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sales tax on labor, yay or nay?
Posted on 1/4/17 at 12:06 pm
Posted on 1/4/17 at 12:06 pm
I see some people charge sales tax on labor, most shops and larger companies do for sure. I thought sales tax was only for tangible items sold. ie the items you buy without tax (wholesale) and then resale with tax that you give the state/parish.
I have done both and paid both, I stopped charging sales tax on labor because I thought it was unfair to customers, but others told me it's required. My parish tax field rep told me it wasn't. A lot of fellow business owners I have talked to say they charge both and only claim tangible items when filing, so basically they make an extra 10% on labor, which is wrong IMO as well.
I never got a straight answer and want to start the new year doing it right. (though since labor is more than item sales for the most part, it will mean more headache as far as paying the five entities I pay tax to monthly)
I have done both and paid both, I stopped charging sales tax on labor because I thought it was unfair to customers, but others told me it's required. My parish tax field rep told me it wasn't. A lot of fellow business owners I have talked to say they charge both and only claim tangible items when filing, so basically they make an extra 10% on labor, which is wrong IMO as well.
I never got a straight answer and want to start the new year doing it right. (though since labor is more than item sales for the most part, it will mean more headache as far as paying the five entities I pay tax to monthly)
15
Posted on 1/4/17 at 12:11 pm to Napoleon
As a fellow business owner, I feel your pain. I don't tax on it and I don't pay on it but who the hell knows?
This is why the Flat Tax (cue some Poli Board whacko) is the way to go. We should all just pay a flat amount on tangible goods we buy and keep the rest of our money.
This is why the Flat Tax (cue some Poli Board whacko) is the way to go. We should all just pay a flat amount on tangible goods we buy and keep the rest of our money.
Posted on 1/4/17 at 12:14 pm to Napoleon
Is there still no alcohol tac in EBR?
I remember in college a 2 dollar beer cost 2 dollars but Pluckers charged tax on it. I fricking hated they did that and would get them to remove the tax. No telling how much money Steve scammed doing that over the years.
I remember in college a 2 dollar beer cost 2 dollars but Pluckers charged tax on it. I fricking hated they did that and would get them to remove the tax. No telling how much money Steve scammed doing that over the years.
Posted on 1/4/17 at 12:34 pm to Napoleon
My understanding is that it depends on the task and what you are working on.
Sales tax in louisiana is way too complicated. Its complete bullshite.
Sales tax in louisiana is way too complicated. Its complete bullshite.
Posted on 1/4/17 at 12:43 pm to Napoleon
I read this 3 times and it made no sense. Then I realized it said labor and not Labor Day.
Posted on 1/4/17 at 1:02 pm to Napoleon
My businesses are out of state.
On labor I only charge if the tax district requires the company or person providing the labor to charge it.
On labor I only charge if the tax district requires the company or person providing the labor to charge it.
Posted on 1/4/17 at 1:23 pm to Napoleon
LA Dept of Revenue
quote:
Under certain circumstances, labor charges are taxable. Labor to fabricate or repair movable property is taxable. Labor charges to construct or repair immovable, or real, property are not subject to sales tax.
Posted on 1/4/17 at 2:34 pm to Napoleon
Not supposed to have sales tax on labor/service only for product/materials.
Posted on 1/4/17 at 2:36 pm to Napoleon
I was told to charge it, even for windshield repairs. Technically I'm selling the resin I put in a windshield.
Posted on 1/4/17 at 2:38 pm to Napoleon
My company's accounting office tells me that if it says "repairs" on the invoice, that tax must be added. If it is installation labor that it is not.
I know this sounds dumb, but that's what I am told.
I know this sounds dumb, but that's what I am told.
Posted on 1/4/17 at 4:34 pm to Napoleon
we don't tax labor either.
Posted on 1/4/17 at 5:37 pm to Napoleon
Sales tax is/should be applied to material sales only. I do not put tax on any of my labor and I would push back if anyone gave me a bid with tax on labor costs.
Posted on 1/4/17 at 6:37 pm to Napoleon
Worked for 10 years at a retailer that offered installation services and they were very "by the book" on accounting for everything. There's no sales tax on services, only on tangibile products. Anyone who adds sales tax to services is doing it to make an extra 9-10% profit on labor
Posted on 1/4/17 at 8:51 pm to Napoleon
Is the carpet cleaner or pest control guy supposed to charge sales tax?
Posted on 1/4/17 at 11:33 pm to Napoleon
In my mind, if the labor is the end product that you're selling, then that should be taxable by a sales tax. In your particular line of work, your labor is your main product (though you do sell parts, which are definitely taxable), but the labor should also be taxable because your labor is the main part of your business. However, if you're building a product like a house or a car in a factory, then that labor should not be taxable under a sales tax because the labor itself is simply an input into producing the good that is taxable under a sales tax.
Of course, my thoughts mean nothing put up against the law, and the state of Louisiana may disagree (it does love to tax EVERYTHING), but my personal thoughts on what's subject to a sales tax simply comes down to "that which is sold to an end consumer on the open market is subject to a sales tax". The labor of the supply chain should not be subject to sales taxes, only the final product/service.
Of course, my thoughts mean nothing put up against the law, and the state of Louisiana may disagree (it does love to tax EVERYTHING), but my personal thoughts on what's subject to a sales tax simply comes down to "that which is sold to an end consumer on the open market is subject to a sales tax". The labor of the supply chain should not be subject to sales taxes, only the final product/service.
This post was edited on 1/4/17 at 11:50 pm
Posted on 1/5/17 at 9:32 am to Napoleon
The short answer is it depends on the service you are providing. Every state has different definitions of a "service" and what is exempt from sales tax. It seems that in the state of Louisiana repair of movable objects (in your case appliances) are subject to a sales tax. This is a straight forward question that a CPA knowledgeable in the subject or the Dept. of Rev could answer for you pretty easily.
An example of the different codes is roofers in La and Tx. In Tx roofers are not considered the end users of the materials (i.e shingles) so they are issued a resale certificate and do not pay tax on those materials. Therefore they must charge tax on the service they provide. In La the opposite is true. The roofer pays tax on the shingles because they are the end user and their service is sales tax exempt to the client having the roofing job done.
An example of the different codes is roofers in La and Tx. In Tx roofers are not considered the end users of the materials (i.e shingles) so they are issued a resale certificate and do not pay tax on those materials. Therefore they must charge tax on the service they provide. In La the opposite is true. The roofer pays tax on the shingles because they are the end user and their service is sales tax exempt to the client having the roofing job done.
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