Sales Tax

[1ctoolfool]

Do you have to pay sales tax on a new machine purchase?

[gar]

080121-0835 EST USA

What you use the machine for, and your state rules determine this.

In our state there is no sales tax on equipment used in industrial processing. That is used to make products that are at some later point sold at retail and those products are taxed at that retail point. Note that there could be many stages thru different suppliers adding value before the final sale. The theory is to eliminate multiple taxation.

Something used for sales, like light, heat, copiers, paper, furniture, etc., is not industrial processing. However, these same items used to make the product are industrial processing.

Yet years ago our greedy politicians added the sales tax to used cars. That is multiple taxation on the same product. Big money here.

.

[1ctoolfool]

does the fact that the purchase is out of state have anything to do with it?
My HFO never charged me sales tax and I don't intend to pay it on my next machine but didn't know the rules about this.
I hate to ask, lest I be taxed.
thanks

[duenow]

In TX no sales tax on equipment used in industrial processing, BUT there is BPP tax & a 50 year old machine will be taxed at 17% of what you paid for it new.
You see they don't go by IRS stuff a new machine will be BPP taxed at 92% the first year, after 10 years 43% (of what you paid for it) & after 15 years & older you will pay 17% of the price you paid forever, ain't city taxes grand?

[Vern Smith]

Originally Posted by 1ctoolfool does the fact that the purchase is out of state have anything to do with it? My HFO never charged me sales tax and I don't intend to pay it on my next machine but didn't know the rules about this. I hate to ask, lest I be taxed. thanks

You will find the answer here:

http://revenue.ky.gov/business/salesanduse.htm

Buying the machine from an out of state supplier does not change your tax status in your home state. That's why all states with sales tax laws have what they call "use tax". This simply means that you owe the home state whatever amount of sales tax you would have paid if you had bought the item in your home state. If the item is exempt from sales tax in your home state it will also be exempt from use tax.

Another trap is how one uses his sales tax exemption certificate. This applies to sales you make to an entity that will eventually lead to a retail sale which will be subject to sales tax at that level. Example; you buy steel for a widget that you will sell to a trailer manufacturer. You have given the steel supplier your sales tax certificate so he does not charge you sales tax. You get a copy of the trailer manufacturer's certificate so you do not have to remit sales tax to your state on the sale of the widget to the trailer manufacturer.

This is where folks get into trouble. You buy steel to make a bearing support for your chain hoist. The steel supplier does not charge you sales tax because he has your certificate on file. However, this does not qualify as a exempt transaction in most states because you are the ultimate consumer. Here is where use tax comes in. You are required to report this purchase on your next sales tax remittance under use tax.

None of this matters unless you are lucky enough to be chosen for an audit. If you are not diligently segregating all your purchases in taxable and non taxable transactions, then remitting the amount due for use tax you will be charged for all those transactions plus interest from the due date of remittance plus penalties. Ain't you glad you asked?

Some, none, or all of this may apply depending on the state you are doing business in. If you are doing business in more than one state it can get real interesting.

Vern

[1ctoolfool]

BPP is some kind of property tax?
yea, I pay yearly property tax to my county sherrif for the machine, how did they know I bought it?

[Geof]

Originally Posted by Vern Smith .......This is where folks get into trouble. You buy steel to make a bearing support for your chain hoist. The steel supplier does not charge you sales tax because he has your certificate on file. However, this does not qualify as a exempt transaction in most states because you are the ultimate consumer. Here is where use tax comes in. You are required to report this purchase on your next sales tax remittance under use tax.....Vern

This should be in bold with big flashing Neon signs around it.

And don't ask why I say that!

[Geof]

Originally Posted by 1ctoolfool BPP is some kind of property tax? yea, I pay yearly property tax to my county sherrif for the machine, how did they know I bought it?

Yikes! That is a bit of a rip-off. This is on top of property taxes you pay on the value of the real property; land and building?

[Vern Smith]

Florida does better than that, or worse depending on your point of view. Down here rents on commercial property leases are subject to state sales tax which is unusual in itself. Not being satisfied with that, Florida also taxes the fees that are passed on to the lessee or renter by the landlord which is normal in commercial leases. One of the fees always passed on is the real estate and school taxes paid by the landlord. You guessed it, Florida charges sales tax on the real estate taxes when passed onto the lessee.

I'm surprised this has not been successfully challenged in court. This is the worst example of egregious taxation I have ever run into.

[slatern44]

Yep, in Oregon we have to pay personal property tax on our equipment in our shop if it's for making money. This is about the only time its good to be a farmer, they are about the only ones that are exempt for paying person property tax on their equipment.

[duenow]

Originally Posted by Geof Yikes! That is a bit of a rip-off. This is on top of property taxes you pay on the value of the real property; land and building?

Yes BPP is for everything in your shop even the coffee pot. When we bought our shop building & moved in our machines that we had at home it wasn't 1 week before the city showed up before we got there to come in write down everything & start sending us a big tax bill every year. For an example I have 3 1942 B&S screw machines I bought in 1972 to date I have paid 3 times what I paid for them in BPP taxes. You never own anything!

[AMCTony]

Property Tax must be ELIMINATED! In Arizona we can place a proposition on the ballot if you can gather 100,000 signatures. I think that it is time to place a prop on the ballot to make ALL taxation of property illegal. I also dont want to hear from anyone about how are we going to pay for schools and police. First off if I have to pay ransom every year to the state to have police then I would rather take my chances with the common theives. Second, We have Gas, Income, Sales, Estate, Use, Ect.... Taxes to pay for things and they are already high. When I am short on cash I have to stop spending. When these jerks are short they just take my house, car, machines, business, and anything else they can. Everybody hates it, knows it is the total opposite of freedom and justice and yet no one will do a damn thing about it. We need small business to organize into groups like employees organize into unions and shut off the cash flow. We need to remember that WE are funding those that hold us ransom. Maybe we should hold them ransom!