The Fair Tax Act of 2005, Part XI
Continuing on to Chapter 2, Credits and Refunds:
`SEC. 202. BUSINESS USE CONVERSION CREDIT.
`(a) In General- For purposes of section 201, a person’s business use conversion credit for any month is the aggregate of the amounts determined under subsection (b) with respect to taxable property and services–
`(1) on which tax was imposed by section 101 (and actually paid), and
`(2) which commenced to be 95 percent or more used during such month for business purposes (within the meaning of section 102(b)).
`(b) Amount of Credit- The amount determined under this paragraph with respect to any taxable property or service is the lesser of–
`(1) the product of–
`(A) the rate imposed by section 101, and
`(B) the quotient that is–
`(i) the fair market value of the property or service when its use is converted, divided by
`(ii) the quantity that is 1 minus the tax rate imposed by section 101, or
`(2) the amount of tax paid with respect to such taxable property or service, including the amount, if any, determined in accordance with section 705 (relating to mixed use property).
Business Use Conversion allows you to take an item purchased at retail and use it for business, refunding the amount of tax on the item, or take a personal item owned form some period of time and refunding the current ‘fair market value’ tax level from the item. In essence, any business use item is untaxed.
`SEC. 203. INTERMEDIATE AND EXPORT SALES CREDIT.
`For purposes of section 201, a person’s intermediate and export sales credit is the amount of sales tax paid on the purchase of any taxable property or service purchased for–
`(1) a business purpose in a trade or business (as defined in section 102(b)), or
`(2) export from the United States for use or consumption outside the United States.
This untaxes items purchased for resale or for export, if you paid tax on them initially.
`SEC. 204. ADMINISTRATION CREDIT.
`(a) In General- Every person filing a timely monthly report (with regard to extensions) in compliance with section 501 shall be entitled to a taxpayer administrative credit equal to the greater of–
`(1) $200, or
`(2) one-quarter of 1 percent of the tax remitted.
`(b) Limitation- The credit allowed under this section shall not exceed 20 percent of the tax due to be remitted prior to the application of any credit or credits permitted by section 201.
This credit will likely not be very big for any business, but it is still money a business can pocket in exchange for helping collect the tax. It should help cover the costs of purchasing or reconfiguring point-of-sale machines. More to follow!
