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What is sales tax?

 
3/5 stars (2 votes)
Category : > Article Directory of Sales Tax Registration
Posted On : Sat Aug 29th,2009

 
It is kind a Tariff or tax, which is charged to buyer on purchases of taxable products.
 

 

What is Sales Tax?

It is a withholding tax, which is collected by a buyer for the taxing authorities on the taxable products and services.

Who is a taxing authority?

It is a local or state government agency which is responsible to classify the amount and the procedure to collect sales taxes from a buyer. The sales tax money is spent on different local projects, state projects and paid interest on federal bill.

What are the taxable products to charge sales tax?

It varies state to state. Generally, the department of revenue of each state has imposed sales tax on taxable retail sales, leases and rentals of most goods as well as taxable services.

Who to charge sales tax?

Sales tax is charged to the direct buyer of the taxable product not from subsequent buyer. The subsequent buyer means the sales tax is collected from end-user only not from the multiple buyers of the same taxable product.

How to get a sales tax permit?

A sales tax, registration process is completed by the department of revenue to get the permission to collect sales tax from a buyer on taxable items.

Who collects sales tax?

A business owner collects sales tax from a buyer on the taxable goods and services. A separate sales tax application is submitted each state to collect sales tax.

How to calculate sales tax?

Sales tax is calculated on the gross sales. A certain percentage or a fixed amount which is defined by a taxing authority is added on the purchased item.

Can sales tax be collected without a permit?

A valid sales tax permit is required to collect sales tax from a buyer and there is a penalty to collect sales tax without a permit.

What happens if a business owner does not collect sales tax on taxable items?

A business owner does not collect sales tax by choice, it is required by the state and in this situation a business owner is personally liable to pay to the taxing authorities.

What happens if a business owner collect sales tax but do not remit to the taxing authority?

It is deemed a violation and business owner will pay personally with the penalties and interest. The government agencies may levy the penalties on the personal assets to collect the unpaid sales taxes.

  

Nashib Umer

Author of One Magic Click Optimization


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Comments (14)
sandra agee   wrote on : Tue Jan 19th,2010
is your state tax i.d. number required as proff of ownership for the purpose of acquiring insurance coverage for time off work due to illness or other insurance. Is your lease,county business registration enough information? Thanks. Also can more than one person be on the tax i.d number if you add someone what does that give them as beneficial. Is thisproff of ownership.      View Detail
Reply : infotaxsquare.com
 
Dear Sandra Agee: Thanks for choosing InfoTaxSquare.com for your business needs. The purpose of sales tax id is to collect sales tax from your clients or avoid paying sales tax to your suppliers.  All officers, owners or members names must be included while applying for sales tax id number because it is required by law.

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Merridy Reth   wrote on : Mon Feb 22nd,2010
I am opening a gift shop whereby I am selling new merchandise. My question is this--when I purchased the products that I am selling I paid sales tax to the company that I purchased the products from so my understanding is that I now sell this merchandise to my customers as a reseller and I do not collect sales tax because I have already paid the tax. Is this correct ? I know that when I go to market and purchase items for resale I use my sales tax i.d. number so that I do not have to pay sales tax until I actually sell the items in my store.      View Detail
Reply : infotaxsquare.com
 
Dear Merridy Reth; Thanks for choosing InfoTaxSquare.com for your business needs. Yes your approach ir correct. But to know more about that please use following link.

How Sales is Taxed:

https://www.infotaxsquare.com/article/how-sales-is-taxed.html

Sales Tax Vendor ID Number Application:

https://www.infotaxsquare.com/forms/sales_tax_vendor_id.php


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Annie Alford   wrote on : Wed Mar 03rd,2010
I just started a business where I travel to differnt states selling handmade jewelry that I make at my home in Utah. I will travel through Utah, Colorado, Wyoming, Idaho, and Nevada to different shows or fairs. Will I need a State Sales Tax for all of these different states and/or cities/counties? Thanks.      View Detail
Reply : infotaxsquare.com
 
Dear Annie Alford: Thanks for choosing InfoTaxSquare.com for your business needs. Yes, to participate in shows you are required to obtain sales tax id number. If you need our services to get it for you then please either use the following link to apply or call us at 516.822.3100 to place order over the phone or for any additional information. Please also use the following link to read about sales tax.

Article Link:
https://www.infotaxsquare.com/article/how-sales-is-taxed.html

Link to apply sales tax:
https://www.infotaxsquare.com/forms/sales_tax_vendor_id.php

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