What should I do (charging tax)

[midnightmadman]

I have a customer (neighbor friend) who is buying signs from me for their business.
The problem is they keep asking me to not charge tax, but they dont want to pay cash and they want an itemized invoice.
I did it once for them and they paid me their business check. Now I have another job I did for close to $400 and they are asking to do it again. I tried to explain that the only time that there is no tax chgarge is if they are re-selling what they are buying from me or using what they are buying from me to make there final product... they are using the signs for advertising.
If I don't charge tax, can I get in trouble down the road or is it their issue?
Please advise!
Thanks​

 

[SqueeGee]

Yes, you can get in trouble. I wouldn't do it anymore. We have folks ask us to do this also from time to time. You just have to be firm and they'll back off.

 

[Mosh]

You WILL get in trouble. Ask them for a tax exempt number, without one they pay tax, period.

 

[R08]

Yes, you can get in trouble. I wouldn't do it anymore. We have folks ask us to do this also from time to time. You just have to be firm and they'll back off.

and to boot.. you've just admitted online to tax evasion. :Oops:

 

[Flame]

Yes, you will get in trouble for this. Tell them flat out it is ILLEGAL. If he has a legitimate business, he will have access to a resellers permit. Here in Washington, I simply make a copy of their resellers permit and keep this on file for them and for any items they will be re-selling, simply mark on their invoices that they have a permit.

Keep a good paperwork trail just in case things get hairy. Trust me...the tax guys are NOT fun to deal with. They carry a big stick.

 

[gnemmas]

Do like some furniture salesman did...We will pay your sale tax...

Here is how it works: our sales tax is 9%, so for $400, divided by .91 is 439.56. So charge him $440, and no sales tax for him.

 

[midnightmadman]

Yes, you will get in trouble for this. Tell them flat out it is ILLEGAL. If he has a legitimate business, he will have access to a resellers permit. Here in Washington, I simply make a copy of their resellers permit and keep this on file for them and for any items they will be re-selling, simply mark on their invoices that they have a permit.

Keep a good paperwork trail just in case things get hairy. Trust me...the tax guys are NOT fun to deal with. They carry a big stick.

They keep telling me they will get the re-sale certificate but even with that is it legit to not pay tax? I mean they are not doing anything with the signs but advertising.

 

[SignManiac]

Simple, tell him to hold on for a minute while you check the legality. Call your department of revenue while he is standing there and explain over the phone that so and so does not want to pay the sales tax and ask if the agent will explain it to him over the phone. That should just about put a stop to it.

 

[Gino]

A few things.

• Do you have a license to charge customers state sales tax ??
  This one is by far the most important question.
• If you have one, you are now a representative of the state to collect such taxes. Failure to do so is illegal on YOUR part, not theirs.
• Have they given you a tax exemption form ??
• If so..... does it exempt them from end-user tax ??
• Paying cash or by check does not eliminate the need to collect taxes.

You better read up on your laws, so no one else takes advantage of you..... or your ignorance.

 

[copythat]

No trouble at all!!!

You don't charge tax for orders now, it's no problem. You will PAY with interest & penalties later on. I stop everyone by telling them they are not resellers, and I will get in trouble, not them. They can't just provide a
re-sale certificate stipulating that it's for resell. Your mistake was not explaining your fees upfront. Your responsible to explain why. And if they still give you excuses...fire them!!! They will only be problematic!



Sign up!

 

[Pat Whatley]

The way my state tax guy explained it to me if they purchase something from me and present me with a resale tax certificate it's up to them to pay any necessary tax....and it's up to me to keep records to show they said it was for resale. Signed work orders will suffice.

So all of my wholesale/resale/tax exempt customers have to sign their completed work orders.

By the way, NEVER just accept a number. You're required to keep a copy of their tax exempt/resale tax certificate on file.

I just realized what you're saying, though. They don't want to pay tax on things they should be paying tax on....AND they want itemized receipts so they can deduct it from their taxes later?!

 

[Fred Weiss]

All of the above. But here's what we have always done ...

We simply ask the customer to file a tax certificate with us in which they claim under their tax registration that the sale is exempt. that places any future onus on them to prove that the purchase was legitimately tax exempt. If the tax auditors find otherwise, then they will come after him and not you.

What you will find is that 99.99% of these requests disappear once you ask the customer to be responsible for the request and not you.

 

[midnightmadman]

Its tough because this customer has potential to become a HUGE customer at some point in the near future. So I tried to explain nicely that its not worth it for either of us in the long run. They are a little bit on the HOT side where they will just cut there ties with me if I piss them off so its touchy. Even though they are a neighbor/friend... they will have no problem doing it

 

[HulkSmash]

If he's a "friend" and you want to give him a "discount" just - the tax amount and take it off the total invoice, and then he still pays tax but it comes out to as if he doesnt.

makes sense?

 

[HulkSmash]

by - i mean minus.

 

[Billct2]

We are required to keep a tax exempt or resellers certificate for all tax exempt transactions. I have been audited by the state and it is not fun, you will have to pay the tax and penalty for all transactions that you don't have the paperwork for. That said
gnemmas technique also works, you just don't tell them you have included the tax.

 

[midnightmadman]

We are required to keep a tax exempt or resellers certificate for all tax exempt transactions. I have been audited by the state and it is not fun, you will have to pay the tax and penalty for all transactions that you don't have the paperwork for. That said
gnemmas technique also works, you just don't tell them you have included the tax.

Well they already nickle and dimmed me to death on the stuff I did. Thats another story!

My hopes are for a LONG term client that will bring in a lot of business....
Maybe I will post it in another thread.

 

[JimJenson]

It is not your place to determine what is taxable or what is not, or to interpret law. Your job is to collect tax, unless otherwise instructed to -and- provided with the proper documents to exempt it.

 

[midnightmadman]

It is not your place to determine what is taxable or what is not, or to interpret law. Your job is to collect tax, unless otherwise instructed to -and- provided with the proper documents to exempt it.

EXACTLY. That's what I need to get through their head.

 

[Mikeifg]

We are required to keep a tax exempt or resellers certificate for all tax exempt transactions. I have been audited by the state and it is not fun, you will have to pay the tax and penalty for all transactions that you don't have the paperwork for. That said
gnemmas technique also works, you just don't tell them you have included the tax.

Been there done that too. It's easier to charge the tax on everything except labor, which is not taxable. If the can't get you an exemption form.