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do you charge tax on your invoices???

Discussion in 'Business Fundamentals' started by trqjnky, Dec 17, 2010.

  1. trqjnky

    trqjnky Senior Member
    Messages: 620

    do you charge state tax on your invoices????
  2. NicholasMWhite

    NicholasMWhite Senior Member
    Messages: 175

    I assume you mean sales tax and in Wisconsin snow removal is not taxable. If Iowa is the same you better not be charging it because if they find out they will make you give it all back and that can get messy. Salting on the other hand is taxable. I don't do much salting but as I understand there is a gray area here depending on how you bill for it (by the ton or by the app).
  3. dayexco

    dayexco Senior Member
    Messages: 312

    lot easier to charge, show on invoice, pay...than go thru an audit, scratch your ass trying to eplain what is waht
  4. trqjnky

    trqjnky Senior Member
    Messages: 620

    I Own an auto repair shop. my labor is taxable, parts are taxable, so i dont see why my snow removal labor wouldnt be taxable, salt/sand is parts, that should be taxable.

    i have to pay taxes on my income, so i should be charging for them in my opinion. except non taxable people like schools.
  5. NicholasMWhite

    NicholasMWhite Senior Member
    Messages: 175

    Here ya go. Iowa law says that plowing is not taxable. Neither is the service of applying ice control. But the actual salt or sand itself on the other hand you do have to charge tax on. Again this is where the gray area in Wisconsin stands because you can always argue that you paid the sales tax when you purchased the salt from your supplier and there fore you don't have to charge it when billing your customer. It seems Iowa law is the same.

    Last edited: Dec 17, 2010
  6. yardsmith

    yardsmith Senior Member
    Messages: 248

    I remember less than 10 yrs ago you didn't even have to claim plowing income in ohio on your taxes...... yeah they figured out how to do away with that.......:dizzy:
    I charge sales tax on commercial, & a few of my residentials
  7. NicholasMWhite

    NicholasMWhite Senior Member
    Messages: 175

    This is risky. If your laws are the same as ours here and you get audited you will have to mail each customer a check for all the tax you have ever charged them and that could get quite expensive because I wouldn't expect the IRS to give you the money that you paid them back. I'd bet you'd be SOL with that.
  8. trqjnky

    trqjnky Senior Member
    Messages: 620

    hmmm interesting...

    anyone else fail to see the logic here??

    auto shop
    labor- taxable

    snow plowing
    labor- nontaxable...???????????
  9. NicholasMWhite

    NicholasMWhite Senior Member
    Messages: 175

    Since when do you expect the law to be logical. Read the link...

  10. trqjnky

    trqjnky Senior Member
    Messages: 620

    hahahaha!! nothing makes sense in our gubment
  11. NicholasMWhite

    NicholasMWhite Senior Member
    Messages: 175

    No sir it doesn't. I can't say I'm complaining though, it makes my life easier for the 1st quarter of every year because all my work in the 1st quarter is snow work.
  12. Rc2505

    Rc2505 PlowSite.com Addict
    Messages: 1,245

    In Ohio it is law. Snowplowing is a taxable service. You must charge tax, collect the tax, and pay the tax. Other than doint those 3 things I don't bother, lol.
  13. MahonLawnCare

    MahonLawnCare Senior Member
    from Ohio
    Messages: 852

    ohio is about the biggest joke of all the states. we have no jobs, everyone is leaving in droves and they want to tax EVERYTHING. IMO, snow plow and lawn mowing are about the 2 dumbest things to charge sales tax on because the customer gets mad at us we have to charge it
  14. MattR

    MattR Senior Member
    Messages: 218

    When I talked to my tax guy regarding this around the last part of 2009, he said that is only when you charge the customer the same price you paid for the salt. If you charge more for the salt, you must charge sales tax. This is regarding WI tax laws, not sure of the other states though. Just wanted to clarify it in case somebody was searching for WI tax info.

  15. clark lawn

    clark lawn PlowSite.com Addict
    from NE ohio
    Messages: 1,233

    dont know who told you that you didnt have to claim that income but i sure as hell wouldnt believe them.

    you should be collecting sales tax from everyone unless they provide you with a tax exempt form.
  16. Winterized

    Winterized Senior Member
    Messages: 120

    Just avoid confusion for the customer....

    I have printed directly on my snow removal invoices w/image of snow blower, no sales tax required.

    I use separate invoices for lawn care w/image of mower with a line for the tax applied.
  17. NicholasMWhite

    NicholasMWhite Senior Member
    Messages: 175

    This is incorrect. It depends on how you charge for your salting. This is taken directly from the site cited below.

    So as long as you charge based on the amount of salt used or by the hour AND you pay tax on the salt when you bought it meaning you didn't use your exemption information. THEN you don't have to deal with sales tax.

    Last edited: Dec 18, 2010
  18. Kris_Kris

    Kris_Kris Member
    from Indiana
    Messages: 39

    That would be true for Indiana also. Pay tax when you buy the salt and dont charge tax when you use it. You just have to write out your invoice properly. You do not pay tax on a material used in a service.
    If you say
    applied salt to parking lot = no sales tax
    If your invoice says Salt $xxx and Labor to apply $xxx =you better charge tax on the salt.
  19. MattR

    MattR Senior Member
    Messages: 218

    Well if you think about it, it is what I said just in a bit different way without clarifying much. I was not incorrect, just did not clarify enough for everybody I guess.

    If you charge for salt used (labor included in that price) then the government figures you are making a profit off of the salt and therefore wants their piece of the money in the form of sales taxes. This would be the same regardless if the salt was applied by you or the customer because you sold the salt, not your labor/service. If you are charging customers this way, the tax laws draw you into the "sales" part of the sales/use tax and not just the service aspect of the "use" tax laws.

    If charged by the hour, then it is figured in by using the labor (which is non taxable) and salt is included with the labor. The government figures that the salt is used to create the final product/service which is a clean and clear driveway.

    Now regarding the exception certificate, you can only claim tax exempt when purchasing the salt if you WILL be charging the customer for the salt and making a profit on it. If you charge by the hour for labor and include the salt in that price, you CANNOT buy the salt WITHOUT paying tax on the salt. The government wants their tax money from somebody and believe me, they will get it, from whomever they think owes it.

    The best thing you can do if I am not explaining this the right way is to go talk to your tax person about it. Maybe you will better understand what I am talking about then. You will see that I am correct too.
  20. NicholasMWhite

    NicholasMWhite Senior Member
    Messages: 175

    I'm not following you here. In your post you have cited examples of both example 1 and example 2 which are shown below. But when you cited example 2 you said you should charge the tax and when you cited example 1 you said you shouldn't. But as shown below you shouldn't charge the tax weather you charge by the amount of salt used (example 2) or by the hour (example 1).

    You stated specifically:

    which is in direct conflict with example 2.

    Furthermore why would you want to collect sales tax when you don't have to. That's one more thing you have to deal with and it forces your customer to spend money that they don't have to. And when they find out they didn't have to pay sales tax they won't be happy.