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View Full Version : Customer refuses to pay sales tax!


K.Carothers
05-05-2006, 09:29 PM
I can't believe what a customer did today. I have a new customer that has more weeds than grass. It is my smallest lawn in the middle of my route. I'm talking about a 10 min job. He said he was going to pay me the $50 for the invoice I sent for the 2 cuts in April. I told him the price is on the invoice then continued cutting. When I finished, he walks out and says his book keeper said that he does not have to pay sales tax and hands me a check for $50 instead of 53.50(invoiced). I couldn't believe that a customer had the nerve to tell me that he is not paying the sales tax. I asked for the book keepers name and number but nothing. I did grab the check(learned that lesson before) but I just don't know what I should do.

Any suggestions???


kc

sicnj
05-05-2006, 09:33 PM
put a lien on his house jk. What i do is print out the laws and hand him a copy. Don't do it unless he pays. or charge him 28 a cut instead of 25 take care of the taxout of that.

1MajorTom
05-05-2006, 09:34 PM
You print this out and give him a copy.
Circle in Red ink Section I
http://www.taxback.state.pa.us/revenue/cwp/view.asp?A=299&Q=208974

Then tell him that you do not charge sales tax, you collect it for the state of Pennsylvania, and they do enforce it. Then see what he says.

Roger
05-05-2006, 09:37 PM
I too have had it happen on a couple of one-time jobs. I just changed the amount so that the combined total equalled the value of the check. It didn't amount to much --for me, not worth making a hassle.

I did have a first-time thing on April's invoices. The check was only for the work, and sales tax was not included. This is a long-time customer and I think she just read the invoice wrong (started using QuickBooks invoices this season). I have registered her payment against the invoice, leaving the sales tax as an open item. It will show up in her May invoice; I am not going to let this one slide, it is too much.

K.Carothers
05-05-2006, 09:37 PM
You print this out and give him a copy.
Circle in Red ink Section I
http://www.taxback.state.pa.us/revenue/cwp/view.asp?A=299&Q=208974

Then tell him that you do not charge sales tax, you collect it for the state of Pennsylvania, and they do enforce it. Then see what he says.

That is great Jodi, thanks.

He also mentioned that he talked with his neighbor and they don't pay sales tax for lawn service. I immediatly said" they are breaking the law".


kc

1MajorTom
05-05-2006, 09:38 PM
We have had this happen to us before, customer called, left message on the machine questioning their invoice amount. I printed out the sales tax law and mailed it to them, they paid their invoice in full including the sales tax, then enclosed a note saying that they no longer wanted our service.
What can you do? Nothing, if that's how people want to be, then so be it.

K.Carothers
05-05-2006, 09:41 PM
I too have had it happen on a couple of one-time jobs. I just changed the amount so that the combined total equalled the value of the check. It didn't amount to much --for me, not worth making a hassle.

I did have a first-time thing on April's invoices. The check was only for the work, and sales tax was not included. This is a long-time customer and I think she just read the invoice wrong (started using QuickBooks invoices this season). I have registered her payment against the invoice, leaving the sales tax as an open item. It will show up in her May invoice; I am not going to let this one slide, it is too much.

I hear what you are saying but where is the line drawn?
What happens if this customer talks with another customer of mine? I want everyone on a level playing field. I don't want to hide numbers.


kc

topsites
05-05-2006, 09:41 PM
I too have had it happen on a couple of one-time jobs. I just changed the amount so that the combined total equalled the value of the check. It didn't amount to much --for me, not worth making a hassle.

I did have a first-time thing on April's invoices. The check was only for the work, and sales tax was not included. This is a long-time customer and I think she just read the invoice wrong (started using QuickBooks invoices this season). I have registered her payment against the invoice, leaving the sales tax as an open item. It will show up in her May invoice; I am not going to let this one slide, it is too much.

I agree... Here in virginia we don't charge tax on services but if we did, what I would do is just give them the total and say nothing further. So, carry this customer with his 50-dollar thing through the end of the year and you only lose 3.50 or so and make sure you do something a little bit FASTER so maybe not quite as good a job but it's only 3-4 bucks ok, so then next year his service becomes 55 and that should take care of it.

Matter of fact, consider doing this for all of yours: Just include it in there, don't say nothing about it, that is the total for all of it and end of story.

daveintoledo
05-05-2006, 10:07 PM
i mailed a copy of the law to curent customers this past winter, and include one in my welcoming letter to new clients.... i also keep a copy of my license to collect the tax in my truck.......

i add it on to the incoice just like any other good or service that is taxable.... if they dont like it, they are history... its not worth it if they are that unreasonable,

AintNoFun
05-05-2006, 10:17 PM
send them a 1099 for the sales tax since they aren't paying it....

topsites
05-05-2006, 10:23 PM
send them a 1099 for the sales tax since they aren't paying it....

You know that is the correct answer, then you don't pay it to the IRS for that account.
You'll have to find out what to do so as not to pay it, but yes once you send them the 1099, it's their obligation.

Evan528
05-06-2006, 12:13 AM
I have had several new clients get there first bill and send the balance minus the sales tax with such notes as " services are not taxable". A copy of the sales tax laws has done the trick for me also......

It seems that at least 3/4 of landscape companys dont charge sales tax. Therefore when I start servicing there lawn they assume i shouldnt be charging them tax either.

olderthandirt
05-06-2006, 12:26 AM
You make a call to your states dept of taxation.
We are doing the state a favor collecting the tax and its not worth argueing about with a customer, if they won't pay after informing them they do owe the tax, I let the state get there money. Usually 1 call and they pay the tax. And the state tells them that all lco services are taxable usually enough to make them relize that going to another lco won't help them get out of paying.

yrdandgardenhandyman
05-06-2006, 02:04 AM
I agree... Here in virginia we don't charge tax on services but if we did, what I would do is just give them the total and say nothing further. So, carry this customer with his 50-dollar thing through the end of the year and you only lose 3.50 or so and make sure you do something a little bit FASTER so maybe not quite as good a job but it's only 3-4 bucks ok, so then next year his service becomes 55 and that should take care of it.

