sales tax ?

[tinker9696]

I received a deposit for a Macaw yesterday to someone in New Hampshire..we are in NY. The sales tax here is 8.625 % . New Hampshire has no sales tax. Customer said she never pays sales tax when purchasing from state that has sales tax. Does anyone know if this is true and how this works when I do my quarterly sales tax. In 8 years I have never run across this before and I have sold outside my state about 1/2 dozen times.
thanks in advance for any input.

[Brian Altenhofel]

If I'm not mistaken, New York is a destination-based sales tax state, which means you don't have to collect sales tax from a remote customer if shipping to their location and that location is outside of New York. However, if they are picking up from you or if they are located in New York, then you have to collect sales tax. I don't know if New York has multiple sales tax jurisdictions, but if they do then that means you may have to collect sales tax at different rates from your in-state customers.

Best advice: check with a local accountant to be sure. Tax laws are very complex.

[tinker9696]

You guys are right...no sales tax unless customer picks up the parrot here in NY.
The other thing is that the deposits are reported but not taxed until they pick up the bird as well.
My question is how do they know that I am not just reporting a deposit when it is other cash flow?

[tallen]

How do they know?

Trust.

You file your tax return, presumably completed to the best of your ability.

They trust that you have reported everything that you are supposed to report, and in the way that you are supposed to report it.

Periodically they might select some subset of the returns that have been filed and do an audit on them to confirm whether or not everything has been reported the way it was supposed to have been reported.

aka, Trust, but verify.

You never know when or whether your returns might be audited. The penalties if you are not in proper compliance could be steep.

[Freelancier]

Customer said she never pays sales tax when purchasing from state that has sales tax. Does anyone know if this is true and how this works when I do my quarterly sales tax.

In general, the customer is responsible for paying sales tax within the state where they purchase a taxable item. The seller is responsible for collecting sales tax ONLY for customers within any state where they have a "physical presence". (States lately have been extorting companies without physical presences that do a large volume in a particular state to also collect sales tax, but I'm not sure it would survive Supreme Court review, but no one wants to be the first to find out either. It's better to let Amazon be the canary in the coal mine at this point.)

So if a transaction occurs between you and someone in the other state, THEY are responsible for self-collecting and reporting the sales tax. Which pretty much no one does. If it occurs within a state where you have a physical presence, then YOU are responsible for collecting and reporting it.