pdp1@EARTHLINK.NET on sat 28 aug 04
mention...and will Bonnie please look over my shoulder here?
Hi Mark, ( and hi Bonnie..! more fun...)
My understanding of the basic drill, is this:
Anytime anyone sells anything to someone else, if their
state has a state sale's tax, then they are likely supposed
collect from the purchaser, the amount of sale's tax as is
the state's requested percentage of the amout of the sale.
The exceptions to this are:
If something is sold to a business as intends to re-sell the
goods in some form.
If something is sold to a an exempt-status tax i-d holder
( where one of course duely notes in ones records, what
that 'number' is, and makes sure as well that it appears on
the copies of the receipts and so on), such as non-profit
most churches, city, county, state or local representatives
of fereral organizations, or whomever as may be that is
If a business buy something and intends to use that
something rather than buying it with the intention of
re-selling it in some form, then sale's tax is supposed to
be collected from them by the seller, when they purchase the
Goods one intends, as a business, to use rather than
re-sell, which are
bought from out-of-state, are supposed to have a "use tax"
paid to the state the purchaser lives in (or that they
or their business is registered in, I suppose), to the same
amount as would have been collected for the sale, if the
sale had occurred in the state of residence.
A business may intend to re-sell some item, and to
experience delays in re-selling the goods or item...and to
thus to be
under no oblige to having the sales tax collected from them
at time of purchase, or, to instead, occasion the
eventuality of that
collection to occur when ever it is they do sell the item or
goods, at which time, the sale's tax is collected from the
purchaser of those goods.
If the item or goods in the mean time becomes damaged in
some way, appears 'used' as say from being a 'demo' model,
or has depreciated to where it's value is less, then the
ultimate amount of the sale's tax collected from the
ultimate purchaser will be according to the actual price of
the sale as occurs.
If the item or goods were, in federal income tax terms, to
have been placed on a depreciation schedule, because the
purchaser forgot they had intended to re-sell the goods or
item, and, if that
schedule had over-time, run it's course, and if then the
item or goods is, according to the federal tax evaluations,
no longer worth anything, then of course, they may give the
item away ( or they may give the item or goods away
regardless), where, instead of selling it, they merely
a fee for administrative services, or for handling charges
incidental to the trouble of giving it to whomever the
thus, alleviating both the recipient and one's self, from
sale's taxes being collected on the value of that transfer.
Of course, such a fee is considered 'income' for services
rendered, and should be
dutifully noted in one's Account's Ledgers and so on, but is
not, itself, being then a 'service', subject to sale's tax.
And paying such a fee is possibly also considered a
legedimate deductible business expense for the purchaser.
Too, items deemed by the federal tax logic to be of no
further value, if bartered, must then be so bartered
according to the value as was assigned to them by such high
authority, in which case, the income both bartering parties
derive, is "nothing".
----- Original Message -----
From: "Mark Pitney"
> Hi everyone,
> I have been reading this thread on out of state sales and
taxes and I am
> getting a little confused. If I purchase anything that I
am going to use to make
> a product and then sell that product and charge sales tax
I don't pay tax on
> the purchase.
I believe this is correct, or it is correct in my experience
anyway, that is: The sale's Tax is not collected from you
when you purchase materials or goods which you will re-sell
in some form. Rather, it is when you do sell them as a
product or as a re-seller, it is then, that you are
supposed to collect the Sale's Tax from the purchaser.
You collect the Sale's Tax when your goods are sold to an
individual, or to a business as intends to use those goods
rather than re-sell them in some form.
That is, you do not collest Sale's Tax from the purchaser
when are selling them to a business as
intends to re-sell them in some form, in which case, they
collect it from whoever they have sold the things to...
That is, unless who they sell them to, is (again,) a
business that intends to re-sell them, in which
Or, unless you sell them to some concern as has an exepmt
say, selling them to a Church, to a non-profit, to things
city, county, state or federal or as may be...in which case
you are not expected to collect Sale's Tax from them for
their purchaseing something from you.
> Or so I have been led to believe. Is this not so? I would
> really appreciate any expertise that can be offered. I
really do not want to wind
> up in a predicament because I don't know or think I am
doing the right thing
> Cindy & Mark