# do you charge tax on your invoices???



## trqjnky

do you charge state tax on your invoices????


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## NicholasMWhite

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).


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## dayexco

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


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## trqjnky

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.


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## NicholasMWhite

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.

http://www.iowa.gov/tax/news/enew1209.html#snow


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## yardsmith

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.......
I charge sales tax on commercial, & a few of my residentials


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## NicholasMWhite

yardsmith;1157861 said:


> 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.......
> I charge sales tax on commercial, & a few of my residentials


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.


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## trqjnky

hmmm interesting...

anyone else fail to see the logic here??

auto shop
labor- taxable

snow plowing
labor- nontaxable...???????????


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## NicholasMWhite

trqjnky;1157879 said:


> hmmm interesting...
> 
> anyone else fail to see the logic here??
> 
> auto shop
> labor- taxable
> 
> snow plowing
> labor- nontaxable...???????????


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

http://www.iowa.gov/tax/news/enew1209.html#snow


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## trqjnky

hahahaha!! nothing makes sense in our gubment


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## NicholasMWhite

trqjnky;1157892 said:


> hahahaha!! nothing makes sense in our gubment


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.


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## Rc2505

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.


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## MahonLawnCare

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


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## MattR

NicholasMWhite;1157860 said:


> 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.


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.

Matt


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## clark lawn

yardsmith;1157861 said:


> 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.......
> I charge sales tax on commercial, & a few of my residentials


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.


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## Winterized

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.


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## NicholasMWhite

MattR;1158031 said:


> 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.
> 
> Matt


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



> Example 1: A person contracts with Company A to have its driveways and parking lots plowed and sanded during the winter months. Company A charges the person by the hour. No part of the charge by Company A is subject to sales tax. Company A must pay Wisconsin sales or use tax on its purchase of the sand used in providing the service.
> 
> Example 2: A person contracts with Company B to have its driveways and parking lots plowed and salted during the winter months. Company B charges the person based on the amount of salt used. No part of the charge by Company B is subject to sales tax. Company B must pay Wisconsin sales or use tax on its purchase of the salt used in providing the service.


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.

http://www.revenue.wi.gov/taxpro/news/101108a.html


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## Kris_Kris

NicholasMWhite;1158188 said:


> 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.
> 
> http://www.revenue.wi.gov/taxpro/news/101108a.html


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.


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## MattR

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.


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## NicholasMWhite

MattR;1158522 said:


> 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.


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:



MattR;1158522 said:


> 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.


which is in direct conflict with example 2.



> Example 1: A person contracts with Company A to have its driveways and parking lots plowed and sanded during the winter months. Company A charges the person by the hour. No part of the charge by Company A is subject to sales tax. Company A must pay Wisconsin sales or use tax on its purchase of the sand used in providing the service.
> 
> Example 2: A person contracts with Company B to have its driveways and parking lots plowed and salted during the winter months. Company B charges the person based on the amount of *salt used.* No part of the charge by Company B is subject to sales tax. Company B must pay Wisconsin sales or use tax on its purchase of the salt used in providing the service.


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.


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## Kris_Kris

.



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.

The customer will pay the amount of the sales tax either way. If you pay sales tax when you buy the salt, you will have to pass that cost along to the customer one way or another unless you just want to pay it for them.


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## NicholasMWhite

Kris_Kris;1158623 said:


> .
> 
> 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.
> 
> The customer will pay the amount of the sales tax either way. If you pay sales tax when you buy the salt, you will have to pass that cost along to the customer one way or another unless you just want to pay it for them.


Yes but if you pay the tax on it then it will save the customer money. Let's say you buy salt at $100 per ton and apply it at $250 per ton. Let's also say that tax is %6. So if you pay the tax it will cost you $106 per ton and you can pass that cost on to the customer so you can charge them $256. Otherwise you can pay $100 with your exemption certificate and then charge your customer $250 plus tax. This would come out to $265.

