1. Missed the live Ask the Expert event?
    Not to worry. Check out the archived thread of the Q&A with Ken Hutcheson, President of U.S. Lawns, and the LawnSite community in the Franchising forum .

    Dismiss Notice

Mower sold on congisgnment

Discussion in 'Business Operations' started by yardboyltd, May 25, 2002.

  1. yardboyltd

    yardboyltd LawnSite Senior Member
    Posts: 323

    Can anyone help me with my legal question?

    I just sold my old mower on consignment with a dealer out of town who sold me my new one. His fee was 10%. I told him start at $2500, and we will take $2000 for it. Anyways he sold it and I get the check. He sold the mower for $2000 with sales tax, and then kept the sales tax, so I ended up with like 1800 minus his 10% fee. I got ripped and I'm pissed. However he is the dealer for my new mower and is currently the one dealer I could turn to if something happened to it, because he also loans mowers when servicing.

    Anyways my question is: Is he allowed to deduct the sales tax for himself, on consignment? What exactly are the rules on sales tax when saling equipment?
  2. Mykster

    Mykster LawnSite Senior Member
    Posts: 668

    Don't know why he would deduct the sales tax from the cost of the mower he's selling for you. And then he'll charge the new buyer sales tax. I don't know exactly how that works but, it doesn't seem right.

    I think he should only be entitled his fee.
  3. FL_Rob

    FL_Rob LawnSite Member
    from Tampa
    Posts: 12

    Can't speak directly to your local/state tax laws... but in FL he who sells it collects the sales tax and remits it to the state (or is supposed to) - he's not supposed to "collect a tax and keep it"

    I'm not sure you have any legal recourse... unless you have an agreement thay says otherwise but that doesn't matter because I don't think .

    If I were you though, I might ask him not to collect his 10% on the taxed total... he should only collect 10% on the pre-tax amount.

    Example: if it sold for $2000 WITH tax inlcuded, and sales tax is 10% then the pre-tax price would have been $1818 - His 10% would then be $181.80 and you would receive the remainder of $1636.37 rather than him collecting $200 on the taxed price which would have yielded you $1618 or about $18 bucks less...

    If he added the sales tax(10%) to the sell price so the seller would have paid $2000 + $200 in sales tax - your agent would collect his 10% of the sell price or $200 and you would have gotten $1800.

    Make sense...
  4. Kent Lawns

    Kent Lawns LawnSite Senior Member
    from Midwest
    Posts: 870

    He screwed you.

    You'll need the full 1800.00.
  5. yardboyltd

    yardboyltd LawnSite Senior Member
    Posts: 323

    He sold the mower for 2000 with sales tax. It was suppose to go no lower than that without calling me, but he hadn't said anything about sales tax. Yes he took his 10% off the sale price without the tax.

    I want to see the check from the buyer to make sure he didn't jip me there. If he got 2500 out of it plus the **** he pulled from me... that's about $850. Perhaps he even collected sales tax from the buyer... That's not exactly pocket change. My father suggested we take him to small claims. I dont' think we have anything to stand on, however it maybe the only way to get hold of the cancelled check, etc..

    I had nothing in writing, only that he had taken the mower on consignment.

    Thing is, his son priced our new mower to us, and he may have been a little cheap and his father may just be trying to make up for it. He's the one that suggested he should try and sell the mower.

    Furthermore, why should I have to pay for the sales tax on my own mower? I payed for it on the new mower I bought from them, in addition to the quoted price. I was sort of interested in a wb they were selling on consignment. I know the price he quoted me for it, i'm thinking about calling back and inquiring about it some more and try to see if he tacks on a sales tax charge. If so, I'd ask him why I had to pay it on my mower I sold there...

    Or could simply call him up and b****, but that doesn't usually solve anything.
  6. vipermanz

    vipermanz LawnSite Bronze Member
    Posts: 1,773

    maybe you should consult your legal advisor to see whats' right and wrong in your transaction
  7. Tony Harrell

    Tony Harrell LawnSite Senior Member
    Posts: 739

    Did he add your old mower to his inventory?, (trade in). If so, he will have to collect sales tax. However, if it was just a consignment sale as you say, he should have passed all monies to you, minus hs fee. The local Gravely dealer had a consignment mower and told me there would be no sales tax. Don't know if it is legal or not, maybe different in your state. If you sold it from your home, would you still have to colect sales tax?
  8. Boy if you can't trust the guy selling you equipment who can you trust........take him to lunch and ask him about it.......
  9. ScottH

    ScottH LawnSite Member
    Posts: 60

    Here's the way we were told to handle consignment sales. Our % is to be based on sale price without considering sales tax. We do however bill and collect sales tax and then forward the tax to the state with our normal tax remitance. Our accountants opinion is that since we actually sell the equipment, even if the owner sets the price, and that the invoice is from us and the check is made out to us, we are responsible for collecting and remiting the sales tax.

    Hope this helps - Scott H

Share This Page