search  current discussion  categories  business - taxes 

sales tax question--thanks to all

updated thu 8 jul 99


Gregory D Lamont on wed 7 jul 99

Dear Clayart Folks,

Thanks to the many of you who have responded to this thread--both on and
off the list.
Your advice has been valuable and unanimous in its opinion.

What tipped me off to this problem in the first place was that when I went
in to deliver more stock the clerk handed me an envelope of cash. This
raised a red flag, as it meant they weren't running the sales through the
cash register. I asked the clerk if she was collecting sales tax on each
sale and she said "no". I informed her that she needed to, and to give the
money to the owner as I would be billing her. (Up until this point I has
simply done an inventory on a monthly basis and submitted a bill for what
had been sold.) The owner has always been a prompt payer. Food and
beverage items such as coffee are not subject to sales tax in Iowa, so it's
likely that my pottery is the only thing they have to collect tax on. I
knew that the shop had undergone a management change (the owner does not
actively participate in the daily operation of the shop) and that perhaps
the new manager was not informed that sales tax needed to be collected on
sales of my pottery. I mantioned this to the owner on the invoice I
submitted to her. Then came the call--informing me that she would no
longer pay sales tax on sales of my mugs. (She probably wants me to pay
the sales tax, although she did not say this outright.) She also said she
would not pay for mugs that "disappear" (her words) or get broken while on
display in her shop.

At any rate, her ill-informed decision not to collect and pay sales tax
and her statement about no longer being financially responsible for lost or
damaged stock while on display in her shop are in clear violation of the
consignment agreement I have with her. To this end, I have penned an
amazingly tactful letter to the owner with the appropriate information from
the Iowa Dept. of Revenue and Finance about it being her responsibility to
collect the sales tax at the time of the sale. I also took the opportunity
to refresh her memory about all of the other terms of our consignment
agreement. In the letter I stated that if she was not able to abide by the
terms of the contract that I would immediately remove my stock and end our
consignment relationship. The volume of business I do with them is not
large, but place has sentimental value to me as it was the first place to
carry my work back when I was just starting out selling my work. It has
given my work a lot of visibility to the university community and has led
to a couple of nice commissions. There are competitors in town now,
though, and I'm going to pursue them if this relationship falls through.
Thanks again,
Greg Lamont

3011 Northwood Drive
Ames, IA 50010-4750
(515) 233-3442