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June 18, 2009I'm in accounts payable and just took over data entry of our sales and use tax. We pay over 1/2 million each month to 40 different states where we have stores.
From what little I know, it looks like we're paying a lot in taxes on things we shouldn't. For instance, we have our equipment repaired $$$$ and pay tax on the labor, parts and even the repair person's travel time. My understanding is that if it's not tangible we don't pay taxes on it. Is that too simplified an understanding?
We're incorporated in California and operate 180 stores (leased space) around the US.
Are we supposed to be paying the tax rate of the stores' locale, our headquarters locale, or the main office's state (Texas)?
Finally, how can I get quick schooling on these specific tax concerns?
Thanks!
Your understanding is too simplified. Each state makes its own rules. What is taxable in one state may not be in another state, and vice versa. For example, Texas taxes food, which most states do not tax, and NJ does not tax clothing, which most states do tax.
The taxes must be paid at the rate of the state where the sale occurs or where the service is performed.
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Your understanding is too simplified. Each state makes its own rules. What is taxable in one state may not be in another state, and vice versa. For example, Texas taxes food, which most states do not tax, and NJ does not tax clothing, which most states do tax.
The taxes must be paid at the rate of the state where the sale occurs or where the service is performed.
References :
Sales tax laws vary by state. What may be true in California may not be true in other states.
References :
State laws vary by state. With stores in 40 states, you have 40 sets of laws to contend with and some states can be extremely convoluted. For example in TX you don't pay tax on the labor for car repairs however you do pay labor to have accessories such as a new stereo system installed.
One other thing. You are not paying the tax, your customers are. You're just acting as agent for the states. Your sales tax receipts from customers should equal what you pay out to the states each month.
References :
You can enroll in an accounting class near you.
Some large multi-state companies have the local stores take care of local issues,but the transactions are sent to a processing center or corporate hq. for monitoring and corporate reports.
Each state has their own tax laws and what is taxed in 1 state may not be taxed in another and they have their own tax rates.
City and counties within a state may also assess a sales tax on goods and services.
References :