Tax Law (Questions About Taxes)/sales tax

Advertisement


Question
QUESTION: I'm retired and have a sewing machine in my home.
Once in a while I sew and sell mail straps to rural mail
carriers (USPS) - quite in frequently -  maybe $800  or $900
per year.
    Do you think I should be paying sales tax on this?

Thanks          Dick

ANSWER: Hi

The point is hopefully you report the net income (cash received less costs) bbut I'd have to know your state to know if selling postal bags is subject to tax.what state are you in?

Do you make brand new straps or fix existing bags?

Is the us postal your custmer or is the individual carrier?

---------- FOLLOW-UP ----------

QUESTION: Answer-

  I live in Minnesota.   These are brand new straps and I sell
them to a distributor,  who sells them.  I'm sure he sells them
to individual carriers  (very few go to the Post Office)

Thanks          Dick

Answer
hi

the sales are taxable unless you get what is called a resale certificate from the distributor you sell to.  your sales are low enough you dont have to worry a lot... but you should be charging sales tax.  minny has different rates

http://www.revenue.state.mn.us/businesses/sut/Pages/SalesTaxCalculator.aspx

you can look up your local rate there.

what you need to do is get the distributor to collect the sales tax and then you dont owe any.  but you do need to request a resale certificate from them.

http://www.revenue.state.mn.us/Forms_and_Instructions/st3.pdf

is the form you need - and it should be marked H - items for resale.

happy christmas  

Tax Law (Questions About Taxes)

All Answers


Answers by Expert:


Ask Experts

Volunteer


MEdusa

Expertise

Tax and general business including hospitality related (hotel mgmt degree and experience in industry prior to obtaining ms tax and cpa).

Experience

19 years cpa. ms tax. NOTE: My discussions are only a general information and do not constitute tax advise without entering into a specific agreement and executing an engagement letter; This free chat is nothing more than general information and should not be construed as tax advice nor does my response or replies imply an agreement to provide client specific advice or other guidance for purposes of avoiding IRS tax or penalties and should not be relied upon without your own validation and confirmation of the how the discussion may fit your facts... Not having all the facts and/or not having a direct client relationship prevents me from providing the most accurate replies as possible and I highly suggest using a local CPA to provide you with written advice and guidance. Taking matters into your own hands is much akin to trying to land an airplane without a license. It is easy to FLY a plane, but LANDING is when critical experience is key. In short, caveat emptor; do your homework and don't just rely on free chat board advice anywhere, anytime.

Organizations
AICPA, CSCPA (Ct society), National Tax,

Publications
a bunch.

Education/Credentials
MS tax and other post graduate coursework

Awards and Honors
variety including Summa Cum Laude

Past/Present Clients
I don't disclose or kiss and tell

©2016 About.com. All rights reserved.