Let's be honest no one really likes giving more money to the government so why give them an extra $9 per ton. Not to mention the fact that the law specifically says that you should not be doing it this way.

Beyond that if you are charging tax and your competitor isn't who is the customer going to go with all else being equal.


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## Kris_Kris

NicholasMWhite;1158662 said:


> Yes but if you pay the tax on it then it will save the customer money. Let's say you buy salt at $100 per ton and apply it at $250 per ton. Let's also say that tax is %6. So if you pay the tax it will cost you $106 per ton and you can pass that cost on to the customer so you can charge them $256. Otherwise you can pay $100 with your exemption certificate and then charge your customer $250 plus tax. This would come out to $265.
> 
> Let's be honest no one really likes giving more money to the government so why give them an extra $9 per ton. Not to mention the fact that the law specifically says that you should not be doing it this way.
> 
> Beyond that if you are charging tax and your competitor isn't who is the customer going to go with all else being equal.


Very true.


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## yardsmith

clark lawn;1158125 said:


> 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.


I DO claim the income AND pay the sales tax; I said about 10-12 yrs ago we didn't have to claim income; shortly thereafter we did have to start claiming it. That all


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## Elwer Lawn Care

Rc2505;1157909 said:


> 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.


Someone questioned me about charging tax last week so I went to the main Ohio tax website and it lists that if you make less than $5,000 on snow removal (or lawn care for that matter) that you dont have to charge sales tax. Makes since right?!


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## Rc2505

It is very possible that is a true statement. I haven't grossed less than 5 grand on snow plowing for so many years, I'm not sure. All I know is my accountant said to add sales tax on all of my plow bills, so that is what I do.


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## MattR

NicholasMWhite;1158552 said:


> I'm not following you here.


By listing a price that you charge your customers for the salt, it becomes a sale, not a service. A sale is taxable unless it is being used as part of a service, in this case, salting service. When providing the salting service, the salt is used to provide the service you are charging labor to do.

Example... You offer snow plowing service. You go and fill up the fuel tank on your vehicle and pay the sales tax for that fuel. Do you charge the customer for that fuel you used seperately on the invoice, or just absorb it into the price of your labor from snow plowing? That fuel was a product used to provide the service, just like salt is to provide salting service.

Like stated earlier in this post, the salt was a product used to provide the service, just like the fuel needed to provide plowing. To list the salt separate only opens you up for a possible audit regarding sales tax owed to the IRS. They almost always win, and love to pick on the little guy because lawyers are expensive. How often does a huge business like Walmart or Shopko get audited? Very unlikely, because they can afford a great legal team to fight the IRS a heck of alot better than the local grocery store, local taven, etc..



NicholasMWhite;1158552 said:


> 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.


I agree. I never charge for salt, at least not seperately on the invoice. I do charge for salting service since the price of the salt can be absorbed into the price without all the tax stuff to worry about.

I am hoping you understand what I am trying to say a bit better. Not sure how else to put it. Best advice I can give anybody regarding the tax subject is to talk to a tax expert. Even if they charge you a consulting fee, it will be cheaper than an audit.

Matt

B.T.W... I am in the sales business for over a decade. Plowing is what helps me through the winter when it is slow. So yes I have checked out the plowing subject with my tax guy to make sure I am not doing nothing wrong by not charging tax when I should be or vice-versa.


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## clark lawn

yardsmith;1159353 said:


> I DO claim the income AND pay the sales tax; I said about 10-12 yrs ago we didn't have to claim income; shortly thereafter we did have to start claiming it. That all


ihave been plowing snow for going on 20 years and alway had to claim the income. its just like any other income. it didnt become taxable (sales tax) until about 10-12 years ago but you still had to claim it as income.


