|
Chandler shakes down dentist for sales taxes. I guess this means governments love sick, unhealthy people, well not the people but the taxes they bring in.
Chandler dentist challenges tax on removable braces by Edythe Jensen - Feb. 4, 2012 07:26 AM The Republic | azcentral.com A Chandler dentist is fighting the city's effort to collect sales taxes on Invisalign braces, arguing that they are prosthetic medical devices not subject to tax and that he is being unfairly targeted. Dr. Stephen Hunsaker e-mailed City Councilman Jeff Weninger to complain, but a municipal auditor is defending the investigation, saying it came out of one of his office's routine efforts to find and collect unreported taxes. Hunsaker, who opened Aspen Orthodontics at 3980 E. Riggs Road in 2003, said he has retained an attorney and declined to discuss the dispute. Invisaligns are custom-made, clear, removable covers that realign teeth and cost about $5,000, according to the manufacturer's website. Municipal sales tax on that amount would be $75; combined state, county and city sales taxes would be $440. Chandler tax auditor Lee Grafstrom said braces don't meet the definition of tax-exempt medical "prosthetic" devices because they "do not support a part of the human body or enhance one of the senses. In other words, the patient's teeth are not being held in the mouth by the trays or braces and the teeth function with or without any type of dental braces." Complicating the issue is that traditional metal braces, although also not considered "prosthetic," are usually exempt from sales taxes because they are sold as less than 15 percent of the dentist's total charge. The cost of Invisaligns are a much higher percentage of the dentist's charge, Grafstrom said. In his e-mail to Weninger, Hunsaker argued that Invisaligns are "prosthetics" because they support teeth. "As far as I know I am the only doctor they have targeted and I'm not aware of anyone else ever paying tax on Invisalign sales." Citing the ongoing audit and possible legal challenges, Grafstrom would not discuss the city's findings in Hunsaker's audit or if he is seeking back taxes on previously sold Invisaligns. But he said the probe came out of a routine examination of all professional and service-oriented businesses that have not reported paying use taxes for a long time. Professionals like doctors and lawyers and services like dry cleaners are required to pay use taxes on equipment, books and furniture they buy from outside Arizona and it is uncommon for any to go long periods of time without making those out-of-state purchases, he said. Although the tax on Invisaligns would be sales tax, not use tax, Grafstrom said the issue came to light during an examination of Hunsaker's equipment purchases. Since Chandler has started the random use-tax audits in 2009, the city has collected about $300,000 in unpaid taxes, Grafstrom said. "It's not a big money maker but more of an education process." In many cases where the business owner or professional is unaware the questioned items are taxed, the city doesn't seek back payments, but instead orders the professional or business owner to pay in the future, Grafstrom said, and that will likely be the outcome in Hunsaker's case. Weninger said he is looking into the issue, which has brought to light a confusing aspect of tax laws that can be cumbersome and unfair. "It sounds very labor-intensive for the businesses; you almost have to be a wizard to figure it out." |