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I made a mistake?

Discussion in 'Business Fundamentals' started by The mayor, Jan 9, 2007.

  1. The mayor

    The mayor Senior Member
    Messages: 272

    In wisconsin snowplowing,sanding, and salting are not subject to being a taxable service.
    I have been charging tax on this. Have I made a mistake or did I read this wrong. Hoping for some responses from people in wisconsin.
  2. Mick

    Mick PlowSite.com Veteran
    from Maine
    Messages: 5,546

    I just read Wisconsin tax laws and the key is that there is a tax on TANGIBLE retail sales. What you provide is a SERVICE not a tangible good. The state site has a "Sales and Use Tax" section that explains this, but not very well. Snowplowing would always be a service and not taxable. Sand/salt would involve Sales Tax if you were just sellng them the product for them to use as they wished. But for this purpose, you are selling the spreading of the product (that's why they call it "salting") so it is not subject to a tax. If you were selling them the product for them to resell, then you would not collect a sales tax, but your customer would have to file "Use Tax".

    So refund the money you collected as a "tax" or give them a credit. But, be able to show that you made an honest mistake and corrected it when you realized the mistake. Keep some kind of records.
  3. QuadPlower

    QuadPlower PlowSite.com Addict
    Messages: 1,056

    Have you been billing them on the invoice for Sales Tax?

    Labor = $ Your labor
    Salt = $Your price for salt x your mark up
    Sales Tax = $% of Salt cost
    Grand Total= all of the above added up

    If so and what Mick said is true then you have to explain to them and either refund or credit them and don't do it again.

    If you just send them an invoice for the total they owe you and don't break it down than it is up to you what you do with the customer. You could raise the price of the salt by the same amount you reduced the taxes. Or you could just not enclude it in their bill the next time.

    Do you get charged sales tax when you buy your salt and sand? In Michigan, I pay sales tax when I buy landscape materials. Landscape materials is any thing I put in or use for the job. Then it is up to who I buy it from to send in that sales tax to the state sales tax people. I then mark up my cost for the item and sell it to the customer.

    I use to have an auto repair facility. With that I did not pay taxes when I bought a part. When I would sell it to the customer, I would mark it up and then base the charge to the customer of 6% sales tax on that price. I then sent that 6% to the State at the end of the month.

    Have you been sending in that sales tax income to the state tax collecting people? If so, you are out that money. And I'm not sure what you should do about telling them your screw up.
  4. The mayor

    The mayor Senior Member
    Messages: 272

    After reading your posts and getting ahold of the state...you are correct. You do not charge tax for snowplowing. Thank you all for the help and info. Looks like I will be doing some credit back to the customers. Funny in the summer, I don't pay taxes on pesticides because the final product is used for your customer. But in the winter I pay taxes on salt and sand...is the final product not the customer. The state didn't have a anwser.
  5. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    In New York they keep it simple TAX EVERYTHING!