ShopVox - frustration beyond imagination - no way to list labor as non-taxable.

[JoeBoomer]

Non-Taxable & Taxable

Installation and service is non-taxable. The labor that goes into making the sign/design is taxable.

"Tax applies to charges for producing, fabricating, or processing tangible personal property for your customers."



So we always add a separate line item for installation and roll it up so that it just shows one price for the project.
What ShopVox needs to do is allow you to build a product which consists of multiple line items automatically. Therefore you don't have to manually add the installation line item every time.



Cyrious user for 6 years. Happy to be ShopVox user now.

- Go Team!

 

[Billct2]

It's all taxed here.

 

[Bart57266]

I know this is an old thread, but I have a thought that may put the sales tax issue into perspective for future readers.

When you buy a refrigerator, the entire price is taxable. However, that price includes manufacturing labor, shipping charges, labor to load and unload it, labor to stock it, commission for salespeople, labor for cashiers, etc. Only a portion of the price was for the refrigerator, itself, but it is the delivered good, so its entire price (what it took to get it in your hands) is taxable.

If you pay an additional fee for delivery and installation, it is not taxable, because they are not providing additional product to you.

 

[kcollinsdesign]

Yes you are right.

It depends on what item you are selling.

You sell a Banner as an end item - the estimation includes labor charges also - but the whole thing is taxable since you are selling a Banner - not banner material and then labor to make it.

Install/Service - these are strictly labor oriented - and yes these should not be taxable (as per local tax laws) and they are separate products and show as separate line items on a transaction.

To further complicate matters, at least in Illinois, labor to construct anything that could be considered real property (such as a permanent sign installed on a property) is not subject to use tax, but the materials used to construct it are subject to tax (to be paid by the purchaser). It is illegal to use a resale certificate in this case, and then add the full use tax to the total price of the completed sign. It is considered a taking in that you are liable only for use tax on the purchase price of the materials, and the additional monies collected by charging the full tax rate at the finished retail product price (as you would any other manufactured product not destined to become part of a real property) are considered illegally obtained. You could sell the finished sign to the customer without installation (and collect the full use tax), and offer installation services under a separate contract, but that means the government will collect more money than they should. What they look out for are those that use a re-sale certificate or buy materials from out of state, then charge the customer full use tax for what is considered a real property improvement (and subject to property tax), then only pay the materials use tax (whether at the counter or sell-assessed), and walk away with the balance of what was represented to the customer as sales tax. The client is getting double taxed, and you are stealing!

 

[kcollinsdesign]

What happens when you get caught? Usually an audit will be triggered if you are buying from out-of-state and not paying use tax. You're supposed to self-asses, and pay quarterly. So if you buy something online and don't pay any usage tax, you're supposed to send that money in an envelope to the State. The auditors will look at your purchases, and figure out how much use tax you owe. They will also look at how you charged use tax to your customers, and if inappropriately applied, you will be charged with refunding the tax over-charges. There is no loss for you there, because you have already collected the money (and presumably haven't spent it yet). But paying the un-assessed use tax can be substantial, depending on how naive or criminally-minded you are.

 

[kcollinsdesign]

Please note that I am not an attorney, direct any questions or concerns to a qualified expert. I'm just sharing the benefit of my experience.

 

[Tattoosleeve]

What kcollinsdesign is saying is 100% correct. They will come after you for amounts not self-assessed. We are in BC which has the same Real Property / Tangible Personal Property setup for taxes. We are in the midst of an audit. We were naive and had no idea of the RP/TPP difference in tax rates. We were overcharging tax on items installed to RP and undercharging tax on TPP install/design labour. When the item is installed to RP the shop becomes the end user and must self-assess tax for the amount of raw materials used in the project. It's a nightmare. You can take the same decal and have 8 different tax scenarios attached to it.