Tax Question - How to Charge?

[alyssamma]

Smiley, I can't do that because items aren't tax exempt.

Purchasers can be tax exempt. Items can be non-taxable.

Furthermore, I thought I was quite clear. If you purchase something taxable for resale, you don't pay sales tax. This means, in general, middlemen don't pay sales tax. There are a few exceptions. Bulk vending of candy is one.

Will you please read the links I provided? Or do you now agree that NYS is $0.75?

[Smiley]

That paragraph was written for vending machines that vend candy bars and soda etc..It is possible to read that paragraph to exempt our stuff up to 75 cents. The bulk vending exemnption was specifically tailored for our machines. As I said before since no one sells gumball for 75 cents it is irrelevant.

Could you please provide me any state tax law that explicitly or implicitly states that if you purchase bulk candy for resale you have to pay sales tax. Thank You.

[alyssamma]

Smiley, if you think this is ambiguous (from the NYS vending assoc)...

In 2000, we enacted more far reaching tax relief legislation that will exempt all vended sales, including candy and carbonated drinks, at $.75 or less

Or this (from your link)...

shall be exempt under this paragraph when sold for seventy-five cents or

  less through any vending machine activated by the use of coin, currency,

  credit  card  or debit card.

Then I'm not sure what to tell you. It is clear that *any* vending machine, bulk or otherwise, is exempt from sales tax for vends less than $0.75.

So, at this point, you can believe whatever you want. Enough posts have been made here for whoever wants info to read it and get the info they need. You win, you are right...it isn't important enough to keep arguing.

But, in closing, to answer your Q, I will refer you to your own link. If you read the first paragraph, it clearly states that food and drink is exempt from sales tax except for candy and soda, unless they are vending from a machine for less than $0.75, in which case they are exempt too.

So, you purchasing candy would mean you need to pay sales tax.

   §  1115.  Exemptions  from  sales and use taxes. (a) Receipts from the

  following shall be exempt from the tax on  retail  sales  imposed  under

  subdivision  (a) of section eleven hundred five and the compensating use

  tax imposed under section eleven hundred ten:

    (1)  Food,  food  products,  beverages,  dietary  foods   and   health

  supplements,  sold for human consumption but not including (i) candy and

  confectionery, (ii) fruit drinks which contain less than seventy percent

  of natural fruit juice, (iii) soft drinks, sodas and beverages  such  as

  are  ordinarily  dispensed  at soda fountains or in connection therewith

  (other than coffee,  tea  and  cocoa)  and  (iv)  beer,  wine  or  other

  alcoholic  beverages,  all of which shall be subject to the retail sales

  and compensating use taxes, whether or not the item is  sold  in  liquid

  form.  The  food  and drink excluded from the exemption provided by this

  paragraph under subparagraphs (i), (ii)  and  (iii)  of  this  paragraph

  shall be exempt under this paragraph when sold for seventy-five cents or

  less through any vending machine activated by the use of coin, currency,

  credit  card  or debit card. With the exception of the provision in this

  paragraph providing for an exemption for certain food or drink sold  for

  seventy-five  cents  or  less  through  vending machines, nothing herein

  shall be construed as exempting food or drink from the tax imposed under

  subdivision (d) of section eleven hundred five.

[Smiley]

Nothing in that paragraph overrides the basic principle that items bought for resale are not taxed. All references in that paragraph are dealing with items sold to the final user.

[alyssamma]

OK

You are correct

[alyssamma]

Oh yeah, and to be clear, I 100% agree with you. If you purchase something for resale, and will be collecting sales tax, you don't pay sales tax when you purchase it.

We both agree on that

[mizugori]

I sell mostly toys. I am really wondering whether it's 50 or 75 cents that I'm exempt for  :-\

[vendy]

I sell mostly toys. I am really wondering whether it's 50 or 75 cents that I'm exempt for 

i think it's quite clear. here is a sentence from alyssamas post

"Section 13-a in that doc applies to non-food items. This would mean things like toys or stickers. If this is what you are selling, then yes, it is $0.50. But for candy, it is $0.75."

i think he pointed this out a few times in this thread.

[mizugori]

Okay so just to clarify, what do I need to do extra if I want to sell toys for 75 cents then? Obtain a COA?

