliced or eaten in-store (whole or sliced) are taxable. An unsliced bagel that's eaten off premises isn't taxable, but a sliced bagel is always taxed.
2. Connecticut taxes diapers … but only for children. In Connecticut, adult diapers aren't subject to state taxes. However, consumers who purchase diapers for their children do have to pay state sales taxes.
3. New Mexico gives centenarians a free ride. If you live to be 100 and you're a New Mexico resident, you're done paying state taxes. Residents who are 100 and older don't have to pay state taxes. However, that's only if no one else claims you as a dependent.
4. Florida has a sales tax holiday … but it's very confusing. Swimsuits are tax free, but masks and snorkels are not. Sports attire is tax free, but not helmets. Printer paper is taxable, but not construction paper. The state maintains a list of seemingly random items to guide merchants.