There’s a Tax for That

Tax calculator and penSales tax rules are rarely easily to determine as can be seen from these items:

  • Bagels in New York – If a bagel is sliced or prepared in some way, it’s taxable. If not, no tax. If you eat it in the store, it’s taxed no matter what.
  • Balloon rides in Kansas – Romantic rides are considered a form of transportation and are tax free. If it’s tethered for the riders to take in the scenery, it’s entertainment and taxable.
  • Tattoos and Piercings in Arkansas – A 6% tax is levied on these services
  • Candy in Illinois – In September 2009, sales tax on candy was raised from 1% to 6.25%. However, items containing flour (such as Twix, Butterfinger and Kit Kat) are exempt as they are considered food not candy.
  • Playing cards in Alabama – For each deck purchased, you’ll pay a 10 cent tax. The seller pays a $4.oo fee annually for a license to sell the cards.

These examples show that it isn’t always easy to know what is taxable and what is not taxable. This is why I always encourage business owners to contact their sales tax agency to find out specifically what is taxable and not taxable for their business (most have written guides by industry that explain the tax laws).

If you’re still not sure how to properly record the taxability of your product, ask for an explanation in writing that tells specifically how to tax your sales. If you are ever audited and found to have not taxed your items properly, you can show you followed the information given to you by the agency to the best of your ability. If the information given to you was incorrect, you can change your processes and collect properly going forward to remain in compliance.