Can my business pay for my customers sales tax in CA?

Question

I asked this question a couple of days ago and I feel like not adding my State made the answers vary.

Basically, I run an online business selling taxable goods in CA. My online payment gateway doesn't support tax implementation, but I'm already kind of stuck with that gateway. My question is if I can take the hit on my profits and pay for the sales tax for the customers that apply?

I would just pay it out-of-pocket, and mention on the website that the sales tax was paid by the company.

I also have a some-what efficient way of determining the tax with an excel spreadsheet and a third-party tax software, so that's not an issue.

Here are some links that might help:

http://www.boe.ca.gov/lawguides/business/current/btlg/vol1/sutl/what-is-required-of-seller.html

http://www.boe.ca.gov/sutax/faqpurch.htm#2

http://www.boe.ca.gov/lawguides/business/current/btlg/vol1/sutl/what-is-required-of-retailers.html

http://www.boe.ca.gov/lawguides/business/current/btlg/vol1/sutl/what-is-required-of-consumers.html

Answer 1

I thought I gave you a good answer & I told you where to look for your answer & I see you have done some research . Yes you may, if you do what is required of you -- you need to state the price includes the tax . Advise your customers of the fact you are including the sales tax in the price OR pay the FULL sales tax yourself.



You don't have to charge it ; but you do have to pay it.



Read this link - pay attention to question number 2 & 3



http://www.boe.ca.gov/sutax/faqpurch.htm



"Who is responsible for paying sales tax to the Board of Equalization (BOE)?



As a seller, you owe the sales tax and are responsible for paying the correct amount to the BOE. If you do not pay the correct amount, you are subject to additional tax charges plus applicable penalties and interest charges."



"Can I collect sales tax from my customer?



Yes. Although you are required to pay and report sales taxes to the BOE, you may be reimbursed by your customer for the amount of tax you owe on a sale. For example, if you are required to pay $1.75 in sales tax on a sale, you may pass that cost on to your customer, provided it is agreed to as part of the sale. It is presumed that the customer agrees to pay the addition of the tax if:



You list a separate amount of sales tax reimbursement on your receipts or invoices;

You post a sign on your premises stating that sales tax reimbursement will be added to all prices of taxable merchandise, or make a similar statement on price tags, advertising material, and other printed material directed to the purchaser; or

The sales agreement specifically calls for the addition of sales tax reimbursement.

If you include sales tax reimbursement in your prices, rather than itemizing it separately on your invoices or receipts, ***you **must** inform the buyer that tax is included***. You can post this information at your premises in a location that is visible to purchasers; or you can include it on a price tag or in an advertisement (whichever is applicable). Use one of the following statements:"



Otherwise you have to pay the full sales tax on the item - so yes, you can pay it.. The tax is imposed on the seller in CA.



It doesn't matter if its a retail store or you are doing business online.



BTW - to calculate the sales tax when you include it in the price of the item - divide the price by 1 plus sales tax rate. For example - you sell an item for 100 & sales tax is 8%.. 100 divided by 1.08 = 92.59 . If you do it this way - you have to inform your customers - otherwise you can pay the tax on the FULL price yourself or in other words in this example $8 if you don't charge the customer the tax. You can't reduce the price of the item when you report your sales.



When I answered your question the other day - one state specifically mentioned you can NOT absorb the sales tax. You have to charge. ( even though the seller is still responsible for paying it). This is NOT the law in CA.



http://www.accountingcoach.com/blog/calculate-sales-tax



Good Luck

Answer 2

Maybe CA is different but on the other side of the country we wouldn't charge sales tax on out of state sales. It's up to the buyer to remit use tax on the purchase in most cases. In state sales would be taxable though. In the event of an audit you'd want the invoice to show the sales price and sales tax separated or the state could say you under paid and they'd be correct without proof it was included.

Answer 3

YES just make sure that you are keeping good daily records of all of your transactions and the total amount of sales tax that you are supposed to send on to your local sales tax office as they would have you scheduled to do during the tax year.

Hope that you find the above enclosed information useful. 10/26/2014

Answer 4

I think it would be perfectly acceptable.

Specify all online purchases include CA sales tax.

Internally, when you post a transaction indicate the selling price is less the tax you are responsible for.

Your adjusted selling price plus tax will equal the amount received from your customer.

Answer 5

Sure. Imaging that the price is $100 and the tax rate is 10%. You should charge $110 and send $10 to CA. If you sell for $100 this means that your actual sales price is $90.91 and the tax is $9.09.

Answer 6

Retail sales of tangible personal property in California are generally subject to sales tax. Examples of tangible personal property include such items as furniture, giftware, toys, antiques, clothing, and so forth. In addition, some service and labor costs are subject to sales tax if they result in the creation of tangible personal property.

Answer 7

Yes. You are responsible for submitting the sales tax tot he state, most businesses [*** that on to the customer, but you can pay it if you like.

Answer 8

if you get audited and your invoices do not show tax when required, you will be charged tax and penalty and interest. why would you give anyone a break whe they would pay tax for the same item/service anywhere else int eh state



DON'T DO IT

Answer 9

Yes, you can pay it yourself or collect it from your customers.