collecting sales tax on out of state work

Discussion in 'Business Operations' started by pl1985, Jan 24, 2008.

  1. pl1985

    pl1985 LawnSite Member
    Posts: 46

    Do you have to collect sales tax on mowing sales out of state? I know that if you have a 'nexus' in a state, meaning business facilities of any kind, you have to charge sales tax to customers of that state. I also know that if you don't have facilities but have employees making sales in a state, you are still required to collect sales tax and submit it to that state. If all my business facilities are in NJ, and I have customers in PA, do I have to charge PA sales tax to those customers? The catch is that the financial transaction is done entirely in NJ, and the customer does not receive any material object from the mowing that would represent a sale, unlike in landscape installations or retail sales. There is no exchange of property for property in PA. The customers all signed up over the phone to pay by credit card, and the charge will be made over the internet and the money deposited into an NJ bank account. If they sent checks to me in NJ and the checks were changed and therefore the transaction completed in an NJ bank, would that still be considered an out-of-state sale? The sale is really made in an office in NJ and the financial transaction happens in NJ.
  2. AintNoFun

    AintNoFun LawnSite Bronze Member
    Posts: 1,807

    sorry i can't give any input, but knowing jersey there gonna get you anyway they can! i know that the treasury dept. is onto people big time for buying cigarettes mail order/online from the indian reservations. within a week i had 2 family members get bills for over 1k and a friend for 3k.. so who knows...
  3. PaulMoody

    PaulMoody LawnSite Member
    Posts: 25

    I don't have direct experience with across state lines but I would say that the location the service is performed is where the tax rate is applied. For example I serve an area that used to be just a large unincorporated area in the county. Over time many of these areas have been forming into little cities. As a resault, when I file my state sales tax reports, I have to break it down into what is collected from each area so the proper share of the local taxes can go to each individual city. Lucky for me they all have the same tax rate at this time. If I were to do business in the next state as well I believe I would have to collect sales tax from that area at their rate and file it with that states Dep of Revenue.

  4. qwerty

    qwerty LawnSite Member
    Posts: 25

    Sales Tax is handled by each individual state. You would have to check with each state's revenue department for specifics, but according to PA's Revenue Code 56.1.6 Under Maintaining a place of business within the commonwealth:

    Regularly engaging in an activity in connection with the leasing or servicing of property which is located within this Commonwealth.

    Example. ‘‘C’’ Company, a Delaware corporation, employs ‘‘E’’ to make service calls. ‘‘P,’’ a Pennsylvania resident, is a customer of ‘‘C’’ company. ‘‘P’’ calls ‘‘C’’ and requests that a serviceman be sent to his house. ‘‘E’’ is dispatched to the residence of ‘‘P.’’ ‘‘C’’ is ‘‘maintaining a place of business within Pennsylvania.’’

    If I understand all the Cs, Es, and Ps you would be required to register with the State of Pennsylvania and remit sales taxes as you have established regular business within the commonwealth even though your office is not physically within state lines. The only wiggle room I see is if "E" employee has to be a Pennsylvania resident or not. Again, only each state's revenue department can give you the exact answer.
  5. pl1985

    pl1985 LawnSite Member
    Posts: 46

    My only concern there is that half the employees of the state and federal revenues services don't know the answers and don't care enough to find the right answer. They'll probably tell me that they are pretty sure you do or they'll just say yes you have to because it's a safe answer. They did a study once with people walking into and calling the federal internal revenue service with tax questions. I think well under 50% of people were given correct answers.
  6. lawnMaster5000

    lawnMaster5000 LawnSite Senior Member
    Posts: 589

    Your accountant may be able to answer these questions for you, if not they should be able to look it up rather easily. Sales tax laws are a state to state thing. Each state will have different laws on what is taxable, and if you are required to tax given your office is in another state. An additional aspect to consider, some states have an agreement with surrounding states requiring sales tax to be collected for out of state transactions.

    No matter what the state's employees tell you it will be more reliable than what we tell you on here.
  7. quipit

    quipit LawnSite Member
    Posts: 29

    If you're working in PA you need to register to do so, you need to collect taxes and pay taxes. LOL They're gonna whack you if you don't...
  8. quipit

    quipit LawnSite Member
    Posts: 29 must file a year end tax return as well :)
  9. quipit

    quipit LawnSite Member
    Posts: 29

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