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	Action Alert CO2 and C02 tanks are not taxable El Paso-based SilverStreak, owned by former TRA President Alan Simpson, was recently audited by the State Comptroller’s Office. The state auditor challenged part of a refund request by SilverStreak for overpayment of sales tax on carbon dioxide purchases. This refund request was identified through a sales tax review of Silver Streak’s accounts payables. “We worked with Alan to recover erroneously paid sales tax that resulted in a refund for his company,” said John Gonzales of TRUST Financial. “During the process, Alan’s company was audited by the state comptroller’s office. We then were able to prove that CO2 purchases were exempt. Even if your company has paid sales tax on CO2 for the last four years, a sales tax review can help you recover those overpayments.” To prove the co-mingled sale/lease of CO2 and C02 tanks were not taxable transactions in the State of Texas, TRUST identified a ruling, Star Ascension number 200505249L, related to the sale and lease of propane tanks and recognized its applicability to CO2. This ruling contends co-mingled sales, including leases and rentals, of exempt gas and tanks used for the purposes of delivering the gas to the tax payer are not taxable. “We argued our CO2 purchases were exempt because it is an item for resell,” Simpson said. “We had, in the past, tried to get the vendor to remove the sales tax but they had a letter from the state that stated otherwise. This ruling clarified why carbon dioxide should be a tax exempt purchase.” SALES TAX REVIEWS There is a mechanism for restaurant owners to capture overpaid sales tax through sales tax reviews. Sales tax reviews examine a company’s accounts payables to determine overpayments of sales tax. Those overpayments translate into a refund for a company. “Profit margins sometimes come down to pennies on the dollar,” said Debbie Adams, owner/operator of 32 McDonalds’ franchises. “Operating a penny business, overpayments of sales tax can make a difference. Our sales tax review examined all ranges of invoices, which helped our restaurant organization. Plus, our staff was trained afterward so we were able to capture those savings on our own.” Most restaurant operators know some of the basic sales tax exemptions but interpretation of sales tax rules change frequently. A sales tax review can identify any gaps in knowledge that exist through new interpretations or staff turnover. Sales tax information resources The Texas Comptroller's Web site (www.cpa.state.tx.us) is a great place to look for information about taxability issues and general Texas tax information. Users can find information available about specific sales tax exemptions as well as toll-free tax information hotlines. Another resource is your own accountant. Having a sales tax review is a great way to save money, maximize profits and stay on the cutting edge of complex state tax laws. By learning about the process and benefits of a review, you will soon see that there is little reason not to try to save money. TRUST Financial is consulting firm that specializes in back office restaurant solutions ranging from sales tax reviews, Work Opportunity Tax Credit management, bookkeeping and accounts payable management, background checks, computer software and hardware consulting and other fields important and necessary to operate a successful restaurant office. www.trustfin.com
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