Tim Lynch on wed 19 jun 02
Well, I do business In Washington and I've not heard that. If you buy a Tax
Registration from the State of Washington, you do not have to pay sales tax
on items you will use to make your pots, if you intend to sell them. Items
such as clay, raw materials, glazes will not be taxed as they go into the
manufacture of resalable items. Other items such as witness cones, tools,
kilns are taxed as they are not resalable items.
A business license is a local thing. A tax number is a state thing.
Hope this helps.
Tim
--
Tim Lynch
The Clay Man
1117 Tedford St SE
East Wenatchee, WA 98802
hifired@earthlink.net
>> Hello,
>>
>> I live in Washington and am buying a Skutt in the next few weeks. When I
>>
>> was talking to the Shop Owner/Salesman, he mentioned that if I had a
>> business license I would not have to pay Sales Tax on the kiln.
>
> ______________________________________________________________________________
> Send postings to clayart@lsv.ceramics.org
>
> You may look at the archives for the list or change your subscription
> settings from http://www.ceramics.org/clayart/
>
> Moderator of the list is Mel Jacobson who may be reached at
> melpots@pclink.com.
Paul Lewing on wed 19 jun 02
on 6/19/02 11:03 AM, Ryan Kamp at ryan.kamp@WAMU.NET wrote:
> I live in Washington and am buying a Skutt in the next few weeks. When I
>
> was talking to the Shop Owner/Salesman, he mentioned that if I had a
> business license I would not have to pay Sales Tax on the kiln. He said,
>
> "Just fill out the Retail Sales Tax Exemption Form". This would be
> pretty nice as the tax is about $160.00. I just want to make sure from
> other potters that this is alright legally speaking. Also, I've heard
> that there is a "use" tax for items that are purchased without sales
> tax. What's the story on this??
Others on this list should know that this answer applies only to Washington
State. Or at least I know it applies here, but I'm not certain about other
states.
Equipment that you buy and keep for your business is subject to sales tax.
Only if you are going to resell it do you not pay sales tax, as sales tax is
charged only once to the end user. In fact, if you buy a jar of glaze and a
box of cones at Seattle Pottery Supply, they will charge you tax on the
cones, but not the glaze, because you are the last buyer of the cones, but
not of the glaze. The salesman is wrong. You should be paying sales tax on
a kiln bought in WA.
I've been doing business in WA for almost 30 years and I've never heard of a
Retail Sales Tax Exemption Form. The only thing I've heard of that might be
construed as this is a form you can fill out if you're visiting WA from a
state that does not have sales tax, and then you don't have to pay it. But
that wouldn't apply to you.
Use tax is basically a sales tax on stuff you buy for yourself out of WA.
So if you bought a car, for instance, in Oregon and registered it in WA
you'd have to pay use tax on that, and the rate is, I believe, the same as
sales tax. Of course, if it's something like a kiln that you don't have to
register with some government agency, chances are no one would ever know you
hadn't paid that tax.
And, by the way, it's not a business license that gets you out of state
sales tax (those are a local jurisdiction deal), but rather a state tax ID
number, which you get from the WA Dept. of Revenue.
I hope that's clear.
Paul Lewing, in Seattle who just collected about $400 in state sales tax on
a 7' x 11' mural yesterday. Man, is it hard to remember that next month
I'll have to give that back!
corey on wed 19 jun 02
This is the scoop on sales tax (Washington style). You are required to pay
sales tax, even if you buy from Oregon or elsewhere. But if you don't
always do this (like some of us, don't use a credit card. A few years ago
there was a big scandal where a lot of people from the Tri-Cities were
caught up in buying furniture from Hermiston OR. They all were "caught" by
the state of Washington by an audit of the furniture's credit card records.
As I remember, the state made a big issue of it and said they were loosing
all kinds of money, and were going to crack down on those EVIL people!
-----Original Message-----
From: Ceramic Arts Discussion List [mailto:CLAYART@LSV.CERAMICS.ORG]On
Behalf Of Ingeborg Foco
Sent: Wednesday, June 19, 2002 5:52 PM
To: CLAYART@LSV.CERAMICS.ORG
Subject: Re: Sales Tax on Kilns
Ryan,
Buy your kiln in Oregon and you won't have to pay tax. You'll have to pick
it up in order to qualify.
Sincerely,
Ingeborg
> Hello,
>
> I live in Washington and am buying a Skutt in the next few weeks. When I
>
> was talking to the Shop Owner/Salesman, he mentioned that if I had a
> business license I would not have to pay Sales Tax on the kiln.