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## cubicinches

In New York State, snowplowing is a taxable service. The only exceptions are tax exempt entities (churches, municipalities, schools, etc.) Unless you are subcontracting for another contractor who charges sales tax to the actual end consumer, *you must charge sales tax on all plowing service*. If you were to be audited by the state sales tax department, and it were revealed that you were performing a taxable service without charging sales tax, *you... the vendor... would be responsible for the tax... *whether you collected it or not. I have seen this happen. Stupidity is not an excuse in their eyes... that would apply to alot of you guys. If you are in business, and you're not sure how your state's sales tax laws read... _find out! _State sales tax departments are nasty. Trust me when I tell you... _you do not want problems with them!_ The more broke the government becomes, the more they seek to find the people/businesses who aren't paying what they are supposed to. Audits are becoming more commonplace on businesses that they have never paid attention to in the past. Go through a sales tax audit one time, and you'll get an education you wish you never had.


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## MattR

cubicinches;1159765 said:


> If you are in business, and you're not sure how your state's sales tax laws read... _find out! _State sales tax departments are nasty. Trust me when I tell you... _you do not want problems with them!_ The more broke the government becomes, the more they seek to find the people/businesses who aren't paying what they are supposed to. Audits are becoming more commonplace on businesses that they have never paid attention to in the past. Go through a sales tax audit one time, and you'll get an education you wish you never had.


I totally agree. The IRS is tough to beat too. Automatically you have to prove them wrong. Once an audit starts, you are guilty and have to prove that you are innocent. Even saving ever single receipt only reduces the amount owed most of the times. The majority of the time if you are audited, they will have a chunk of your hard earned money when you leave the audit hearing.


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## clark lawn

in Ohio it must be listed as a seperate line item on the invoice. if you get a sales tax audit and its not you will have to pay that money. even the guys that say they just pay it and dont bill it to the customer.
same with your materials, the end user pays the tax. if you buy salt at lowes and pay the tax you still must bill the customer the tax as a seperate item. i posted before about the guy i know thatlost his business and almost his house over sales tax issues.


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## tuney443

cubicinches;1159765 said:


> In New York State, snowplowing is a taxable service. The only exceptions are tax exempt entities (churches, municipalities, schools, etc.) Unless you are subcontracting for another contractor who charges sales tax to the actual end consumer, *you must charge sales tax on all plowing service*. If you were to be audited by the state sales tax department, and it were revealed that you were performing a taxable service without charging sales tax, *you... the vendor... would be responsible for the tax... *whether you collected it or not. I have seen this happen. Stupidity is not an excuse in their eyes... that would apply to alot of you guys. If you are in business, and you're not sure how your state's sales tax laws read... _find out! _State sales tax departments are nasty. Trust me when I tell you... _you do not want problems with them!_ The more broke the government becomes, the more they seek to find the people/businesses who aren't paying what they are supposed to. Audits are becoming more commonplace on businesses that they have never paid attention to in the past. Go through a sales tax audit one time, and you'll get an education you wish you never had.


Very well said cubicinches.By me,it's just amazing how many contractors don't care or don't believe me when I tell them they need to do things correctly or face some nasty consequences down the road.Understanding sales tax law really isn't difficult,they have everything you need up on their site and if you're still confused,they will gladly straighten you out when you call them.And just to clarify here as I see some mixing of the 2 taxes--income tax and sales tax are 2 complete different entities,the only similarity is that both will bite you in the ass if you don't do things right.


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## cubicinches

tuney443;1160115 said:


> I see some mixing of the 2 taxes--income tax and sales tax are 2 complete different entities


Almost comical, yet scary at the same time, that some don't understand the difference.

Yet so many wonder why this business as a whole is viewed as being less than professional.


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## tuney443

clark lawn;1160018 said:


> in Ohio it must be listed as a seperate line item on the invoice. if you get a sales tax audit and its not you will have to pay that money. even the guys that say they just pay it and dont bill it to the customer.
> same with your materials, the end user pays the tax. if you buy salt at lowes and pay the tax you still must bill the customer the tax as a seperate item. i posted before about the guy i know thatlost his business and almost his house over sales tax issues.


