# about paying "use tax"



## ReiRei (Feb 23, 2009)

I am confused about "use tax"...

I just bought a heatpress from out-of-state vendor without any tax. I also bought a teflon sheets via internet and he didn't charge me the tax.

So these are the subjects to use tax and I have to report?? 

And I was reading some of the old threads and found one said "I have to pay taxes every year for the heat press, over and over and over."

What does this mean?? what kind of tax do I have to pay for the heatpress every year, over and over????Is everyone paying this every year???

If the merchandise from out-of-state is for resale (like blank shirts), I don't need to pay the use tax, right???

I have a due to report my first use and sale tax in this July, so I am trying to get more info.

please let me know.
Thank you.


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## thutch15 (Sep 8, 2008)

You would only need to pay use tax on items that you use....not items that you resale. So if you buy a tee tax free and keep it then you are suppose to pay use tax. It is not just for business either....if you buy a movie off ebay you did not pay tax, so you are SUPPOSE to pay use tax. Sure nobody does though. 

As for paying sales tax every year for the heat press...wrong. You only pay sales tax once.


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## Boomerbabe (Sep 5, 2009)

However, here in FL since we had to register our business in our county to get a business (formerly occupational) license, they want to know what equipment we have so they can collect a "tangible property" tax. This we will have to pay every year. They get you coming and going it seems.


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## thutch15 (Sep 8, 2008)

Boomerbabe said:


> However, here in FL since we had to register our business in our county to get a business (formerly occupational) license, they want to know what equipment we have so they can collect a "tangible property" tax. This we will have to pay every year. They get you coming and going it seems.


I agree that some places would want a "property" tax every year...just like your car.


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## ReiRei (Feb 23, 2009)

Thank you for the reply.

I know in the real life, nobody reports the "use tax" for something you buy on e-bay. But when it comes to business and if I want to file those as business expenses later, I better to report everything??? How do you handle these??
I bought 2 teflon sheets on e-bay for about $10, and I am going to use them for my business. So I do want to count this as my business expense... 

According to what BOE says, I am sure I am suppose to pay....but I have never heard anyone reports the use tax for a book you buy online or something like that.


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## hostingdiva (Mar 31, 2006)

There's paperwork you need to file - you can find it here: Sales and Use Tax. 

California also has free seminars (virtual and in person) that they offer regarding use tax stuf. You can find those here - Seminar Schedule - Board of Equalization


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## greyhorsewoman (Jul 19, 2007)

Most individuals don't pay the 'sales tax' due on out of state purchases, and frankly, the states have no real way of policing it. (Though they are well aware of the revenue they lose due to this and may one day figure out a way to change that.)

However, it would do you well to pay 'use tax' on out-of-state purchases for your business, even though I'd bet many just ignore it. At some point, your state may decide to do an audit and, bingo, you'll be in a lot of hot water.

A couple of years ago, the state of PA realized how few vendors holding sales tax licenses reported any use tax. They sent all holders who had never submitted any use tax a letter indicating that they could do a 'self-audit' and submit any monies due by a certain date or the state would/could require a state audit. Especially with the financial crisis our states face these days, they are all looking for ways to collect more revenue.


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## SunGuy (Feb 2, 2010)

ReiRei said:


> But when it comes to business and if I want to file those as business expenses later, I better to report everything???


Yes, you should report it. I have a friend who got caught, (I forgot the incident) but instead of paying just the sale/use tax amount, it was calculated by percentage. Amount vs Reported = %, % times all the yearly/quarterly tax repot until it was current!!! It turned into a few thousand dollar fine. 



ReiRei said:


> How do you handle these??I bought 2 teflon sheets on e-bay for about $10, and I am going to use them for my business. So I do want to count this as my business expense...


This depends on what you're doing with it? If you're keeping it as a "TOOL", you need to pay tax for it. If you're using it to make an "ITEM", the tax is collected when you sell the item. 

For ex. I bought a graphtec blade today. It's a tool since I'm not re-selling it. I will need to pay "use tax" on it. Tomorrow, I'm buying application tape, I won't report or pay the tax on it because I need the application tape to put it on my vinyl decal and when I sell the decal, the "sale tax" will be collected on it. 

You will get used to it. I'm in California, I did with the sale form.


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## ReiRei (Feb 23, 2009)

Thank you for the reply.

I was just worried a bit too much since this'll be the first time for me to report the use &sales tax. 


It seems like CA also wants a "property" tax for the heatpress every year.


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## Artsplace-CBR (Feb 22, 2007)

As far a t-shirts there is no tax on clothing whether you are buying or selling. Isn't that correct?


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## thutch15 (Sep 8, 2008)

Artsplace-CBR said:


> As far a t-shirts there is no tax on clothing whether you are buying or selling. Isn't that correct?


You do not need to pay sales tax on anything that you are going to be reselling. You would then need to charge sales tax if you are selling to the end user.


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## SunGuy (Feb 2, 2010)

Artsplace-CBR said:


> As far a t-shirts there is no tax on clothing whether you are buying or selling. Isn't that correct?


I'm not sure which State you're in so it can vary from State to State, but in California, there is a Sale tax on clothing. I see it all the time when I buy clothes at the store.

Here is a good link which sale tax what. Sales taxes in the United States - Wikipedia, the free encyclopedia


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## Brandzapparel (Jul 10, 2009)

Artsplace-CBR said:


> As far a t-shirts there is no tax on clothing whether you are buying or selling. Isn't that correct?


Do you have a resale certificate?
If you do you then you will not pay any tax when purchasing, you will have to apply the tax when reselling though.


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## SunGuy (Feb 2, 2010)

With the power of the internet, it doesn't matter anymore for the home business. 

You can buy supplies out of state, so you don't have to pay tax.

You sell it locally or online, CASH ONLY, and you don't have to pay sale tax. 

Just don't get a re-seller permit because that's how the state keeps track of your income.

If you buy $100,000 worth of supplies with a reseller permit, and report only $25,000 worth of gross sales, it is an automatic red flag!!!!

There is some advantage with a reseller permit, no-sale tax on local supplies, access to large wholesaler, but if you're willing to wait, it's always cheaper online and out of state. (California is just expensive to operate.)


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## greyhorsewoman (Jul 19, 2007)

> You sell it locally or online, CASH ONLY, and you don't have to pay sale tax.


Just how does one collect cash ONLINE~!!?



> If you buy $100,000 worth of supplies with a reseller permit, and report only $25,000 worth of gross sales, it is an automatic red flag!!!!


The people you purchase goods from are not required to submit records to the state of whom they sell to unless specifically requested. There is no way they would _automatically_ know you spent $100,000 on supplies/goods. Also, it's very possible to purchase larger amounts of inventory than your gross sales ... you account for that by how much INVENTORY you have on hand. 



> no-sale tax on local supplies


A sales tax license DOES NOT forgive you from paying sales tax on taxable purchases, whether in-state or out. It means you don't pay sales tax on items that will be RESOLD, as sales tax is considered applicable to the finished resell product only.


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## SunGuy (Feb 2, 2010)

> Just how does one collect cash ONLINE~!!?


Easy. "Please put cash in an envelope and mail it to me!!!!" Money order works too. 



> The people you purchase goods from are not required to submit records to the state of whom they sell to unless specifically requested. There is no way they would _automatically_ know you spent $100,000 on supplies/goods. Also, it's very possible to purchase larger amounts of inventory than your gross sales ... you account for that by how much INVENTORY you have on hand.


I know. I do some wholesale reselling with my other business. They don't automatically know but there is a paper trail. And do that a few years and they will get you.


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