____________________________________________________________________________
__
Send postings to clayart@lsv.ceramics.org
You may look at the archives for the list or change your subscription
settings from http://www.ceramics.org/clayart/
Moderator of the list is Mel Jacobson who may be reached at
melpots@pclink.com.
Ryan Kamp on wed 19 jun 02
Hello,
I live in Washington and am buying a Skutt in the next few weeks. When I
was talking to the Shop Owner/Salesman, he mentioned that if I had a
business license I would not have to pay Sales Tax on the kiln. He said,
"Just fill out the Retail Sales Tax Exemption Form". This would be
pretty nice as the tax is about $160.00. I just want to make sure from
other potters that this is alright legally speaking. Also, I've heard
that there is a "use" tax for items that are purchased without sales
tax. What's the story on this??
Any help is greatly appreciated.
Warm Regards,
Ryan Kamp
Lake Stevens, WA
Ingeborg Foco on wed 19 jun 02
Ryan,
Buy your kiln in Oregon and you won't have to pay tax. You'll have to pick
it up in order to qualify.
Sincerely,
Ingeborg
> Hello,
>
> I live in Washington and am buying a Skutt in the next few weeks. When I
>
> was talking to the Shop Owner/Salesman, he mentioned that if I had a
> business license I would not have to pay Sales Tax on the kiln.
Hildy Licht - Hildy Licht Co. Inc. on wed 19 jun 02
Sales tax must be paid by the end user. If you are buying a kiln and
you are the end user, you must pay the tax when you purchase it. It
doesn't matter if you are a person, a business or a corporation. No
one gets out of paying tax. End user pays.
The purpose of a resale certificate is to purchase your materials
(clay, glazes, if you were a carpenter, screws, wood etc.) that you
will make into another product without paying tax on them as you will
use them to make a bigger more expensive product for which you will
charge tax for the whole thing. Then, when you fill out your forms
to the tax office, you tell them how much stuff you bought that you
didn't pay tax on and how much you sold and charged tax for...takes
an accountant to figure it all out.
If you give the kiln company your resale license number, that goes
into his record that you have purchased this item for the purpose of
reselling it. Its kinda cute how the government works. Because when
you have a resale certificate, sooner or later you will be audited.
And if you're not audited, sooner or later the kiln company might be.
Those tax people just don't trust us, they audit people for a
living.... And the government employees are very good at checking
everything. When they come to a cute little $160 tax that wasn't
charged to a one time buyer....they'll track it down and find who
ended up paying that tax. ANd if it is you who has not paid it,
they'll nail you with the tax, interest and a penalty. It isn't
worth it!
If you buy something out of state, you do not have to pay the tax of
the other state. But you do have to pay to have it shipped to you.
sometimes that is cheaper. I seem to remember hearing that this
might be changed. But in the State of California, you don't mess
with the tax people or resale certificates. I don't even buy my clay
without paying tax on it. It is just easier in the long run to
simply report the items I've sold and the tax I've collected, then to
try and figure out what clay I kept for me (for which I should pay
tax) and what clay I built into products to sell.
I owned an electronic company for 30 years and was audited by the tax
people about 3 years after I started the company. Over the years,
I also received calls from other large electronic companies being
audited. The auditor was checking with me to see if my invoices for
which I did or did not charge tax reflected what their purchase
orders said.
pay the $160. The sale person does not know what he is talking about.
Hildy
>Hello,
>
>I live in Washington and am buying a Skutt in the next few weeks. When I
>
>was talking to the Shop Owner/Salesman, he mentioned that if I had a
>business license I would not have to pay Sales Tax on the kiln. He said,
>
>"Just fill out the Retail Sales Tax Exemption Form". This would be
>pretty nice as the tax is about $160.00. I just want to make sure from
>other potters that this is alright legally speaking. Also, I've heard
>that there is a "use" tax for items that are purchased without sales
>tax. What's the story on this??
>
>Any help is greatly appreciated.
>
>Warm Regards,
>
>Ryan Kamp
>Lake Stevens, WA
>
>______________________________________________________________________________
>Send postings to clayart@lsv.ceramics.org
>
>You may look at the archives for the list or change your subscription
>settings from http://www.ceramics.org/clayart/
>
>Moderator of the list is Mel Jacobson who may be reached at
>melpots@pclink.com.
Donna Sparks at Almost Art on thu 20 jun 02
i can help on the 'use tax' part of your question.
THere is a 'use' tax to compensate for the sales tax on items you make for
YOURSELF from the materials you didn't pay sales tax on.
off hand, i would have put a kiln in the category of 'tools' (which are
taxable even with a business license) rather than 'materials' which end up
in the ware that is sold and sales tax collected when sold. But i've not
bought a kiln in WA state. i'm sure others have and will respond.
