Post a new topic
    5 Replies Latest reply on Jul 23, 2008 11:10 AM by Bean Counter

    Sales Tax Liability

    sooner Wayfarer
      Does anyone have a sample form for wholesale companies to use when selling direct to companies who use their product rather than going through a retailer. In other words, if I sell my product direct to a company rather than the company buying my product from a retailer, if there a sample form that I could have the buyer to sign placing the burden of sales tax on them so that I am released from sales tax liability?
        • Re: Sales Tax Liability
          Lighthouse24 Ranger

          In what state are you located and what are you selling? It would be easier to provide a recommendation for your situation with specific information.

          Generally speaking, if you are legally in business (wholesale, retail, or both), you are required to file sales tax returns/reports for your state. If all of your sales for a reporting period were wholesale and tax exempt (i.e., meant for resale), then you would not have collected any sales tax from customers -- and that's what you'd report. If you sold to a consumer (even if it was another business) in your home state that bought taxable products to use rather than to resell, then you'd normally be obliged by most states to collect and report the sales tax (with a few exceptions).

          Can you provide more info (state, type of business/product)?
            • Re: Sales Tax Liability
              sooner Wayfarer
              Located in Texas. Manufacture welding supplies. Sell wholesale only to retail supply stores. Wanting to sell to a few companies directly that will only use product, not resell. We are a legal business with an EIN # we do quarterly reports on income taxes. Since we sell wholesale we do not collect any sales tax. Is it legal to sell directly to companies that will only use our products and not resell without charging them a sales tax, if they agree to be responsible for paying and reporting the sales tax? If so, is there a form that I can have them sign?
                • Re: Sales Tax Liability
                  Lighthouse24 Ranger

                  Two of my businesses are based in Austin.

                  There's no standard form for what you're asking because, technically, you (the seller) are supposed to collect the sales tax. You could conceivably create a form of your own and have the occasional retail (i.e., not for resale) buyer that you're talking about sign it, stating that they will pay Use Tax on the item when they filed their returns -- but the risk is that if you were audited by the Comptroller, your books would show retail sales for which you didn't collect sales tax. This is directly from the State Comptroller:

                  As a seller, you are responsible for collecting and remitting the correct amount of sales tax to the Comptroller's office. If you do not collect and remit the correct amount, you will owe any additional tax plus you may be assessed penalties and interest.

                  I assume you already have a Sales and Use Tax permit (so you can buy supplies and materials wholesale), but if not, why not just get one and collect/report/pay the tax on these sales? It's free, and the form is easy to complete and file (half page). Here's the Comptroller's website with links to everything you'd need:



                  Hope that helps. Best wishes.
                  • Re: Sales Tax Liability
                    Bean Counter Adventurer
                    Did you get you question answered. I did not see a check mark on this issue.

                    It sounds like you need to collect a manufacturing exemption certificate. You collect it in the same manner as the wholesale certificate, The form can be found on the Comptrollers website under forms.

                    Please make sure the forms are completely filled out. Any blank spacies on any of the exemption forms allows the Comptroller to verify the forms under audit.

                    If there are no blanks then the Comptroller must accept the forms on what is called "good faith". So DO NOT leave any blanks!

                    Hope this answers your questions.
                • Re: Sales Tax Liability
                  amspcs Ranger
                  There is no one-size-fits-all form or policy for every situation and every municipality.. You need to find out what the state of Texas mandates. Here is Florida, there is a form based on the sales tax certificate of the seller that states the item(s) are for re-sale and therefore tax exempt, as opposed to the item(s) sold being used by the buyer/end user which means they are responsible for sales tax. But again, that is for Florida. You need to find out what applies in Texas. I'm sure you can find a Texas Department of Revneue site somewhere on the net and find exactly what you need in short order.