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M$2.00  Funded By Mahalo ? |  April 17, 2009 04:08 PM

How do taxes work when selling to resellers? Do you never charge tax? or is it at their discretion?

I work for a retail buisness, we have designers that come in and buy products from us to resell. It is my understanding that we do not charge tax on these items because they will eventually get charged tax at the end user. Is this correct? or is it at the discretion of the reseller to choose when the tax is charged?

Note** Our excuse for a book-keeper just got fired and im trying to get an understanding of how things work. I was trained by the book-keeper to enter our daily sales into quickbooks. I have already found holes and mistakes in the training. this is one of them.
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lisagerett... lisagerett...
 
April 17, 2009 05:35 PM
The answer will vary based on the state in which you are located. Each state has their own laws regarding sales tax. However, generally speaking sales tax is paid by the end user. So if your customer is reselling the item, you would not charge tax to your customer. But you will need to obtain a "Resale Sales Certificate" from your customer which states that the sale is for resale. If you are audited and don't have the resale certificate, you will be responsible for paying the sales tax.
Source(s):
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demanda demanda
 
April 17, 2009 05:43 PM
great answer! I'm glad you decided to come check out our little question answering cult. :)

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nowwhatnap... nowwhatnap...
 
April 17, 2009 05:47 PM
The business is located in Connecticut.

That's what my assumption was, I just need to hear it from someone else. We haven't quite gotten training from our new accountant. But I am taking some accounting classes at a local community college.

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lisagerett... lisagerett...
 
April 18, 2009 02:36 PM
CT does follow the guidelines I gave above. In fact, here is a link to the resale certificate recommended by CT: http://www.ct.gov/drs/lib/drs/fillable_certificates/reg1-23fillable.pdf

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kristielor... kristielor...
 
April 19, 2009 07:54 PM
It depends on your state tax laws, but usually when you sell to a reseller, you do not have to charge them tax if you have a copy of their resale certificate (or at least the resale certificate number) on file.
Source(s):
Personal experience


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