Issue link: http://psai.uberflip.com/i/954030
131 2018 INDUSTRY RESOURCE DIRECTORY Some States Exempt Certain Supplies and Services Check with your state's Department of Revenue (or equivalent state agency) to see if they have a list of services that are subject to or exempt from state tax. Determine if your state defines your products and services as taxable or if they are exempt from tax to the customer because some other state agency or authority is regulating the taxes you are required to pay. • Pay particular attention to any rule suggesting you can avoid paying sales tax to your providers of certain supplies (deodorizers, cleaning products, toilet paper) if you charge sales tax to your customers. Portable sanitation operators in several states have been hit with hefty back taxes and fines due to liberal interpretations of laws like these. Get guidance in writing and keep impeccable records on what supplies you purchase and the sales taxes you both pay and charge. • Some states also charge sales tax only on the rental but not on the service. It is tempting in these instances to prorate your total customer invoice in such a manner as to minimize the sales tax. Whatever proportion of the total invoice you allocate to rental vs. service, have a documented rationale and recognize that the more lopsided it is, the harder it will be to defend if you are audited. Rule of Thumb Remember, states are going to try to maximize their revenue under the law, so it is wise to be conservative in your interpretation and implementation of what is allowed. Numerous portable restroom operators from around the country have found themselves paying back taxes and fines because of confusion or misinterpretation of their state's sales tax laws. Some operators deal with this by simply charging and remitting sales tax on the entire invoice in order to avoid debates, legal fees, and fines. They see it as a risk management tactic, realizing that most customers understand the "tax" line as something separate from the company's quoted prices. If you are going to be making sales in any US state with a sales tax, be sure to talk with your accountant at the outset, at the beginning of each tax year, whenever you have a material change in your operation or offerings, or whenever there are changes in your state sales tax laws. This will help ensure you run a good business and avoid potential penalties. Canadian? For an overview of charging and collecting sales tax, visit www.canadabusiness.ca/eng/page/2651 Sales Tax