In a bid to improve the number of taxpayers who choose to file their state tax returns online, Maryland’s Comptroller has turned to tickling funny bones as a manner of persuasion. In a spoof of Budweiser’s “Real Men of Genius” advertising campaign, the state office has posted it’s “Real Taxpayers of Genius” on YouTube.

“Today, we salute you, Mr. Frustrated Taxpayer,” begins the announcer. He’s then backed up by singers who repeat his falsetto phrases announcing an alternative to paper-based confusion — individuals can file their taxes electronically.

At the video’s end, Comptroller Peter Franchot reminds viewers online filing is faster and easier than mailing a return — not to mention far less expensive for the state. The state spends $1.98 processing each paper return, compared to a paltry $0.38 for those filed online.

After the Iranian government planned to implement a new national sales tax, businesses country-wide shut their doors for two days. The new tax would require merchants to pay the government 3% of their gross sales receipts.

In turn, that would lead to price increases passed on to consumers to make up the losses.

Even though the protest paid off and the government temporarily backed down from the new tax, it’s only a matter of time until another sales tax measure is introduced. They’re all part of President Ahmadinejad’s plan to revamp Iran’s banking system and tax code, which are considered antiquated.

Julius Baroi, along with four other University of Central Oklahoma students, founded the loosely-organized party business “Kegheadz” to rake in some extra earning. When the group’s MySpace account boasted the business had “over a billion served,” Oklahoma state tax officials took notice. After an in-depth assessment, the students were hit with a state tax bill for $320,000.

After the assessment, Baroi and the other co-owners claimed their MySpace boasts exaggerated more than slightly — Kegheadz claims to have hosted only 20 parties in the past year in a half. The business has made less than $2,000 since its inception.

But state tax officials aren’t letting up on the students. According to 2007 tax documents, the business actually hosted more than 100 events over the past five years.

A recent press release from Connecticut’s Department of Revenue says the state’s not going to take Sunday afternoon activities lightly. Any vendors who sell at a flea market, trade show, craft show, antique market or fair in the state must obtain a sales and use tax permit from DOR.

What if a vendor only wants to sell on one day? No exceptions, claims the state. An individual, business or corporation needs to have the permit on hand before a sale is made, and it needs to be prominently displayed at the vendor’s table or booth.

In case you’re thinking the state’s blowing smoke, failure to obtain a tax permit will result in a $500, three months in prison, or both.

Patrons of the Antiques Roadshow — now’s the time to panic.

After state alcohol beverage tax regulations approved on June 10, 2008, California’s State Board of Equalization (SBE) will be taxing flavored malt beverages as distilled spirits. Previously, they were qualified as beer for taxation purposes.

What sounds like a small detail to the casual drinker could have serious implications for distributors — or really enthusiastic company picnics. The “beer rate” of taxation is currently $0.20 per gallon, but now that malt beverages are reclassified, they’ll be taxed at the distilled spirits rate of $3.30 per gallon.

In Louisiana, every game of bingo, if it’s played correctly, comes with serious tax implications. Many churches and non-profit organizations rent their game equipment and materials from a distributor. Game cards, numbered balls, that giant rotating cage — they’ve got to come from somewhere.

And those bingo card dabbers (either the electronic or old-fashioned versions) that mark off when you’ve got the right number? That’s where sales and use tax comes in. The bingo materials distributor leases these devices to a charitable organization, which in turn takes over partial ownership of the dabbers.

The charity releases the dabbers to players and pays the distributor for every dabber used in a game session. Because giving the dabber to a player is considered a separate leasing of tangible personal property, the transaction between the charity and each player is taxable.

And you thought it was as simple as pulling out numbered balls.

But the answer’s more complicated than you think.

A Wal-Mart store located in Bentonville, AR, sold both Starbucks frappuccino coffee drink and Yoo-Hoo chocolate drink in glass bottles. Unsure of whether or not these items were taxable or exempt, the company’s headquarters submitted an in-depth petition on behalf of its NY stores to the state’s advisory panel looking for clarification.

The Taxation and Finance Department issued good and bad news to the chain: Frappuccino is exempt, but tax needs to be collected on sales of Yoo-Hoo.

For this specific frappuccino beverage, the main ingredient used in its production is brewed coffee. The panel ruled the beverage is, essentially, a flavored, cold coffee, and coffee is exempt from sales tax. But the myriad of ingredients used in Yoo-Hoo don’t qualify for an exemption — although it contains small amounts of cocoa, it’s considered a non-carbonated, flavored soft drink.

Stephen Edward Matters, owner and operator of My Maid and other residential cleaning businesses in the Minneapolis/St. Paul area, was nabbed when his company’s books weren’t as spotless as its services. Among the 22 felony tax charges Matters faces, two stand out:

1. Not remitting sales tax in excess of $150,000 to the state, and
2. Pocketing $55,300 in Social Security taxes from employees’ paychecks instead of handing the money over to IRS.

My Maid had sales of at least $2,413,906 between 1998 and 2005, yet Matters never handed a dime to the state. One key factor raised a red flag: the Minnesota Department of Revenue had revoked Matter’s sales tax permit in 2000, yet he continued to perform business without it.

Of course, his business wasn’t the only thing profiting. Those Social Security taxes he’d held onto? Matters used them for personal expenses. Rather than worry about hiding that extra income on his tax return, he simply decided not to file personal income tax for 10 years.

After grilling him over his financial “decisions,” state and federal prosecutors reported Matters “often could not sleep because he was worried about the fact that he had not paid or filed taxes.”

Apparently, he couldn’t pull himself away from his guilt long enough to take a nap on the giant pile of money he’d been stealing from his employees and the state.

We’ll see if a judge feels his pain — each of his 22 felonies is punishable by a $10,000 fine, up to five years in prison, or both.

That’s the latest according to a new finding from Indiana’s Dept. of Revenue.

An auto exhaust systems manufacturer purchased steel-toed boots for its employees to use in the production process. Because the equipment was used in manufacturing a product, the company filed a claim for a use tax exemption on its purchases.

But Indiana DOR denied the exemption after a critical discovery: The company had purchased the steel-toed boots and sold them to its workers at a reduced cost instead of giving away the equipment for free.

Because of that move, the company was actually providing a benefit for its employees — the opportunity to purchase protective shoes at a reduced price. Using the boots to provide workers with a benefit is a taxable use, and DOR promptly denied the company’s exemption claim.

Instead of absorbing the costs, providing workers with protective equipment and earning a valuable tax exemption, the company must remit the full amount of use taxes on its purchases.

Sounds like an expensive kick where the sun don’t shine to us.

At least, they shouldn’t be, according to The Streamlined Sales Tax Project definition. Many states have put it into effect in order to design, test and refine a tax system that radically simplifies sales and use taxes.

But then, issues like this come up. Candy is viewed as a taxable item, but SSTP stipulations also say that if an item contains flour, then that item is considered food, not candy. Take a gander on the ingredients list of a Kit Kat bar, and what do you see? Flour. So Kit Kats aren’t candy — they’re food.

And food is generally not taxable. Confused? So are we. Excited that you can indulge on as many guilt-free chocolate “food items” as you like with full support from SSTP? So are we.

Here’s the real takeaway: Even though SSTP is geared toward making tax questions a non-issue, it’s not all the way there yet, and it’s certainly not set in stone.

If your company’s on the fence about whether certain products or transactions are taxable in certain states, you can do more than check the paper regulations (which end up confusing a department even more). Get state reps on the phone, lay out your situation and concerns, and you might be able to feel your way out of a costly tax situation.