[SOLVED] Tax Exemption Question

[Abet Computers]

I work in Ohio, United States

I usually have a few customers a year that come in and give me the tax exempt form and all that for a basic service of under $80 so I do not bother with the tax exempt stuff because its under like $5.00 that they are saving and its not worth the headache so i just eat it.

But today I had a customer that just purchased a crap load of taxable items and service it came up to $203.00 in tax ( $3003.00 - the tax = $2800.00) I got there tax exempt form and all that but what do i do with it so i can claim it back?

 

[dgoglio]

You should probably seek the advise of an Accountant or tax professional. Maybe even check out your States tax agency website.

 

[dgoglio]

I know in MD you don't "claim it back" you just don't charge them tax after you get THEIR tax certificate and validate it.

 

[Tech Savvy]

The way it works in NJ is you just don't charge them the tax but you have to have their tax exempt form in hand before the service is done.

There are two ways to tell the IRS about it.
1. To tell them how much sales tax in total you collected.

2. Tell them how much in total was charged (sum of all invoices pre tax) and in another field that gets subtracted you put the sum of the tax exemption invoices. We do it this way to separate a contractor from a school or something. They both are tax exempt, but for us we like to see it separate in our books.





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[nlinecomputers]

I work in Ohio, United States

I usually have a few customers a year that come in and give me the tax exempt form and all that for a basic service of under $80 so I do not bother with the tax exempt stuff because its under like $5.00 that they are saving and its not worth the headache so i just eat it.

But today I had a customer that just purchased a crap load of taxable items and service it came up to $203.00 in tax ( $3003.00 - the tax = $2800.00) I got there tax exempt form and all that but what do i do with it so i can claim it back?

What's to claim back? You don't collect the tax. In QuickBooks, I have more than one sales tax option. In the customer's settings, you have a tax exempt option. When I file my tax online Texas(and I assume every other state) it asks me for the total sales and total TAXABLE sales. Quickbooks' sales tax report will tell you both.

 

[MichaelBits]

As others stated, you don't collect it to begin with. This is why you have that tax exempt option in sales software and cash registers.

Just log their tax id and amount is all you really need to do.
There is no real paperwork involved, you just don't collect it. May vary by state though...

 

[mraikes]

Hold your horses everyone. I believe Ohio (like my idiotic New Mexico) is one of the few states that has a gross receipts tax, not a sales tax. Gross receipts taxes =/= sales taxes.

If I'm correct about that, OP has to report his gross receipts (which includes income from tax exempt customers), and then utilize whatever mechanism Ohio has for backing out the tax exempt portion prior to the final tax calculation.

So OP should definitely run this by an accountant in Ohio before possibly running afoul of a tax situation almost none of the rest of you have to deal with. Gross receipts tax can be a bitch compared to normal sales tax elsewhere.

 

[nlinecomputers]

Ohio has sales tax: http://www.tax.ohio.gov/sales_and_use.aspx They, like Texas, have a GRT on Corporations. It's called Franchise tax in Texas. Also, a customer wouldn't need to give him a tax exempt form for GRT. That responsibility is on YOU the business owner. You the business are being taxed not the client.