Friday, September 21, 2007

Golden Rule of Taxability

In general, all sales of tangible personal property are taxable.
In general, all sales of services are NOT taxable.

However, there are lots of exceptions. States provide a multitude of exemptions for sales of everything from food sold by a grocery store to non-profit organization purchases. And every state taxes some specific services, like rental of equipment or repairs to tangible personal property (TPP).

So, unless the law says otherwise, sales of TPP are assumed to be taxable. But sales of services are presumed to be exempt unless there is a law saying that a particular service IS taxable.

Caution though. Don't just casually peruse the law. If you find nothing in a few minutes of research, don't assume that state doesn't tax your service. Review several sources including basis information before coming to your conclusion. A lot of stuff hides in the basis rules.

There's also a corollary to this rule: All states do it completely differently. What is taxable and what is non-taxable varies 180 degrees from one state to another. Some states give an enormous amount of exemptions. Some states tax virtually all services. Do your research.

A good assumption to make is that everything is taxable unless you make sure it isn't taxable.

The Sales Tax Guy

See the disclaimer - this is for education only. Research these issues thoroughly before making decisions. Remember: there are details we haven't discussed, and every state is different.

Here's information on our upcoming seminars and webinars.

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