Question for US based Business

[Boston Pro Comp Serv LLC]

I'll be fashioning a letter to them on Monday with legal council and my CPA. I'll keep the thread updated when I get a response.

 

[Edge Tech NY]

Anyone know New Yorks deal? I was told file as a consultant and dont charge/pay tax on it..

 

[HCHTech]

PCX is on point. There is no reason NOT to mark up parts. File the right paperwork to be able to buy things pre-tax, then mark up and charge tax on the total to the customer.

The rules work that way in Pennsylvania, too. Labor is not taxed, but parts are. In addition, anytime you take a part from inventory to fix the shop computer, you have to pay use tax (same rate as sales tax), too. The only exception is if you are selling to an actual non-profit. I have a couple of those and they always require a separate accounting.

 

[Boston Pro Comp Serv LLC]

So, at the CPA today we called the rep that sent me the letter. It is true you can file as a consultant (in MA) which I do and pay tax on the parts when you buy them and not charge your customers tax. Provided, you pay tax when you buy them, don't mark up, and don't itemize the bill. The DOR has the impression that I buy large quantities tax free, keep an inventory and mark up. Which I don't do. I buy the parts as needed for the job. While we do repair computers it is a mere 20% if that of the business income. Mostly we do custom software. They still want me to do it their way, but they may let me continue the way it is now. That has yet to be determined by the powers to be. My argument is that it would be an unfair burden to get the resellers cert, change the way we do the books, find suppliers, etc etc when that is not the primary business function. I have yet to get a final answer on the issue. So far +1 for the little guy lol.

 

[ICEinLAVA]

If we buy an item, pay the sales tax and then give it to the client we have to charge sales tax even though we already paid it. Even if we are giving away something free of charge we have to charge tax. They told me that if a tangible item leaves my hands, I have to charge. Still can't figure out how to charge .06% on zero dollars.

We have that as well. i see it mostly on cellphones. you pay sales tax on the the full retail price of the phone. so that $20 USB drive that your giving away for free, your supposed to be collecting the use/sales tax of $1.20 to send to the state.

Welcome to the greedy world...

 

[Boston Pro Comp Serv LLC]

I lost lol, I ended up having to register as a reseller and charge tax on parts.

 

[HCHTech]

Well, at least now you are in the arena of being able to mark up your parts. This is a GOOD thing!

 

[Markverhyden]

I lost lol, I ended up having to register as a reseller and charge tax on parts.

Just noticed this thread. I don't have a lot of direct repair work. So if someone needs something I tell them when/where/what to buy and I only charge labor. I still have tons of stuff, power cords, telephone cords, USB cables, cat5 patch cables, etc. If they are in a bind I just toss them in n/c. I did register and get a resellers cert as I anticipated a bunch of work from a couple of customers that would require me stocking parts. But nothing came of it.

That all being said I do know of a number of "trades" people who do the same thing you do. And they have not heard from the DOR. But that was last year and things are tough. So maybe the DOR is putting the squeeze on.

 

[gikstar]

PCX is on point. There is no reason NOT to mark up parts. File the right paperwork to be able to buy things pre-tax, then mark up and charge tax on the total to the customer.

The rules work that way in Pennsylvania, too. Labor is not taxed, but parts are. In addition, anytime you take a part from inventory to fix the shop computer, you have to pay use tax (same rate as sales tax), too. The only exception is if you are selling to an actual non-profit. I have a couple of those and they always require a separate accounting.

Gosh, hope they don't come after me, 'cause I just gave away 6 computers and set them up free to a non-profit and I don't plan on reporting anything since these were donated computers to me.

 

[Boston Pro Comp Serv LLC]

I'm in Mass if that makes a difference. They don't seem to mind about the past, but used it as as scare tactic. Seems to be happening to a lot of businesses around here.