Expert: Shirley McAllister, CPP, PHR - 10/23/2011

Question
My spouse has done a few small businesses from our home.
In the past she has charged tax for a home cleaning business in the state of CT. In the past 7 years she has run a quilting business from our home and has charged sales tax to her US customers. Basically both of these two small home businesses are a service industry. The quilting customer provides my spouse a quilt and my spouse sews (quilts) the top, batting, and back of  the quilt with a custom sewing design the customer chooses. My spouse supplies the thread and sometimes the batting material. Is she wrong in charging sales tax for these two businesses?

Answer
Whomever sells the end product to the consumer charges sales tax.  If the company that provides the quilt sells to consumer they charge sales tax if she actually sells to the comsumer she charges sales tax.

I actually have not had a cleaning person charge me sales tax, I did not know it was charged on services. Mostly it is charged on tangible retail purchases such as you buy in a store.

You might want to check with the Connecticut Sales Tax division on the cleaning business as I am not in Connecticut and have not had experience with that. In my state it is not charged on services only on tangible goods.

Shirley