In NY,the way that would work is if you didn't have a Resale Certificate filed with Lowes and you paid Lowes the sales tax,you would charge the sales tax to the end user,the client,but when you pay in the sales tax you've collected to the state,you can deduct that tax you paid to Lowes as a credit so that there is not a double sales tax incurred.


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## clark lawn

tuney443;1160141 said:


> In NY,the way that would work is if you didn't have a Resale Certificate filed with Lowes and you paid Lowes the sales tax,you would charge the sales tax to the end user,the client,but when you pay in the sales tax you've collected to the state,you can deduct that tax you paid to Lowes as a credit so that there is not a double sales tax incurred.


the way it was explained to me is that if you are a legit businessyou will have a tax exempt number to supply your vendor. if you either dont have the number or dont file a tax exempt cert. then you pay and are out the money.

either way you do it it must be listed as a seperate line item on your invoice.


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## tuney443

clark lawn;1160359 said:


> the way it was explained to me is that if you are a legit businessyou will have a tax exempt number to supply your vendor. if you either dont have the number or dont file a tax exempt cert. then you pay and are out the money.
> 
> either way you do it it must be listed as a seperate line item on your invoice.


Yeah,but in NY,it's more than just supplying your sales tax ID #.It will either be a Resale Certificate or an Exempt Organization Certificate that of course has that # on it.It's supposed to be filed each year.I guess NY is friendlier than Ohio because I have filed for the credit in a few instances where there would have been a double tax and have never been questioned.


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## clark lawn

ya its about the same. we have to fill out a tax exempt form and state the reason( resale, gov, church, etc) and you have to have a sales tax number for the form.


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## MGV

In NYS we have to charge tax for plowing.


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## tuney443

You're in my neck of the woods there MGV.


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## LB1234

No one should be "charging" sales tax.



If it is required by your state and/or the customer is not tax exempt, you should be "collecting" sales tax for your state and then remitting it to them.


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## cubicinches

LB1234;1163661 said:


> No one should be "charging" sales tax.
> 
> If it is required by your state and/or the customer is not tax exempt, you should be "collecting" sales tax for your state and then remitting it to them.


That is true... 

No one _ever_ uses "your" and "you're" correctly around here either. Most guys who don't know the difference anyway tend to understand each other.


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## clark lawn

cubicinches;1163682 said:


> That is true...
> 
> No one _ever_ uses "your" and "you're" correctly around here either. Most guys who don't know the difference anyway tend to understand each other.


or they're and there and their, or wear,were, and wear. or even a vs an.


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## MGV

tuney443;1162653 said:


> You're in my neck of the woods there MGV.


Yea...I'm in Wappingers Falls


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## ERWbuilders

Does anyone know in Illinois how much tax to charge. would it be 15.3%. Im having a little issue with a customer that wants my tax i.d which is my social security number. Im a sole proprietor.


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## tuney443

ERWbuilders;1205433 said:


> Does anyone know in Illinois how much tax to charge. would it be 15.3%. Im having a little issue with a customer that wants my tax i.d which is my social security number. Im a sole proprietor.


Surprised you already don't know if you're in business.I have no idea but I'm sure if you went to the Illinois Tax Dep't.,you're counties tax rate would be there.I'm having trouble believing any jurisdiction would charge 15.3% though.Even NYC is app. only 9%.


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## Dr Who

throwing my 2c in..

If you are required to collect tax, then you should collect it, then pass it on to the guberment.
if you are not susposed to collect tax, then do not, you are breaking a law and they will nail your hide.

Ky...
No tax can be charged on a service, be is mowing the grass, labor for auto repair,construction etc, or plowing snow. A service is non taxable.
parts, supplies, salt all are taxable,(unless the customer is tax exempt) IF you do not pay tax on the item whne you paid for it, and you must buy it for resale, and when sold collect tax on it, pass it on to hte state guberment.
If you paid tax on what ever you are reselling, then you CAN NOT collect tax on it.
This is KY laws, each state has there own.
..


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