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Indiana members, on sales taxes

Discussion in 'Business Operations' started by GroundKprs, Mar 12, 2001.

  1. GroundKprs

    GroundKprs LawnSite Bronze Member
    Messages: 1,969

    This is from IAN (now INLA) tax seminar 8 years ago. May be some minor changes since. If your accountant cannot give you definite procedures, better question whether you need a new one.

    In Indiana, sales or use tax is charged on most material sales except food and prescription drugs. The tax is charged to the final consumer, because the state would rather have the tax charged on the ultimate value of the product. Any one handling - adding value to - the product in the course of delivery is not liable for sales tax payment. The entity who makes the sale to the final consumer is charged with collecting the tax for the state, and recording and forwarding the monies to the state. Sales taxes are a significant source of tax revenue, and audits are frequent in the green industry, so do your best to be accurate. On any job you are selling to the final consumer, you must charge sales tax unless the buyer provides you with an ST-103 sales tax exemption. (Even if this is supplied, and it is improper useage by the buyer, the seller can be caused to pay the tax that should have been charged.)

    materials and labor: You can bill the customer for itemized materials and labor fees, and charge tax on the materials fees. If the materials cost (cost to you) is less than 10% of the total job price, you can elect to pay the sales tax to your supplier and charge the customer a flat non-taxable charge for the job, (except for fertilization services.)

    fertilization - You must charge the customer sales tax on the full cost of the service. You cannot itemize materials and labor, and you may not use the 10% rule noted above. If you make a complimentary application, you must pay sales tax on the cost to you of quantity of the product used.

    flat monthly rates including fertilization - since this rate is based on average cost over a time period, you know the cost charged for fertilization as a component cost, and must collect sales tax for this amount. In our situation, we charge tax for the fertilization in the months of application only. You may be able to charge a fixed rate each month (the average of tax charged over the period), but I would check first with state on this. In my discussions with state auditors, they like to see the tax and the sale event definitely linked.

    NOTE: Because of the historically lax attitude of the green industry toward tax collections, auditors frequently target that industry. Average for all green industry business is an audit every three years. If they find gross irregularities, you will then be audited every year for an indefinite period. If you do not have proper records, you will be liable for whatever they calculate. Do it right, and save tons of hassle.
  2. Skookum

    Skookum LawnSite Senior Member
    Messages: 675

    Thanks Jim!

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