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1. luckymom30
   Member Profile

   If you purchase say equipment from an out of state company and they do not charge you sales tax, and then you sell something to someone and don't charge them sales tax are you liable for the sales tax for the out of state equipment per Washington State?

   Posted 4 months ago #         

2. skeeter
   Member Profile

   Need more information. Are you operating as a business? Do you have a resale certificate? Is the ultimate customer in Washington?

   Please post as detailed a description as you can and one of the accountants will probably help you out.

   Posted 4 months ago #         

3. skeeter
   Member Profile

   In general, a vendor in Washington state (presumably you) is required to collect sales tax if the customer is also in Washington state at the time of purchase. The vendor is then required to remit the sales tax to the state.

   If the customer is out of state, then the vendor is typically required to collect sales tax only if the vendor has nexus in the customer's state.

   Posted 4 months ago #         

4. luckymom30
   Member Profile

   Thanks skeeter, a good friend of mine operates a business here in Washington State they purchase some equipment from a company located in another state and they were never charged sales tax for the equipment. Then my friend forgot to charge sales tax to a customer and now they are being audited and they found out they are required to pay on the sales tax but the other company isn't being audited.

   Posted 4 months ago #         

5. skeeter
   Member Profile

   Hmmm. Looks like your friend made a couple errors. First, he/she was supposed to pay "use tax" if the vendor didn't charge sales tax. Second, if the customer (of your friend's business) was in Washington, then your friend should have charged sales tax and is legally obligated to pay even if he/she didn't charge the customer.

   Off the top of my head (and given my limited understanding of the facts) it sounds like the auditor is correctly applying the law. If your friend feels he/she is being treated incorrectly, there are many CPAs that would be happy to help.

   This website has a lot of great information:

   http://dor.wa.gov/Content/Home/Default.aspx

   Posted 4 months ago #         

6. kootchman
   Member Profile

   What they don't know won't hurt them. Yea. ya do owe the tax if you sell it . Don't volunteer. A good work around for that little problem, is never take custody of the resale product... add your mark-up and have the vendor ship direct... after ya get paid.

   Posted 4 months ago #         

7. luckymom30
   Member Profile

   Thanks so much skeeter for all your help I will pass this on to my friend.

   Posted 4 months ago #         

8. skeeter
   Member Profile

   Also consider having your friend go back to the customer and say "so sorry, I should have charged you sales tax. Are you agreeable to paying the tax now to correct the problem?" The customer might want be understanding. Probably happens all the time.

   You're very welcome - good luck.

   Posted 4 months ago #         

9. Bostonman
   Member Profile

   Skeeter summed it up pretty well. The sales/use tax can be very complicated. If you didn't pay sales tax on the equipment then you need to pay the use tax. I used to run into that all the time when I worked for a large public company in Vancouver who routinly would buy things out of state and not get charged the sales tax. I had to constantly go through the invoices and accrue the use taxes.

   Its a pain in the ass but one thing I have found is its less work than having the department of revenue come out and audit your books. I doubt the DOR is trying to screw you but if you need to you can hire a CPA to verify their work.

   Posted 4 months ago #         

10. Jiggers
    Member Profile

    

    Bostonman, are you a Tax Consultant or know how to claim? I need someone's free advice. How do I contact you?

    Posted 4 months ago #         

11. Bostonman
    Member Profile

    I have been an accountant for 16 years and a CPA but I have never held a position in tax or consulted for taxes. I am routinly asked questions about tax estimates since I work in the investing world but I am probably not your best bet for tax questions. Now that I have given you that disclaimer I can try to answer a question if you have one. You can post it here or you can tell me where to e-mail you and I will shoot you an e-mail.

    Posted 4 months ago #         

12. Bostonman
    Member Profile

    Skeeter is also a CPA and does work in the tax field but I think in corporate taxes. So, depending on your questions someone can probably give you an answer.

    Posted 4 months ago #         

13. skeeter
    Member Profile

    Bostonman is correct. I'm a CPA and work in a corporate tax department. There are several CPAs on the WSB forums. Post a new thread and you'll probably get some decent answers.

    Posted 4 months ago #         

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