Sales tax question???

Question

I have a service business where I purchase the part and pay my vendor the sales tax when I make the purchase. I then charge my customer flat rate for my service. They do not no what I pay for the part. Do I have to charge them for sales tax as well?

I live in South Carolina. I pay my wholesaler sales tax when I purchase the parts and equipment. Then I sell the service call as flat rate or the installation of a whole job as a flat price. I hope if I pay the sales tax to my wholesale vendor that it would end there. I really do not need more paperwork to send the government. Thanks to all for the replies.

Answer 1

It depends on the state and it depends on the service. Most services are not taxable, and so you are the consumer of the materials required to perform the service, much like a massage therapist who must buy their own towels, oils, etc. In those cases you must pay the sales tax and you do not charge sales tax. However, some states require tax on parts, but not labor, if listed separately on the invoice, but no tax if you're working under a lump sum agreement, like some construction and electronic repair.

The other answers you received are totally wrong (both before and after mine). In most service business YOU are the consumer/end user and YOU pay the sales tax. Again, however, it depends on the state and the service.

Added 10/3:

It appears as though you're doing it appropriately. You can review the regulation here: http://www.scstatehouse.net/coderegs/c117.htm. Scroll down to labor or do a find on the page for installation. The only thing i'm not sure about is installation by a third party. You might call the Dept. of Revenue and ask, but from what I can see, you pay tax on your materials, and the service is not taxable.

Answer 2

Lots of bad answers.

Depends on your state sales tax regulation and where the service is performed.

Some states charge you and not the customer.

CT charges you and makes you charge full sales tax on 100% of invoice, including service to some customers, depending on what you are doing.

MA makes you gross charge the customer the full sales tax on the part and then you take a credit for sales tax paid to your vendor for the sales tax you paid in MA, but if you paid the sales tax in RI you lose the credit and pay the full amount.

Call your local sales and use tax for your state. This is a trustee tax and as such you are 100% personally responsible for such tax to withhold and remit to the state. (Yes the state can go after you personally because you did not charge the customer).

Answer 3

Depending on your state, the parts you sell to an end user must be charged sales tax on what you are charging them, not what you paid. You should not be paying sales tax on the purchase of the part. Obtain an exemption letter from your state (which you would provide a copy to your vendor).

Answer 4

I know on our business, we buy the materials needed to wire the house and pay the sales tax. We then charge the customer for the material ~ bottom figure, but we don't charge them again for sales tax that we have already paid. For instance, if our material bill was $1,200 (tax included) then we would charge them $1,200. Once you pay the sales tax, you can't charge sales tax again on the same item. (I live in Tennessee) Your state could possibly be different, you could check with your State office. Look on your state's website, if the information isn't listed, call the Department of Labor and Workforce.

Answer 5

Sale tax is charged to the END USER meaning that the manufacturer sell the item to a wholesaler which sell it to a retailer which then sell it to the consumer (end user).
So who is the end user? If you buy the item paying the sale tax then you are the end user. If you purchase item from a wholesaler tax-free then your customer is the end user (consumer).


If you need to know the rules on state tax look up on the following website in the state you are conducting a business.

http://www.taxadmin.org/fta/link/forms.html

Answer 6

Yes, sales tax needs to be paid for by the end consumer, not by you. There are some items exempt from sales tax, I'm assuming that these items are eligible.

Since you purchase the items for re-sale, you shouldn't pay sales tax - get a resellers exemption, and then just charge the end customer and submit the tax collected to the state.

Answer 7

Sales taxes can be complicated. It depends on the state that you live in and what state you are doing the service.

Answer 8

It depends on where your customer resides. If you both live in the same state. You will have to charge them sales tax. You are not required to charge sales tax to customers in other states or in other countries.