[coinvestor]

Oh yeah, and to be clear, I 100% agree with you. If you purchase something for resale, and will be collecting sales tax, you don't pay sales tax when you purchase it.

We both agree on that

Not sure about NY, but in NC the above is correct but it is not contingent on collecting at the time of sale. If you buy for resale, you buy exempt. Then the resale is taxed according to the list of rules that apply by means of delivery (wholesale, retail through a vending machine, retail at C store).

JD

[alyssamma]

All, for the record, I sent Smiley a PM last night. I didn't want this to turn ugly, and re-reading this it looks like it might have.

There is no question that if you purchase something for resale, you won't pay taxes (mostly*) because when you resell it, you'll collect sales tax. I think everyone agrees on that.

The question here is an interesting one. If you purchase something for resale - something that would normally be taxable - but then package it in a way so that it is not taxable, do you have to pay sales tax on it. Smiley is saying no and I said yes.

In all honesty, I said yes because if the answer is no then that is a pretty big sales tax loophole, and states are cracking down on collecting sales tax. But I couldn't find anything specific - one way or the other - to answer that question. Since Smiley has a CPA telling him he is right, there isa good chance that he is indeed correct on this

That being said, it is important not to confuse not paying sales tax with not having to pay sales tax. Again, Amazon is a good example of this. You (generally) won't pay sales tax when you make a purchase from them (unless you live in a state where they have a physical presence). However, you are suppsosed to declare these purchases on your state income tax form and pay sales tax there. I'm sure everyone does this

Kevin

[coinvestor]

The question here is an interesting one. If you purchase something for resale - something that would normally be taxable - but then package it in a way so that it is not taxable, do you have to pay sales tax on it. Smiley is saying no and I said yes.

Kevin

This is a good summary of what I was getting at also. I agree with Smiley. Its not a loophole, they are exemptions from sales tax for any number of reasons all of which could probably be traced back to a lobbyist somewhere I think that vending gets such favorable sale tax laws because of the low vend prices and the fact that the prices on the machines are inclusive of the sales tax and it cannot be added on to the sale.

JD

[alyssamma]

LOL, well, you might be right JD, but it is the definition of a loophole. Loopholes aren't bad...nothing negative implied by that word

But the prices on the machine are not inclusive of sales tax - for bulk. For full line they are and you (if the vend amount is high enough) have to pay sales tax on them.

[coinvestor]

But the prices on the machine are not inclusive of sales tax - for bulk. For full line they are and you (if the vend amount is high enough) have to pay sales tax on them.

My point was, the reason that bulk is not taxed in most states is because the .25 vend price has to be inclusive of any sales tax. But I will point out that if you pay sales tax when you purchased product, like you said above, then the .25 would be inclusive of sales tax even for bulk.

[Jax Snacks]

The question here is an interesting one. If you purchase something for resale - something that would normally be taxable - but then package it in a way so that it is not taxable, do you have to pay sales tax on it. Smiley is saying no and I said yes.

In all honesty, I said yes because if the answer is no then that is a pretty big sales tax loophole, and states are cracking down on collecting sales tax. But I couldn't find anything specific - one way or the other - to answer that question. Since Smiley has a CPA telling him he is right, there isa good chance that he is indeed correct on this

I don't want to get into the middle of this, but FYI here are the facts for my state.  Here in Florida,  candy sold for 25 cents from a vending machine with a charity sponsorship is exempt from the sales tax.  Vendors that have a reseller certificate on file at Sams Club, will not be charged sales tax for those items when purchased.  Every quarter the vendor must file a sales tax return to the state stating the gross sales AND the exempted sales amount.  For a 100% charity vendor, they will be the same numbers and no sales tax is due.  Obviously each state can be different with minor loopholes possible.

What drives me crazy about all of these taxes (license fees, property taxes and sales taxes) is that they were primarily written for full line vending machines and amusement machines.  There was usually no thought given to bulk machines and therefore can have a huge impact on a bulk operator.  Some states may have amended the laws specifically for bulk, but others have not.

Glad to see that Ohio has given relief to bulk operators.  Florida has gone the other way (back in the 1990's) and gives no relief to bulk operators except for the charity exemption.  I suspect the state legislature amended the law after heavy complaints from bulk operators and charity organizations but it does not go far enough and is extremely unfair to bulk operators.