Quote:
Originally Posted by scrapking
Don't pay it, or pay it and have it rebated.
If they don't pay it, then it's simply an item that's exempt from tax. If they pay it and get an input tax credit against tax they've collexted, it's a VAT.
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Don't pay it. A business only pays sales tax on stuff that it is the end user of, office supplies etc. A business does not pay (neither directly or pay and have rebated) sales tax on stuff it then sells on to it's customers, whether it is finished goods or raw materials used to make finished goods. The end consumer is the only one who pays sales taxes.
So for example, lets say I work at a local homebrew shop (which I do part time
) when the store sells a 6.5 gallon glass carboy fermentor to a customer they (the customer) pay sales tax (collected by the business at the time of sale and remitted to the State). When the store bought the carboy from Crosby & Baker (a wholesaler in the homebrew industry) it did NOT pay ANY sales tax.
We do not (currently) have any sort of VAT (or VAT like) scheme in the US or for that matter any Federal sales tax at all. Sales taxes are typically State and sometimes City level taxes, allthough there are a couple states that have no sales tax at all.
Complicating things further, when the transaction crosses state lines there may be no tax at all, which really gets some states miffed (Google search California and Amazon tax). A state can only require a business that is within it's jurisdiction (or that has a presence within it's jurisdiction) to collect taxes from residents that are also within the States it's jurisdiction. Since Amazon does not operate any part of it's business within my home State, when I buy something from Amazon there is no sales tax collected. Technically I am supposed to fill out a form every year and pay taxes to the state myself for such purchases, but nobody ever does.
Edit: and apologies to G0AT and everyone else for taking this so far off topic.