Cindi Anderson on thu 20 jun 02
I believe states must have different rules. In California, there is no tax
exemption if you are using the items to make new items. (ie You pay tax on
raw materials, even if you are using them to make an item you resell.)
If fact, in CA it is called a "resellers permit", and the certificate says
"I will resell the item listed... in the regular course of my business
operations, and I will do so prior to making any use of the item(s) other
than demonstration or display while holding the item(s) for sale. I
understand that if I use the item(s) purchased under this certificate in any
manner other than as just described, I will owe use tax based on each item's
purchase price or as otherwise provided by law." Also: "A person may be
guilty of a misdemeanor under Revenue and Taxation Code section 6094.5 if
the purchaser knows at the time of purchase that he or she will not resell
the purchased item prior to any use..."
I recommended that the purchaser do a web search to find out the laws in
Washington State.
Cindi
Bruce Girrell on thu 20 jun 02
> > I live in Washington and am buying a Skutt in the next few weeks. When I
> > was talking to the Shop Owner/Salesman, he mentioned that if I had a
> > business license I would not have to pay Sales Tax on the kiln.
This would be correct if you are a reseller. If you are the end user of the
kiln the exemption does not apply.
> Buy your kiln in Oregon and you won't have to pay tax.
Items bought out of state usually do not carry a sales tax. However, you are
_supposed_ to pay the sales tax to your local state. Michigan has gotten
picky about this lately due to the increase of interstate sales, especially
through the internet. For the last two years Michigan residents have had to
show that they paid the tax or else pay an estimated tax along with their
regular income tax to account for out-of-state purchases.
Bruce "not a CPA, though" Girrell
Pat Colyar on thu 20 jun 02
Well, Ryan, speaking as someone just over the hill from you in
Gold Bar, Washington....
The sales tax exemption is for items that you would re-sell
as a small manufacturer, such as clay, teapot handles, glazes,
everything that goes into your product. It is not for items that
you don't re-sell, such as equipment, tools, Ceramics Monthly.
In the Byzantine reaches of the Washington State tax codes,
if you don't pay sales tax on something that you use, you should
still pay a "Use Tax" equal in rate to the state Sales Tax. This
is all explained on the infamnous "Business & Occupation Tax"
form; the B &O tax being one of the most regressive taxes known
to commerce, a tax on GROSS sales.
I believe that the salesperson was incorrect in offering you
the tax break...just my understanding, of course.
Pat Colyar, in gorgeous Gold Bar
http://www.firetrail.com/~pcolyar
Gavin Stairs on thu 20 jun 02
Dear Cindi,
Are you sure that this language is interpreted to mean that raw materials
are taxable, as well as the item which is made from them? This is double
taxation, and is usually deplored. The usual interpretation of such a
statute is that the raw materials bought for making items for sale are
exempt, as they will be combined into a unit for sale which will bear the
tax. This is not explicit in the California statute as you have quoted it,
but I would be very surprised if it were not the interpreted common meaning
of it.
Gavin
At 03:55 AM 20/06/2002, you wrote:
>I believe states must have different rules. In California, there is no tax
>exemption if you are using the items to make new items. (ie You pay tax on
>raw materials, even if you are using them to make an item you resell.)
>
>If fact, in CA it is called a "resellers permit", and the certificate says
>"I will resell the item listed... in the regular course of my business
>operations, and I will do so prior to making any use of the item(s) other
>than demonstration or display while holding the item(s) for sale. I
>understand that if I use the item(s) purchased under this certificate in any
>manner other than as just described, I will owe use tax based on each item's
>purchase price or as otherwise provided by law." Also: "A person may be
>guilty of a misdemeanor under Revenue and Taxation Code section 6094.5 if
>the purchaser knows at the time of purchase that he or she will not resell
>the purchased item prior to any use..."
>
>I recommended that the purchaser do a web search to find out the laws in
>Washington State.
>
>Cindi
>
>______________________________________________________________________________
>Send postings to clayart@lsv.ceramics.org
>
>You may look at the archives for the list or change your subscription
>settings from http://www.ceramics.org/clayart/
>
>Moderator of the list is Mel Jacobson who may be reached at
>melpots@pclink.com.
Eric Suchman on thu 20 jun 02
I'm sure that this varies state to state. Here in Calif. you can do that
only if you have a resale number. This also means that you then get to pay
the tax directly to the state rather than through the firm you made the
purchase from. And Then you usually haave to pay a use tax..which really
amounts to the same thing.