Matter of fact, consider doing this for all of yours: Just include it in there, don't say nothing about it, that is the total for all of it and end of story.


In my state it is illegal to hide the sales tax in the price. You must show the price total and then the sales tax on that price total. The total and the sales tax must be listed seperately.

Here's an account of my own experience.

http://www.lawnsite.com/showthread.php?t=145174

newz7151
05-06-2006, 11:27 AM
In my state it is illegal to hide the sales tax in the price. You must show the price total and then the sales tax on that price total. The total and the sales tax must be listed seperately.

Here's an account of my own experience.

http://www.lawnsite.com/showthread.php?t=145174

I believe i remember reading somewhere that you can include the tax on an amount (like, an oil change or something) as long as your invoice states that the tax is included in the price. Like, say your total with tax comes to 54.65, the bill is due for 54.65 and you can have on your pricing somewhere "Lawns mowed for $54.65" (tax included)

dtelawncare
05-06-2006, 07:15 PM
In Alabama, we do not have a service sales tax. On the statement that most lawn care/landscapers are not collecting taxes, they will have to pay it at the end of the year unless they don't claim the income all together. Whenever I supply cutomers with items, I add the extra charge as a service charge, not materials mark up.

JJLandscapes
05-06-2006, 09:22 PM
you going to lose a customer for $3 a month? show him the proof and he will most likely pay it... if he doesnt either bite the $3 if you dont plan on doing any big expensive job or drop him for being a cheap ***

K.Carothers
05-07-2006, 05:02 PM
you going to lose a customer for $3 a month? show him the proof and he will most likely pay it... if he doesnt either bite the $3 if you dont plan on doing any big expensive job or drop him for being a cheap ***

That's the problem. They are easy lawns but I can't make exceptions because a few customers will not pay the sales tax.

I believe a good business person gives at times but the sales tax must be paid by the customer. Why should I have to be the one to adjust my invoices to those customers and lose 7%???

I just received another invoice with a customer saying they have been in the service industry for 30 years and never paid sales tax. Of course, they didn't add the sales tax to the check.


kc

newz7151
05-07-2006, 05:59 PM
That's the problem. They are easy lawns but I can't make exceptions because a few customers will not pay the sales tax.

I believe a good business person gives at times but the sales tax must be paid by the customer. Why should I have to be the one to adjust my invoices to those customers and lose 7%???

I just received another invoice with a customer saying they have been in the service industry for 30 years and never paid sales tax. Of course, they didn't add the sales tax to the check.


kc

Just make copies of what Jodi said to print out for PA and mail it back to them along with a note letting them know that if they refuse to allow you to collect the sales tax for the state , that at the end of the year, that will be getting reported with your tax statements and then THEY will get the penalties and intrest charged from the state for not paying sales tax on their bills.

yrdandgardenhandyman
05-07-2006, 07:12 PM
Just make copies of what Jodi said to print out for PA and mail it back to them along with a note letting them know that if they refuse to allow you to collect the sales tax for the state , that at the end of the year, that will be getting reported with your tax statements and then THEY will get the penalties and intrest charged from the state for not paying sales tax on their bills.



And then wait for them to cancel. Unfortunately you will lose the customers for doing the right thing. But the right thing we must do. Most people are smart enough to understand business and the law. You will always have a few who are cheapskates, which is what these guys are.
Does your state have an exception if you gross less than a certain amount, say, $5000.00 for example? Does any state?
There are so many "lawn care professionals" working way under the radar that it sometimes feels like a losing cause to be legit. But my Pappy taught me to always try to do the right thing. It will all even up in the end.

lrose2
05-07-2006, 07:23 PM
The tax laws do vary from state to state as to whether or not our services are in fact taxable. In states where our services are taxable, you can almost bet that the service providers that are not charging sales tax are not licensed, nor are they legitimate companies.

yrdandgardenhandyman
05-07-2006, 09:28 PM
The tax laws do vary from state to state as to whether or not our services are in fact taxable. In states where our services are taxable, you can almost bet that the service providers that are not charging sales tax are not licensed, nor are they legitimate companies.


Then wouldn't that be in the state's best interest to enforce that law? Why doesn't the government enforce the laws that are on the books before they make new ones? I'm not whining. I just feel the fly by nighters and illegal (there's that word again) operators have a very unfair advantage, price wise. And it appears that most of the landscaping and lawn work is going untaxed for some while I must collect 7% on top of every dollar, keep a seperate account for it and ensure that the state gets it by the due date. Otherwise I am fined.

old dog 80
05-07-2006, 10:29 PM
In Alabama, we do not have a service sales tax. On the statement that most lawn care/landscapers are not collecting taxes, they will have to pay it at the end of the year unless they don't claim the income all together. Whenever I supply cutomers with items, I add the extra charge as a service charge, not materials mark up.
In Pa where there is sales tax ,you must file online or by phone and tax is dure the 20th of each following month.There has been a sales tax(6%) on these
services for 15 years now.One of the ways to stop lowballers is to turn them in to the Pa. Dept. of Revenue for not collecting sales tax.A friend I graduated with is an enforcement officer and they are looking for cheaters.He even had to shuta kid's worm selling venture because someone called in a complaint!

Fantasy Lawns
05-08-2006, 11:53 AM
That guy needs a new "book keeper"