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| Advice on Sales Tax http://w-ww.luthiersforum.com/forum/viewtopic.php?f=10101&t=17313 |
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| Author: | bassgtrs [ Thu May 22, 2008 12:10 pm ] |
| Post subject: | Advice on Sales Tax |
Long time lurker first time poster here. I am mainly a hobbyist but I do build my fair share of solid bodies. I built a bass for a friend of mine and shipped it FedEx last October. I mainly just charged for cost. Just as luck would have it he gets an audit from the state's nexus and discovery unit and they want to charge an equivalency sales tax since there is no record of me having collected any taxes. I was under the impression that if you don't have a business presence in the state where you ship then you don't have to collect sales tax. This didn't even cross my mind since it was basically a transaction between friends. Next time I mail a guitar to another state should I collect a sales tax? |
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| Author: | Jody [ Thu May 22, 2008 12:38 pm ] |
| Post subject: | Re: Advice on Sales Tax |
talk to an accountant, lawyer, or the tax bureau in your state , it varies from state to state , and the laws change from year to year some states are coupled with reciprocating sales tax agreements. I noticed this year , for the first time , the NY state tax form asked if I owed any taxes for items I bought online from out of NY state ! Jody |
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| Author: | Don Williams [ Thu May 22, 2008 1:58 pm ] |
| Post subject: | Re: Advice on Sales Tax |
It used to be that you were not required to collect taxes on goods sold via the internet or mail order to customers outside of your state. It appears as though some states are trying to close those loops. In my state, I am not required to charge sales tax for customers outside of this state. To make things easier on myself, I simply don't sell to anyone in my state. Contact David Bland here via PM for more expert advice. |
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| Author: | Colin S [ Thu May 22, 2008 4:29 pm ] |
| Post subject: | Re: Advice on Sales Tax |
In the UK you don't have to charge sales taxes (VAT here) until your business turnover reaches over £67,000, or about $130,000. And, you only have to charge other EU residents, so US citizens don't have to pay. However, if I buy something from the US, then I have to pay 17.5% VAT on it and on the shipping costs! Colin |
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| Author: | Michael Dale Payne [ Thu May 22, 2008 4:34 pm ] |
| Post subject: | Re: Advice on Sales Tax |
The first thing is if you are a hobbyist then you likely do not have a business tax ID. Therefore you can't collect state sales tax. So at that situation your are not selling guitars you are selling your service as a craftsman and should be calming the funds as personal income. |
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| Author: | HomelessGuitarBuilder [ Thu May 22, 2008 4:36 pm ] |
| Post subject: | Re: Advice on Sales Tax |
Some states have reciprocal agreements with other sates and/or groups of other states for the purpose of charging and collecting sales taxes on Internet transactions. |
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| Author: | bassgtrs [ Fri May 23, 2008 7:51 am ] |
| Post subject: | Re: Advice on Sales Tax |
Thank you all for your replies. It doesn't appear that the state will budge on this. However we are trying to see if they will waive the penalty and interest they are also charging. |
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| Author: | boboreilly [ Sun May 25, 2008 10:20 am ] |
| Post subject: | Re: Advice on Sales Tax |
It's true, you do NOT have to collect sales tax on an out of state customer. However, that does not absolve the buyer from paying it. Most, if not all states, require you to pay sales and use tax on EVERYTHING you buy, regardless of wether or not the seller collects it. Yes, even things like your amazon purchases. The only difference in out of state sales is on wether the seller collects, or the buyer reports it and pays on their tax return. Some states work solely on the honor system, while others are pretty agressive on making sure that they get their $$$$. |
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| Author: | DYeager [ Sun May 25, 2008 12:35 pm ] |
| Post subject: | Re: Advice on Sales Tax |
Perhaps if you sent your friend copies of the material receipts and an invoice for your time, marked "gift"? Don't forget the fedex bill. Dan |
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| Author: | DYeager [ Sun May 25, 2008 12:36 pm ] |
| Post subject: | Re: Advice on Sales Tax |
Perhaps if you sent your friend copies of the material receipts and an invoice for your time, marked "gift"? Don't forget the fedex bill. Dan |
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