Eric in Oceanside
> From: Ryan Kamp
> Organization: Washington Mutual
> Reply-To: Ceramic Arts Discussion List
> Date: Wed, 19 Jun 2002 12:03:30 -0700
> To: CLAYART@LSV.CERAMICS.ORG
> Subject: Sales Tax on Kilns
>
> Hello,
>
> I live in Washington and am buying a Skutt in the next few weeks. When I
>
> was talking to the Shop Owner/Salesman, he mentioned that if I had a
> business license I would not have to pay Sales Tax on the kiln. He said,
>
> "Just fill out the Retail Sales Tax Exemption Form". This would be
> pretty nice as the tax is about $160.00. I just want to make sure from
> other potters that this is alright legally speaking. Also, I've heard
> that there is a "use" tax for items that are purchased without sales
> tax. What's the story on this??
>
> Any help is greatly appreciated.
>
> Warm Regards,
>
> Ryan Kamp
> Lake Stevens, WA
>
> ______________________________________________________________________________
> Send postings to clayart@lsv.ceramics.org
>
> You may look at the archives for the list or change your subscription
> settings from http://www.ceramics.org/clayart/
>
> Moderator of the list is Mel Jacobson who may be reached at
> melpots@pclink.com.
Bonnie/Jeremy Hellman on thu 20 jun 02
Ryan,
I am not familiar with Washington's sales tax laws, however I can explain
in general how a resale certificate works. I am guessing that the Retail
Sales Tax Exemption Form is the form that registers your business as being
one that does not pay sales tax on items purchased because you are
reselling them. You would certanly NOT be reselling the kiln, if you are
planning to use it in your ceramics, and I would not think you'd be eligible
for an exemption from the $160 sales tax but I don't know for sure without
researching WA state sales tax laws. A business license sounds like a local
license of some sort and I don't know what that gives you, except perhaps
the opportunity to fill out a sales tax exemption certificate.
The term I am familiar with is the Sales Tax Exemption Certificate which
gives you an exemption from paying sales tax on purchases of materials that
you will turn into saleable products or on products that you purchase for
resale.
If you are planning to start a business to sell your ceramics you would
legally be entitled to a sales tax exemption on purchases of materials that
will be turned into your products to sell. In Pennsylvania, you are
manufacturing when you make ceramics, because you are chemically changing
the state of the materials. My understanding that this is a reasonably
constant definition of manufacturing for tax purposes. BTW even if you apply
for a sales tax exemption number (certificate) as a manufacturer, you can
still be an artist when you file your annual income tax return.
In PA (and the other states I'm familiar with) you do not have to report
your business PURCHASES of tax-exempt materials to the sales tax people. It
is the responsibility of the vendor to report sales both subject to sales
tax and tax exempt to the sales tax people. If a purchase is tax exempt, the
seller must have on file a copy of the purchaser's sales tax exemption
certificate, with their sales tax exemption number. So if you are selling
your ceramics to a company that claims sales tax exemption, you need to keep
on file a copy of their sales tax exemption certificate, signed, with their
exemption number, and the reason why they are sales tax exempt.
If you as a business are not charged sales tax, it may be because you are
using the materials to make a product which will be sold subject to sales
tax. You need to decide if you are opening a business with a profit motive
or just planning to make ceramics as a hobby. If you are selling some of the
ceramics you make as a hobby, you will probably be paying sales tax on your
purchases.
When people are supposed to pay use tax occurs if they purchase something
not subject to sales tax, the most frequent example being an interstate
purchase. If you bought your kiln mail order or internet order from a
company in another state and had it delivered in WA, you would not be
charged sales tax (unless your vendor had a business presence in WA). You
would be supposed to pay use tax to WA, at a rate probably identical to
your sales tax rate.Usually you WOULD pay sales tax in that other state if
you drove across the state line to make your purchase which you then carried
back to your home state, UNLESS you give them a copy of your sales tax
exempt certificate with your individual number.
If you do get a sales tax exemption number, you will be required to file
reports at least quarterly and possibly monthly with your state. Typically
these forms require you to list your sales, both subject to sales tax and
tax exempt, and remit any sales tax you've collected.
What I can't tell you is whether the kiln would qualify for exemption to a
manufacturing business. This varies tremendously by state. In the several
states I've researched, it is not enough to use the manufacturing equipment,
such as the kiln, or a computer for the kiln, in manufacturing. The
materials purchased must actually be turned into the product for sale. I
don't know about Washington state, but many states have their sales tax
information (which items are subject to tax) online. You could also have a
friend call the sales tax people in WA and ask about a situation similar to
yours.
