USA Tax Liability

[E O R]

The company from time to time give away sample products. We invoice at Zero $'s and reduce inventory and expense to marketing samples (below the line). Since we expense (below the line) to marketing samples our CPA firm is suggesting we either charge sales tax to avoid tax liability or we should change accounting treatment (method) to expense (above the line) to Other COGS. What would make business sense and how should we in fact treat these types of samples? In my opinion, it is treated as marketing expense to promote product...a grey area.

I am open to recommendations!

 

[kaligaclark]

I am in Arizona, but also worked in Texas so not sure about CA sales tax issues, but in AZ and TX the end company that get the samples should claim as use tax and I am not convinced that you paying the sales tax on these items is the best way to go. Again, I am not aware of CA sales taxes so you might want to check with the state. Good luck