Small business sales tax question

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Old 03-16-07, 03:38 PM
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Small business sales tax question

We have a small online business, and we buy items to resell from wholesalers, of course. Wholesalers recognize us as a business and do not charge us sales tax on items that we are going to re-sell.

We also often find clearance items at retailers that we know will sell on eBay and such. Usually, retailers won't sell something to you as tax exempt, so we end up paying the 6% (Michigan) sales tax for those items.

My question is, since these are items that we are re-selling, are we entitled to get a credit/refund from the State of Michigan? It would seem that they should be exempt, but it's difficult to find any information on the MI Dept. of Treasury site.

Thanks for any advice.
 
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Old 03-16-07, 08:44 PM
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air biscuit; you need to apply to your state Dept. of Revenue (or similar name) for a Sales Tax Exemption certificate. Once you have that the retailer can NOT collect sales tax from you on items that you're going to resell. You need to keep careful records as states are always looking for folks who are "trimming" around the edges a bit.

For instance; you go to Costco and see a closeout item that you think you can resell, but you're also buying office supplies, paper, toner, etc. Make certain that you pay the tax on the latter items as they're for office use.

Good luck
 
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Old 08-19-07, 09:57 AM
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Originally Posted by slumlordfrank View Post
air biscuit; you need to apply to your state Dept. of Revenue (or similar name) for a Sales Tax Exemption certificate. Once you have that the retailer can NOT collect sales tax from you on items that you're going to resell.
Assuming they sell for resale. Most retail businesses aren't set up to sell without charging sales tax. If they don't do it, they're not going to do it just this once. It's a bookkeeping hassle for them, and not worth it for a one time sale. They may not even know how do track it. It's easy if you know how, but if they never have, they'll probably just say too bad.

But you can claim it as a deduction / credit when you pay your sales tax collected in to the state. Of course every state is different, so I'd email or call your tax department, or ask your accountant, if you use one.
 
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Old 08-19-07, 10:19 AM
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I don't know if there is a difference between the tax exempt paper for a business as opposed to one for a church. For our church all we have to do to make a tax free purchace is to give the retailer a copy of our tax exempt certificate. There are a few that play dumb and don't want to accept it but mostly it is just paperwork for them to file in place of the tax.
 
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