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Sales tax question

Discussion in 'Sales, Marketing, Pricing Etc.' started by rydods, Feb 7, 2020.

  1. rydods

    rydods Member

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    I was asked to wrap a 30ft trailer, measured, estimated cost and send a quote requiring a deposit. Customer approved but is trying to avoid paying the sales tax. I told him I would need a sales use tax certificate of exemption form filled out.
    So he sends me a department of revenue seller's permit.
    We are both in Wisconsin and he is a physician. The trailer wrap is advertising his business and services but he's not "selling" the services I am providing him.
    I could ask my accountant but I know it will cost me. Just thought I'd see if anyone knew if this makes him tax exempt?
     
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  2. 2CT Media

    2CT Media Major Contributor

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    Not knowing WI laws but that wouldn't Fly in AZ. If its for his end use he is the definition of a taxible entity.
     
    • Agree Agree x 2
  3. Kottwitz-Graphics

    Kottwitz-Graphics Very Active Member

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    No... at least in Maryland, you have to provide a reseller certification and it's only good for items that you resell. If it is for your own use, you have to pay taxes...

    But I dont know who would be in hot water if you took his certificate and didn't charge tax, even if they were to check.
     
  4. Texas_Signmaker

    Texas_Signmaker Very Active Signmaker

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    Not allowed in Texas. I wouldn't think YOU would be the guilty party because HE is the one claiming a false exemption.
     
  5. WildWestDesigns

    WildWestDesigns Major Contributor

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    This right here. Depending on jurisdiction, there may be exemptions, usually (at least in my experience) if what you are selling them is not the final product and they have to go somewhere else to finish the good (even if it's for their own use). I do believe that that is jurisdiction specific though.

    As to who would be at fault, this is just me speculating, but we are responsible to do our due diligence in these matters and if it's deemed that we didn't do enough to make sure, then I could easily see us being found at fault. That is just me speculating though, so take that for what it's worth.
     
  6. netsol

    netsol Member

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    some of our clients in new jersey have enterprise zone exemptions as well.
    they CHARGE their customers sales tax in the zone at 3% instead of 7%

    if i sell my client an item & they are end user, BUT IT IS USED WITHIN THE ENTERPRISE ZONE the purchase is exempt. not so for an item bolted to a delivery truck or salesman's car or van OR AN ITEM LIKE A NOTEBOOK AN EMPLOYEE SOMETIMES TAKES HOME.

    your client may fit into some strange category like this, but isn't explaining properly
     
  7. Johnny Best

    Johnny Best Very Active Member

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    How much is this sales tax he does not want to pay? And what is the tax in your area, 5%, 9%.
     
  8. Gino

    Gino Premium Subscriber

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    If he is the end user......AND the trailer is not rented out, but also for his own use, unless there are some laws on the books in Wisconsin, like netsol mentioned, he is 100% responsible for the sales tax. Even if you honor a sales tax exemption certificate, if it is bogus, you will also receive some bad sh!t from the IRS for not knowing your own laws.

    Why would asking your accountant cost ya ?? Even a lawyer will answer a simple 3 minute question.
     
  9. night eagle

    night eagle Active Member

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    Sales tax exempt is for reselling items. He could claim his trailer is for sale as part of his business.

    I would honor his exempt status as long as he had filled out the proper paperwork.
     
  10. Rick Tennyson

    Rick Tennyson Member

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    If he signs a resale or exemption form, it’s between him and the state, period. It is not your place to confirm whether he qualifies for exemptions or not.
     
    • Agree Agree x 2
  11. Gino

    Gino Premium Subscriber

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    Knowingly accepting a sales tax exempt form you know or do not know is legit or not can get you in some serious trouble. Read up on it and enlighten yourselves. Not knowing the laws and how they are applied DOES NOT exempt you from wrong doings. Negligence does not hold up in court of law.
     
