Tax Question: What if a Customer refuses to pay Sales Tax?

Discussion in 'Business Operations' started by Paradise Landscapes, May 30, 2003.

  1. Paradise Landscapes

    Paradise Landscapes LawnSite Senior Member
    Posts: 960

    I ran into a situation the other day.
    The homeowner refused to pay the Ohio sales Tax.

    I would like to open up this thread to see the input you fellow LCO's and Landscapers have to offer. What would you do? :rolleyes:
  2. Meier

    Meier LawnSite Senior Member
    from DFW
    Posts: 269

    I had one about amonth ago who didn't want to pay sales tax. I explained that I didn't want to collect it, but if I didn't and the state comptroller ever asked me about what I'd been doing the last few years, I'd have to pay it all myself, along with interest and penalties.

    I just explained that sales tax was unavoidable.

    She signed up.

    DFW, TX
  3. Lawn Tek

    Lawn Tek LawnSite Senior Member
    from u s a
    Posts: 457

    Ask him why he is exempt ? I f he refused to pay it then he did not pay his bill in full to you . Assuming your gonna pay HIS tax , makes him still owing you .
  4. Paradise Landscapes

    Paradise Landscapes LawnSite Senior Member
    Posts: 960

    I contacted the IRS. Same thing happened Last Year. I reported them, they came and took some of thier property. They thought I was bluffing when I told them I would call the IRS. They found out wrong when the IRS showed up.

    Lesson: Don't try to cheat the IRS. :cool:
  5. Paradise Landscapes

    Paradise Landscapes LawnSite Senior Member
    Posts: 960

    Lawn Tek,

    Good Point. I asked him why he thinks he is Exemped. All he could say is becauase more material was used than what was originally stated, Thinking I should take the Tax hit on the material.
  6. philk17088

    philk17088 LawnSite Fanatic
    Posts: 17,386

    Tell him to call the state and give them that bogus reason, they'll staighten him out!
  7. greenman

    greenman LawnSite Addict
    Posts: 1,405

    Dont show the tax on the invoice. When you charge the client "your price" (your cost plus your mark up), add the tax in with the cost (hidden tax). My invoices dont have a "sales tax" line. Just a "charge" lines and "total" line. If you dont pay tax at purchase to the seller then it may difficult to do this though. I pay my taxes when I purchase, so the taxes are already in "my price" when I quote the bid or total price.
  8. John from OH

    John from OH LawnSite Member
    Posts: 144

    Paradise, did you list the sales tax in your contract? We always put the price, sales tax, and a grand total on our contracts. Those details clarify any misunderstanding the customer has about the final price of any job.

    As I read your posts, 2 things come to mind.

    First, you state that the materials were more than you quoted him. Was this a time and materials job (T and M jobs still state sales tax will be charged on the job), or did you miscalculate materials and try to pass on your mistake to the customer?

    Second, you state that last year the same thing happened and you turned the client into the IRS. The IRS doesn't collect sales tax. Sales Tax is a state collected tax. The IRS is responsible for income tax, employment tax, etc.

    Give more details and maybe we can give you applicable advice. How much is the sales tax? Is it worth the trouble of collecting it?
  9. John Allin

    John Allin LawnSite Bronze Member
    Posts: 1,489

    We have a nice relationship with the State Revenue people here in our local market. If we have any questions, we call them for clarification..... they really are quite friendly since they know we are really trying to follow the state tax laws.

    Anyway, one of the "services" we get is when a customer gives us a hard time about what might be taxable, and what is not (translation.... refusing to pay sales tax) - they will gladly make a phone call to our client "explaining" the tax law to them and what the ramifications are for refusing to pay.

    They do it professionally, and without malice..... but the point DOES get across to the client..... and we always get the money.
  10. Paradise Landscapes

    Paradise Landscapes LawnSite Senior Member
    Posts: 960

    I was trying to pass my mistake to the customer. I wanted to eat my mistake and have the customer pay the sales tax.

    I did have my sales tax on a seperate line.

    Example: Materials:XXXXXX
    Labor: XXXXXX
    Total: XXXXXXX

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