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Legally avoiding charging sales tax



 
 
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  #1  
Old August 4th 03, 06:44 AM
rAD
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Default Legally avoiding charging sales tax

I haven't tried this, but suppose you have the customer order the parts with
THEIR credit card? Then only charge them for assembly. Technically, you
didn't sell them any hardware at all.


  #2  
Old August 4th 03, 08:36 AM
Woodbutcher
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On Mon, 04 Aug 2003 05:44:48 GMT, "rAD" wrote:

I haven't tried this, but suppose you have the customer order the parts with
THEIR credit card? Then only charge them for assembly. Technically, you
didn't sell them any hardware at all.


Doesn't matter,you still supplied a tangible service therefore it is
still taxable. Only sure way to find out is contact your states
Revenue Dept. Most people think it's simply "Sales Tax" when in fact
it's "Sales and Use Tax" which covers both goods and services.
BTW there are only a couple of states that have strictly "Sales Tax"
  #3  
Old August 4th 03, 09:44 AM
Jim Turner
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On Mon, 04 Aug 2003 05:44:48 GMT, "rAD" wrote:

I haven't tried this, but suppose you have the customer order the parts with
THEIR credit card? Then only charge them for assembly. Technically, you
didn't sell them any hardware at all.


Depends on the state you live in. Some tax labor. If you don't sell
them the parts, then you don't make any profit on the parts.
  #4  
Old August 4th 03, 04:25 PM
Al Dykes
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In article et,
rAD wrote:
I haven't tried this, but suppose you have the customer order the parts with
THEIR credit card? Then only charge them for assembly. Technically, you
didn't sell them any hardware at all.


Then they have to pay the tax. What's the point ?

OTOH; I've alway done small business consulting and used the fact that
I wasn't a reseller for anything to make the case that I was more
objective and always recommended solutions that were the best for the
customer. I've always been able to use the internet to get best prices
and be competitive with integrators that were tied to a brand.
I produce a bill of materials with where-to-buy-from specifics
and hand it to my client.





--
Al Dykes
-----------


  #5  
Old August 4th 03, 04:43 PM
Woodbutcher
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On Mon, 04 Aug 2003 14:06:04 GMT, "rAD" wrote:


"Jim Turner" wrote in message
ws.com...
On Mon, 04 Aug 2003 05:44:48 GMT, "rAD" wrote:

I haven't tried this, but suppose you have the customer order the parts

with
THEIR credit card? Then only charge them for assembly. Technically, you
didn't sell them any hardware at all.


Depends on the state you live in. Some tax labor. If you don't sell
them the parts, then you don't make any profit on the parts.


God you guys are thick. I KNOW services are taxable. But the bulk of the
value in a computer you build is in the hardware purchased, not in YOUR
labor. So you could reduce the taxable amount from say $1000 down to $100 if
you make the customer purchase the parts from the supplier on the Net. And
whether you charge them a markup on the parts or just strictly charge them
for your time is irrelevant. It amounts to the same thing if the amount
charged is the same.

The snag here is that people are usually tight-fisted and don't want to pay
you until the computer is up and running perfectly.


Okay the thick one will try and explain it to you AGAIN, (1) They buy
the parts,BRING them to you to assemble,you charge for assembly
ONLY,you tax your service ONLY. (2) They buy the parts, bring them to
you to assemble,you charge a markup and service,YOU TAX THE WHOLE
THING. If you charge a markup you are in essence selling them the
parts. Only other way around it is beef up the service charge for you
books and don't list any markup. Legally it any parts are shipped to
your business that relate to your business whether for personal use or
resale,the business is required to pay the sales tax.
  #6  
Old August 5th 03, 02:06 AM
Jim Turner
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On Mon, 04 Aug 2003 14:06:04 GMT, "rAD" wrote:


"Jim Turner" wrote in message
ws.com...
On Mon, 04 Aug 2003 05:44:48 GMT, "rAD" wrote:

I haven't tried this, but suppose you have the customer order the parts

with
THEIR credit card? Then only charge them for assembly. Technically, you
didn't sell them any hardware at all.


Depends on the state you live in. Some tax labor. If you don't sell
them the parts, then you don't make any profit on the parts.


God you guys are thick. I KNOW services are taxable. But the bulk of the
value in a computer you build is in the hardware purchased, not in YOUR
labor. So you could reduce the taxable amount from say $1000 down to $100 if
you make the customer purchase the parts from the supplier on the Net. And
whether you charge them a markup on the parts or just strictly charge them
for your time is irrelevant. It amounts to the same thing if the amount
charged is the same.

The snag here is that people are usually tight-fisted and don't want to pay
you until the computer is up and running perfectly.


You are the one being thick here. There is more that adds to the cost
of parts than sales tax.

1. The sales tax paid is often offset by the shipping and handling
charge on small orders. (The parts needed to make a single computer
will be a small order) Larger orders, like a real dealer/system
builder does will have a much lower shipping cost, which will more
than make up for the sales tax difference.

2. If the mail order company has a "presence" in your state, they
still must collect sales tax.

3. If you are a real dealer that does more than one or two systems a
month, then you can get deals from REAL distributers that will allow
you to sell the parts to your customers at about the same internet
price, including sales tax, and still make a bit of a profit.

4. Your method of doing systems would be an RMA/warranty nightmare.

What is your real goal? To sell your customers a quality system at a
very good price? Sell to your customers at the lowest cost no mater
what? Or avoid sales tax whenever possible, even if there is no real
savings and the hassles go up? It's your business, but I wouldn't do
it that way, and never have.
  #7  
Old August 5th 03, 06:39 PM
mchiper
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Jim Turner wrote:

You are the one being thick here.

Extra ordinarily so, I'd say.

There is more that adds to the cost of parts than sales tax.

snip A really fine effort.

Which doesn't even touch on,
Buying in quantity, rebates, and the "food chain".
(Any one of which makes sales tax pale.)

Or, inter State agreements,
and
Who pays sales taxes whether the seller collect's them, or not.

----- My favorite quote -----
"A pessimist sees the difficulty in every opportunity;
an optimist sees the opportunity in every difficulty."
Sir Winston Churchill (1874-1965)
- One test is worth ten thousand words -
  #8  
Old August 6th 03, 10:11 PM
Northman
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On Mon, 04 Aug 2003 15:43:48 GMT, Woodbutcher
wrote:

snip

(2) They buy the parts, bring them to
you to assemble,you charge a markup and service,YOU TAX THE WHOLE
THING. If you charge a markup you are in essence selling them the
parts. Only other way around it is beef up the service charge for you
books and don't list any markup. Legally it any parts are shipped to
your business that relate to your business whether for personal use or
resale,the business is required to pay the sales tax.

end

How can anyone get away with "marking up" parts that someone else
already paid for? if you buy a car and take it to the shop for
service do they charge you for the labor, parts installed, and a
"markup" on the car itself to get it back?
  #10  
Old September 24th 03, 06:28 PM
JAD
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sigh a resellers license and sale tax ID number solves this dilemma. I don't pay tax on hardware purchases immediately, I charge
the customer the equivalent to the tax I will be charged 1/4 ly.




"rAD" wrote in message nk.net...
I haven't tried this, but suppose you have the customer order the parts with
THEIR credit card? Then only charge them for assembly. Technically, you
didn't sell them any hardware at all.




 




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