Roofers Charging Sales Tax

wywoody - So, let me get this right; I build a house for a client for a contract price of $500,000; I pay the State Of Wash. $42,000 sales tax? That's like 1-1/2 times what a Realtor would get(?) That's a real OMG moment.

natty Said:

Mike H Said: The law is the law,

And, tax exempt has a specific legal meaning. For example, in TX, a church is exempt from all sales taxes. I once roofed a ministers home. It was owned by his church. I filed their tax exempt form with my supplier and we paid no sales tax on the materials.

Oh my goodness, I am seriously impressed. We do schools and churches every year. Same forms, same tax exemptions. Both of my brothers run 501 (c)3 (or tax exempt) organizations. www.thirstrelief.org www.imaginemissions.org I sit on the Board of christian school. www.gracechristianlions.org I understand what tax exempt means in it's many different forms. But thank you for the explanation.

Mike H Said: The law is the law,

And it is a shame that you don't even know the law of your state. You can't even tell me the thing being taxed.

And, "tax exempt" has a specific legal meaning. For example, in TX, a church is exempt from all sales taxes. I once roofed a minister's home. It was owned by his church. I filed their tax exempt form with my supplier and we paid no sales tax on the materials.

I live right on the line of two extremes in sales tax. In Oregon(7 miles away), there is no sales tax. Here in Washington. it's one of the nations highest, 8.4%. That goes for materials and labor, so the state gets a pretty healthy chunk of everything I do. As for buying personal things, there are large shopping centers at the first exit of both bridges into Oregon and pretty much everything we buy over $100, we make the trip there to buy.

I initially started doing most of my work in Oregon, but moved to Washington because at the time there was a substantial WC savings here vs Oregon. But I gradually developed builder clientele here in Washington and didn't charge or collect sales tax from them, meaning the builders were liable for it.

One of my best customers got audited and the sales tax on the work I had done for him was almost $50,000. We agreed to split the difference and I did two roofs for him for free for my part even though it should have been obvious to him I wasn't charging him the sales tax.

I remember being insulted by a customer who was trying to avoid the sales tax when he said "I guess ALL you guys want to be paid in cash."

Egg, The way you explained it, it is the same with us.

natty Said: You are saying the same thing as lefty and it simply makes no sense. States may be different as to what they tax and at what rate, but the principle behind a sales tax is the same. Some thing is being taxed at some point in a sale. In OH, what is being taxed?- the service or the material or both? It cant be the way you are stating it. And you are not tax exempt because there are tax exempt organizations. If you have a sales tax license you can provide that to your material supplier which is a claim that you will resell the material and that you will collect the tax upon resell.

I fail to see your issue. How you can say "... simply makes no sense", well, doesn't make sense. The law is the law, and until they consult you on the system, all I can surmise is.... it makes sense.

At the POS, they will ask "are you tax exempt?", and if you want to split hairs over that terminology, I'll leave you to your own vices.

twill59 Said:

Isnt social engineering the point of the present system? Isnt that what has drove us to the extreme edge of nuttiness?

Social engineering is what complicates all taxes- it matters not whether it is an income tax, sales tax, fair tax, flat tax, VAT, or any other kind of tax. All of the politics behind one kind of tax over another is just bloviating.

Mike H Said:

In OH, we charge sales tax on the project if we Declare ourselves tax exempt at time of material purchase. If we do not Declare as such and pay tax on all material purchases, then we do not have to collect a sales tax from the consumer.

natty Said:

twill59 Said:

Not looking to argue. But pray tell how the fair tax would be any more complicated than what we already have :S

The point of argument is to reveal the truth. An income tax is pretty simple. It is the social engineering that govt attaches to it that makes it so complicated. If we had a national sales tax, we would still have to file an income tax form so we could get all of those rebates Congress would grant so as to make it fair.

Isn't social engineering the point of the present system? Isn't that what has drove us to the extreme edge of nuttiness?

Herein lies the beauty of our system and individuality of our Statehood. LOL but seriously at the same time.

It is a flustercluck because sales taxes are imposed by the state. we don't have a national sales tax. Each state is free to set their guidelines as they wish.

In OH, we charge sales tax on the project if we Declare ourselves "tax exempt" at time of material purchase. If we do not Declare as such and pay tax on all material purchases, then we do not have to collect a sales tax from the consumer.

In time, I won't be surprised if we end up with a VAT (value added tax), that we see on every sale, just like in Canada. There will be a federal and state tax line on every receipt. Every time a good changes hand or is improved in some manner, the added value of the good is taxed. Last time I was in Canada, I believe the total VAT was around 14%.

Lefty Said: If you charge a sales tax on the materials you also have to charge a sales tax on the labor.

That can't be right. If a homeowner hires lefty to do his roof, there is no sales tax on labor. But, if the homeowner hires Lowes to do his roof, he pays a sales tax on the entire job? That would be unconstitutional- violates equal protection under the law.

Yes - Egg has it correct.

twill59 Said:

Not looking to argue. But pray tell how the fair tax would be any more complicated than what we already have :S

The point of argument is to reveal the truth. An income tax is pretty simple. It is the social engineering that gov't attaches to it that makes it so complicated. If we had a national sales tax, we would still have to file an income tax form so we could get all of those rebates Congress would grant so as to make it "fair".

I think you got it right there Egg.....in several ways ;)

I confess now all y'all have got me confused. In Ca I can assume that if roofing contractors were supposed to be collecting sales tax and paying it in, they'd be all over us on a regular basis. I recall being told many years ago by my accountant at the time that we were considered end users unless we were buying wholesale. Paying the sales tax as an end-user and incorporating that in our service contracts makes the materials incidental and tax exempt. Wholesalers don't pay tax to manufacturers or to what were called "jobbers." They don't collect it from retailers either. Retailers collect it from the end-user, whether it's us or the general public. Essentially we pass the incidental materials on at cost and anything we end up with after all the bills are paid is profit on our service. I haven't spent any time thinking about this issue in the last forty years, but for some reason I suspect Lefty has it right. But if you are going to tax the public for your roofs, then you definitely ought not be paying a sales tax when you buy your materials and if you don't pay sales tax on your materials, then you have to collect it from the public when you sell it. And I can't imagine you could routinely sell your materials to the public at a loss to lower those taxes either. Plus you would wind up having to do regular exacting inventory counts to keep track of every item you bought and haven't yet paid the taxes on. It would be fruitless to quote me cuz I really don't know. And then the laws change. And then they change again. And then again. Remember when every dollar of interest you paid was untaxable?