If this is way more information than you wanted, the short answer is that if
you are not entitled to a sales tax exemption, it is fraud to claim to be
tax exempt.
Hope this helps. As usual, you will need to research your state's sales tax
code to see exactly what applies in your specific situation. (That's the tax
accountant's way of saying, "Test, test, test" or "your mileage may
vary.")
Bonnie
Bonnie Hellman, CPA in PA & CO
>
>
>
>
>
> ----- Original Message -----
> From: "Ryan Kamp"
> To:
> Sent: Wednesday, June 19, 2002 3:03 PM
> Subject: Sales Tax on Kilns
>
>
> > Hello,
> >
> > I live in Washington and am buying a Skutt in the next few weeks. When I
> >
> > was talking to the Shop Owner/Salesman, he mentioned that if I had a
> > business license I would not have to pay Sales Tax on the kiln. He said,
> >
> > "Just fill out the Retail Sales Tax Exemption Form". This would be
> > pretty nice as the tax is about $160.00. I just want to make sure from
> > other potters that this is alright legally speaking. Also, I've heard
> > that there is a "use" tax for items that are purchased without sales
> > tax. What's the story on this??
> >
> > Any help is greatly appreciated.
> >
> > Warm Regards,
> >
> > Ryan Kamp
> > Lake Stevens, WA
> >
> >
>
____________________________________________________________________________
> __
> > Send postings to clayart@lsv.ceramics.org
> >
> > You may look at the archives for the list or change your subscription
> > settings from http://www.ceramics.org/clayart/
> >
> > Moderator of the list is Mel Jacobson who may be reached at
> melpots@pclink.com.
> >
> >
>
Ryan Kamp on thu 20 jun 02
I checked out the website for Washington's Department of Revenue and found
the following:
"The Machinery & Equipment exemption provides a retail sales and use tax
exemption for machinery and equipment used directly in a manufacturing
operation or research and development operation. Sales of or charges made
for labor and services rendered in respect to
installing, repairing, cleaning, altering, or improving qualifying machinery
and equipment are also exempt from sales tax."
So according to this, since a pottery business is a manufacturer, and kilns
are equipment that are used in the manufacturing of tangible goods to be
sold, the kiln should be tax free.
Am I reading this right? Any Washington potters have comments?
Ryan
Philip Poburka on thu 20 jun 02
Dear Ryan,
This sounds about right for most states...
'Use-Tax' to my recollection, is (here in Nevada, at any rate,) levied upon
a Business who has purchased
some tangable item from another state...the state the Business is in being
jealous and pouty of the transaction, and seeks to extract appeasements...
Phil
Las Vegas...
----- Original Message -----
From: "Ryan Kamp"
To:
Sent: Thursday, June 20, 2002 11:41 AM
Subject: Re: Sales Tax on Kilns
> I checked out the website for Washington's Department of Revenue and found
> the following:
>
> "The Machinery & Equipment exemption provides a retail sales and use tax
> exemption for machinery and equipment used directly in a manufacturing
> operation or research and development operation. Sales of or charges made
> for labor and services rendered in respect to
> installing, repairing, cleaning, altering, or improving qualifying
machinery
> and equipment are also exempt from sales tax."
>
> So according to this, since a pottery business is a manufacturer, and
kilns
> are equipment that are used in the manufacturing of tangible goods to be
> sold, the kiln should be tax free.
>
> Am I reading this right? Any Washington potters have comments?
>
>
> Ryan
>
>
____________________________________________________________________________
__
> Send postings to clayart@lsv.ceramics.org
>
> You may look at the archives for the list or change your subscription
> settings from http://www.ceramics.org/clayart/
>
> Moderator of the list is Mel Jacobson who may be reached at
melpots@pclink.com.
Orchard Valley Ceramics Arts Guild on fri 21 jun 02
>I believe states must have different rules. In California, there is no tax
>exemption if you are using the items to make new items. (ie You pay tax on
>raw materials, even if you are using them to make an item you resell.)
Hi Cindi -
You should talk to your supplier about this - I believe you are mistaken
about taxes on raw materials. Materials that actually go into the product
are interpreted as being for resale.
My supplier (in San Jose, CA) has my reseller's ID on file, and does not
charge me sales tax on clay or glaze ingredients. He does charge me tax
on tools, books, etc, since I am not purchasing these for resale. I know
that my supplier is periodically audited by the CA state tax board, so I'm
pretty sure he is following the correct procedure.
Regards,
Bob
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