What is Sales Tax?

It is a withholding tax, which is collected by a buyer for the taxing authorities on the taxable products and services.

Who is a taxing authority?

It is a local or state government agency which is responsible to classify the amount and the procedure to collect sales taxes from a buyer. The sales tax money is spent on different local projects, state projects and paid interest on federal bill.

What are the taxable products to charge sales tax?

It varies state to state. Generally, the department of revenue of each state has imposed sales tax on taxable retail sales, leases and rentals of most goods as well as taxable services.

Who to charge sales tax?

Sales tax is charged to the direct buyer of the taxable product not from subsequent buyer. The subsequent buyer means the sales tax is collected from end-user only not from the multiple buyers of the same taxable product.

How to get a sales tax permit?

A sales tax, registration process is completed by the department of revenue to get the permission to collect sales tax from a buyer on taxable items.

Who collects sales tax?

A business owner collects sales tax from a buyer on the taxable goods and services. A separate sales tax application is submitted each state to collect sales tax.

How to calculate sales tax?

Sales tax is calculated on the gross sales. A certain percentage or a fixed amount which is defined by a taxing authority is added on the purchased item.

Can sales tax be collected without a permit?

A valid sales tax permit is required to collect sales tax from a buyer and there is a penalty to collect sales tax without a permit.

What happens if a business owner does not collect sales tax on taxable items?

A business owner does not collect sales tax by choice, it is required by the state and in this situation a business owner is personally liable to pay to the taxing authorities.

What happens if a business owner collect sales tax but do not remit to the taxing authority?

It is deemed a violation and business owner will pay personally with the penalties and interest. The government agencies may levy the penalties on the personal assets to collect the unpaid sales taxes.