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Accounting Homework Help

Simple Way to Understand Sales and Use Tax Homework Answers

by Jul 9, 2017Accounting

The topic of sales and use tax homework answers is fairly intriguing and we find it easier to discuss as they pertain to some real-life incidences. In our blog, we describe and elaborate on the definition, types of transaction and the rules abiding the tax payers when it comes to the said law. Our blog is focused to enriching you with all that you need to know about this particular tax.

Our blog sales and use tax homework answers the basic notions associated with tax collection and payment. Common public in general pay taxes in all the purchases they make, however, consciously unaware of the procedure. This stems from the fact that lot of people consider taxation as a complicated process only to be dealt by government authorities, businessmen and CA offices. We try to throw some light on the procedure and applicability thus making it easier for all.

What is a sales tax?

Sales tax is the price paid in addition to the purchase price and collected by the vendor against sale of a good. Sales tax may vary from place to place, government to government. ร‚ย The vendor in turn, remits the amount of tax to the government. Certain purchase for example, vehicles and trailers, tax is paid by the buyer directly to the government.

Definition of use tax

Unlike the sale tax, use tax is paid to the government directly by the buyer of goods. For example, you buy furniture A from Colorado for use in your state of residence Massachusetts. You do not pay Massachusetts sales tax for purchase in Colorado. However, you pay 6.25% use tax in Massachusetts as furniture A will be used in the latter state. Use tax is applied as the purchase was not made subject to sales tax in Colorado.

Inclusion of goods under use tax

  • Movable personal property like electronically transferred software
  • Transfer of pre-written computer software
  • Telephone, mobile phones and other personal transmission devices.

Cable service and internet service does not come under the purview of sales tax and exempt from such taxes.

Sales and use tax homework answers pertaining to a particular state define sales and use tax vendor as one who

  • Is involved in the activity of selling, renting or leasing out movable personal property or telecommunication services that are subject to the state sales tax.
  • Purchases movable property within a state jurisdiction and resale those at a higher price to generate revenue from the said property.
  • Manufacture goods using various parts for sale in the said state.
  • Is associated with delivering, repairing and installing telecommunication devices within the state jurisdiction.

Other state vendors who are listed outside the jurisdiction of a said state, however, performs similar activities as that of the state vendors defines above will fall under the purview of sales and use tax law.

How does a vendor become eligible to collect sales and use tax?

The ops topic of sales and use tax homework answers goes on to reveal how a vendor can apply for registration in a particular state. A registered vendor is eligible for collecting and subsequently remitting sales and use tax to the government for various public welfare developments.

  • Vendors can log on to state website dedicated for registration of vendors for sales and use tax
  • Fill up the application form online
  • A sales and use tax registration certificate is issued separately for each business location
  • The registration number and the form is displayed by the vendor at his business premise to let the customers become aware of his credibility

The law of sales and use tax, however, is lenient when it comes to one time purchase of any item by an individual or business from outside the state jurisdiction. For example, if you purchase a one-time item outside the state jurisdiction as an individual, you do not have to shell out sales tax. Again, as a business enterprise, you are not liable to collect sales and use tax if you indulge in one time buying and selling of an item outside the state jurisdiction.

Tax-exempt items

Sales and use tax homework answers states how certain items is not included in the tax regime.

The tax-exempt items are as below

  • Sales of food and clothing: Food targeted for human consumption is exempt from sales and use tax. Meals sold in restaurant, however, is charged tax as per state law. Individual clothes below a certain pricing do not fall under the purview of sales and use tax.
  • Sale of newspapers, journals, magazines are exempted from the said tax regime.
  • Amusement and sporting events tickets or admission passes are tax exempted.
  • Sales of telephone services to residences of a said state does not fall come under sales and use tax regime.
  • Transportation services are usually not taxed in the given regime.

Other apparels and specific items that do not fall under the sales and use tax regime is given as below

  • Aprons, household items are tax-exempted
  • Bathing suits
  • Belts, buckles, suspenders
  • Choir, clerical vestments
  • Synthetic and natural fiber
  • Costumes
  • Footwear, boat shoes, innersoles, sandals, shoelaces, slippers, sneakers and tennis shoes
  • Gloves, gardening, casual dress
  • Gym uniforms
  • Hats, caps, earmuffs
  • Leotards, tights
  • Ski pants
  • Tennis clothing
  • Work clothing and uniforms
  • Rainwear
  • Neckwear, ties, scarves
  • Jacket, windbreakers

The list only grows long depending on the state in question. Sales and use tax homework answers reveal that taxable and tax-exempt items are state specific.