Discussion:State income and State Sales and Use unpaid

I have a client who is an evangelical ministry / band that is hired to perform youth rallies and church functions. He is paid and 1099'd by the churches. Most of his work occurs in his home State of Georgia but he also perfoms in other States some as well--Florida and possibly others.

He worked for a church in 2006 and 2007 and ran this ministry part-time during those years. At the beginning of 2008, he quit the church and focused on this ministry full-time.

So here are the issues I am concerned with:

SALES AND LOCAL SALES TAX: At his events and on the internet, he sells some CD's and shirts for his band (limited sales volumes). To this point, he has not collected or remitted sales tax on his goods. I don't yet know the breakdown as to the volume of sales nor the distribution of income per State. How would you handle this? I will ensure correct reporting and remittances in 2008 but I am unsure how to handle this for 2007 (I am doing his taxes for tax year 2007). Is it come to Jesus time with Georgia and the other State sales and use departments? Since H&R only filed his income taxes, I don't suppose they would be responsible for fixing the omission.

STATE INCOME TAXES: I have not reviewed his 2006 tax return (H&R did it) to see if they filed multiple State income tax returns. For 2007, he earned income in Georgia and Florida (I am checking to see if there are more States where he earned income and how much). I will have to check Florida regulations to see if he has to file an informational return of any sort but he should not owe any personal income tax. In the event that he failed to remit taxes for 2006 (I will file proper State returns for 2007) to the proper States, shouldn't H&R be responsible to correct their oversight? What would be the best procedure for doing this....handle it for him and beg for mercy from the States affected or just kick him back to H&R block?

Thanks, Michael

Definitely a lot of work. He said he had several friends in the industry that needed the same services and took a bunch of my cards....

Michael

No state income taxes in FL for anything other than C corporations....

His principal place of business is in Georgia. He travels mostly to Florida...I am still waiting on the other states but their percentage of travel is very minimal.

He is a musician/evangelist and sells his CD's on a table at his performances and I don't think the sales volume is high.

Do you have any good reference sites regarding the reciprocal sales and use taxes?

Thanks again!

Michael