jt13 Posted June 12, 2010 Share Posted June 12, 2010 I'm looking at buying a route and the owner lives in a different state than which the machines are located and pays sales tax to the state he lives. That is incorrect right? If your machine is located in state x it doesn't matter where your business is registered, you have to collect and pay sales tax to the state in which machine is located. Link to comment Share on other sites More sharing options...
alyssamma Posted June 12, 2010 Share Posted June 12, 2010 In general you pay the sales tax where the sale is made. There are exceptions, though. For example, when you buy a car you pay where it is titled, not where you actually buy the car. For out of state purchases it get more complicated. If you live in state X and make a sale in state Y, there is a good chance state X will want you to pay sales tax. In other words, there is a good chance the seller is correct. If you give more specifics I can maybe give you a better answer. Kevin Link to comment Share on other sites More sharing options...
jt13 Posted June 12, 2010 Author Share Posted June 12, 2010 Kevin, He is incorporated or LLC in MD and machines are in DC. From what I can research it looks like he should be paying 6% sales tax to DC on gross revenues. Trying to figure that out because that obviously would affect my valuation of the business. Thanks, James Link to comment Share on other sites More sharing options...
alyssamma Posted June 12, 2010 Share Posted June 12, 2010 James, I did a little research on this and your best bet is to call the tax departments of MD and DC. It appears to be pretty complicated unfortunately. I believe what you are saying is correct, but there are some other factors which come into play. The seller may currently be doing the right thing. Sorry I couldn't give you a more specific answer Kevin Link to comment Share on other sites More sharing options...
jt13 Posted June 12, 2010 Author Share Posted June 12, 2010 Thanks Kevin; I don't know if it confuses things or not but if I did buy it my LLC would be in VA. Link to comment Share on other sites More sharing options...
alyssamma Posted June 12, 2010 Share Posted June 12, 2010 I think VA and MD use similar laws. My understanding is that you collect DC sales tax (although I believe technically it is called "use tax") and pay that amount to DC and pay nothing to VA. But, like I said, make a quick call Note, if you are going to be "legal", you need to check about DC and foreign LLCs. Most states require you to file as a foreign LLC if you are doing business in that state. And, of course, you'll have state income tax issues. Bottom line, have a presence in multiple states complicates things greatly. If you are going to do business this way, and want it to be legal, make calls to the appropriate departments of taxation. Kevin Link to comment Share on other sites More sharing options...
jt13 Posted June 13, 2010 Author Share Posted June 13, 2010 Thank you for your take Kevin. Link to comment Share on other sites More sharing options...
alyssamma Posted June 13, 2010 Share Posted June 13, 2010 np. Are you only going to have machines in DC or will you have machines in VA also? If only DC I would just form the LLC there...it would simplify things greatly. Link to comment Share on other sites More sharing options...
jt13 Posted June 13, 2010 Author Share Posted June 13, 2010 Probably just dc unless I got a wild hair to expand. Yeah, having the llc in dc would definitely simplify things. Link to comment Share on other sites More sharing options...
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