As one who spots and retrieves most pennies I see on the ground, I'd
rather get the 1 cent back than pay it for whole dollar pricing. Yes,
it's a goofy mind game in pricing, but that's the way everyone does it,
regardless of sales tax. It only takes 100 stoops to get a buck - helps
the wallet as well as the waistline!
Owen Lowe and his Fly-by-Night Copper Company
"Sure we'll have fascism in America, but it'll come disguised
OK, I stand corrected in that we do have a use tax as a part of what we all
think of as sales tax, but I don't see anything in the code that requires
paying tax on mail order items as was the original comment that I replied
to. In fact, the instructions for column D on the ST-100 specifically
exempt purchases that meet the criteria for exemption of sales tax - even
when purchased elsewhere. So - I'll modify my original reply to state that
we are not liable for use tax on mail order tools or supplies that otherwise
would have met the criteria for exemption had they been purchased locally.
Use tax is what you pay when you buy a taxable item from out of state and
the seller did not collect sales tax. Lets say you buy an answering machine
from Amazon for $100. They will not charge you tax, but your home state
wants their cut. You must voluntarily report and pay it. If not, if an
auditor finds it you will pay the tax, plus possible interest and penalties.
If you show a pattern of avoiding paying sales tax, they will be sure to
audit you frequently. Yes, you have a state employee sitting in your office
going over your records. Isn't being in business fun?
My former business was audited once. The lady was the sterotypical
government employee. She was mean, nasty, and just plain rude. I think
she went to anti-charm school as a youth.
My failure to pay sales and use tax was due to lack of knowledge and not
deliberate. I self audited everything prior to the current year and
didn't have to pay any penalties.
I stand corrected.
"The production exemption applies to to purchases of machinery and
equipment used directly and predominantly in the production process."
So no NYS sales tax on power tools. If you took the time to set up
your shop as a business. Just sell a few things you make on e-bay
Depends on what you are. If you're a contractor, then yes. If you're a
manufacturer or a number of other categories defined by NYS, then no. It's
spelled out pretty clearly by the state. For the shop guy who is building
tables to sell, the power tools are exempt if they are predominantly used
for the manufacturing work. Though it is indeed hard to believe, NYS is
actually quite clear on this one... for a change.
That is what I had believed. However, according to the information
posted by New York State on
a manufacturer does not have to pay sales tax on equipment
predominantly used in the manufacturing process.
See Page 14 "Sales Tax Information For: Manufacturers, Processors,
Generators, Assemblers, Refiners, Miners and Extractors, and Other
Producers of Goods and Merchandise (12/97)"
"To be eligible for the production exemption, machinery and equipment
must be used directly and predominantly (more than 50% of the time) in
the production of tangible personal property..."
See Page 15 "A Guide to Sales Tax in New York State (8/04)"
"A manufacturer is required to register as a vendor for sales tax
purposes in order to use exemption documents to purchase raw
materials, machinery, equipment, parts, tools, supplies, and related
services without paying sales tax on its purchases."
What he said is generally true here in CT.
Check with a local CPA or the tax authority. I usually find CPA's to be
easier to deal with and sometimes more accurate than the folks answering
the phone at the State DRS.
The rules can be slightly different for furniture vs. built-ins or
finish carpentry, just as they can in regulatory issues. One is the
often the installation of customer provided material (home improvement
or construction), the other is sometimes called manufacturing (furniture
Ask a tax pro familiar with your locale. Some states require that
collected sales tax be kept in a separate bank account.
NYS Info on Capital Improvements & Repairs to Real Property
For a list of all of the NYS Sales Tax Publications
PUB 750, A GUIDE TO SALES TAX IN NYS, has a link to "Important Vendor
Been awhile but you may not want that tax exempt certificate. As I recall,
we had to file a quarterly sales tax report and it was a pain at that time
(10 years ago). May just want to pay the tax on the materials and pass that
on in the cost of the project and avoid the freakin hassle with NYS.
Not so bad an ordeal Bob. The forms are really pretty simple and simple
record keeping makes the forms a less than one hour effort every quarter.
Having said that, there is a certain value in not providing NYS any more
information about yourself than is absolutely necessary.
Yes, this is acceptable. But I believe you need to get a Certificate of
Authority from the state to collect sales tax for the labor portion.
This may be helpful. (Sales tax info is on page 18.)
You do not get a "tax exempt certificate" as you are not tax exempt.
When you purchase the materials you indicate to the seller that you are
purchasing them for resale. They will ask that you complete a resale
certificate for their files and will not collect (sales tax is
collected, not charged) the sales tax. Here is a copy of a NYS Resale
This is in Texas but NY may not be that different.
For supplies that go in to a project such as varnish, stain, screws, I do
not pay sales tax so long as it is for furniture.
In Texas, The whole piece of furniture is taxable. The price you sell the
piece for is taxable regardless of how much is parts and or labor. You do
not have to pay sales tax on the materials for this purpose. WORDING on
your invoice is very important.
In Texas the sales tax laws differ greatly.
My suggestion is to call the local NY State Comptrollers Office and ask
when they are the least busy. Go to that office and get set up legimately
and describe what kind of business you plan on doing and exactly what you
will be selling. They can tell you exactly what to pay tax on and what to
charge tax on.
In Texas maybe. If the work is being done to a customers personal home/
property and cannot be removed with out also doing repairs the job is not
taxable and I must pay sales tax when I pay materials. An example would be
adding a wall, replacing an old fence, or adding built in cabinets.
If my work can be removed with out having to do repairs the job is taxable
and I do not have to pay taxes on materials that go in to that job. Tools
are taxable. Blades, drill bits and such that have a life expentancy of
less that 6 months are not taxable to me when I buy them.
The net result is the same.
In Texas it is not. The sales tax on a piece of furniture that you sell
would be greater than the sales tax on the materials that you bought.
If so, how does one
IIRC in Texas you must first be licensed to do business. Then go to the
State Comptrollers Office and get your Sales Tax Permit.
You go to the local municiple offices and register as a small business (DBA)
and obtain an tax number. For DBA's in NY, it's typically your SSAN. Armed
with that, you can now purchase tax exempt and charge sales tax based on the
final product, which you have to submit to NY on a quarterly basis. Don't
be late - they are not a forgiving group of people.
None needed. The DBA route is a really easy route and it works well.
Simple bookkeeping - no accountant needed, just keep records, collect tax
and hand it over to the state.
Going to add some emphasis to this very important point. ALso, ALWAYS
send the return Certified Mail with a Return Receipt. Save your post
office receipts too. You wouldn't be the first person who filed on
time and was charged a late payment penalty. Happened a lot in one
company I was working for.
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