    • Agree Agree x 1
  12. binki

    binki Premium Subscriber

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    In California a sellers permit is required to resell goods. If they are not resold then a sales or use tax is due on them. As an example, if you open a Christmas tree lot, any unsold trees will have a use tax due. I would say since he is not reselling then the tax should be levied. It doesn't matter who pays it, you or him, but the government will want their share of the transaction.
     
  13. WildWestDesigns

    WildWestDesigns Major Contributor

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    In order to know if one should be collecting or not be collecting, one has to know what their customer qualifies or doesn't qualify for. So yes, one has to certain extent confirm if their customer does or does not qualify. Especially if it is something that you may have to collect if they don't qualify.

    One has to do reasonable due diligence in making sure. Them signing say a waiver of your responsibility isn't really going to hold up.

    Now, let's suppose that they do go after the customer and not you. Fine and dandy right? In my mind, not really. Because right now you are already on the radar of not collecting taxes on someone that didn't qualify for an exemption. I would be worried about them coming back and wanting to see how many others slipped through that should have had taxes collected on.

    I will say I'm very risk adverse when it comes to things like this, so if there is any question on things like this or other permissions etc. It's all about making sure one is protected.

    See this is the thing that would concern me. The customer is really not wanting to pay the tax now, I doubt that feeling will go away when it's time for them to send that in on their own. And once you have one that slips through (accidental or not), how many others also slipped through that should have been collected on?
     
  14. signsofparadise

    signsofparadise New Member

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    Here in NY Tractor and Trailers with a combined G.V.W. of 26,000 are exempt from NYS Sales Tax - Form ST-121.1 (use it all the time - many are unaware). It looks like Wisconsin does also Wisconsin Sales Tax Exemption Certificate S-211_1 - Look under the "Other" section.
     
    Last edited: Feb 8, 2020
    • Like Like x 1
  15. binki

    binki Premium Subscriber

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    I didn't mean it that way. Either call it out as a line item on the invoice or build it into the price but the vendor would submit it at tax time. I didn't mean leave it up to the customer to send it in.
     
  16. WildWestDesigns

    WildWestDesigns Major Contributor

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    This line comes right from the Wisconsin Revenue site:

    "Exemption certificates are signed by purchasers and are given to sellers to verify that a transaction is exempt."

    I'm reading that as it is the place of the seller to make sure that the sell is exempt. At least in the OP's jurisdiction.

    To me, it would depend on the scope of "accessories". If wraps qualify for that or not. It may very well, but that's what I would want to make sure about.


    I would just leave it as a line item. That way it's very easily documented that it was collected and for what transaction. I know some build it into the price itself, to me it's just easier for records if it's all out in the open.

    Back before they started closing up that internet purchase loophole, that's really who it was left up to, the people purchasing the good and it was up to them to send in the tax.
     
  17. unclebun

    unclebun Very Active Member

    Charge them sales tax. Even though he is a reseller, he is not exempt from all sales tax like a charitable or government entity. The Wisconsin form exemption for commercial trailer doesn't apply to his box trailer. It's for commercial cartage. And besides, you're not selling him the trailer; you're selling him graphics.

    The graphics on the trailer are for his practice's use, not for resale. Therefore you have to charge sales tax.

    If you ever need a doctor, don't go to him. He's a cheat an a shyster. He knows the sales tax law as well as you do. If he is trying to get away with this, he likely also tries to cheat insurance and Medicare.
     
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    • Agree Agree x 1
  18. netsol

    netsol Member

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    cut and pasted from nj st-3 form
    option 3 for exemption

    For use in the performance of a taxable service on personal property, where the property which is the subject of this Certificate becomes part of the property being serviced or is later transferred to the purchaser of the service in conjunction with the performance of the service.
     
  19. netsol

    netsol Member

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    that's why we have cpa's
     
  20. Dukenukem117

    Dukenukem117 Member

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    in CA you don't just provide a sellers permit but have to fill out a form specifying what you are purchasing and what business you are in. If you have something similar, I'm not sure how a physician is going to be able to fill that form out truthfully.

    But I agree with others who say to not budge and insist on charging the tax. Its not exempt.
     
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