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Technology Stocks : Gateway (GTW)
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To: Terry who wrote (5726)4/7/1998 5:41:00 PM
From: IceShark  Read Replies (1) of 8002
 
You will note from the following excerpt in the 1996 10K that they are a little more direct about having these sale/use tax agreements. I think in earlier reports they were even more specific in the description. Does make one wonder why they toned down the language in the '97 filing though.

With respect to income tax, it is not clear what effect the stores would have on total taxes. A unitary tax formula is used and you are basically shifting tax liability from one state to another. To the extent your net income would be partially allocated to higher tax rate states, you would incur an incremental increase in state income taxes.

The Company is party to agreements with numerous state tax authorities pursuant to which it collects and remits applicable sales or use taxes in such states. The Company entered into these agreements in response to inquiries of taxing authorities in those states concerning whether the Company's alleged contacts required the collection of sales and use taxes from customers in those
states. These agreements generally limit the liability of the Company for non-collection of sales taxes prior to such agreements' effective dates. These agreements do not address income taxes. Taxing authorities in other states have made similar inquiries concerning the Company's alleged contacts with those states and, in the future, could make specific assessments. The Company has not collected or remitted any sales or use taxes in such states for any prior periods, nor has it established significant reserves for the payment of such
taxes. There can be no assurance that the amount of any sales or use taxes the Company might ultimately be required to pay for prior periods would not materially and adversely affect the Company's business, consolidated financial position, results of operations or cash flows.
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