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Old 01-28-09, 03:37 PM   #1
ravenmore
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Charge sales tax on IT Consulting invoice?

Hey all,

About to submit an invoice for my first couple of weeks as an IT consultant. I don't think I'm supposed to charge sales tax but wanted to get your thoughts (I know I know - I'm looking for an accountant still...)
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Old 01-28-09, 03:41 PM   #2
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Hey all,

About to submit an invoice for my first couple of weeks as an IT consultant. I don't think I'm supposed to charge sales tax but wanted to get your thoughts (I know I know - I'm looking for an accountant still...)
Not familiar with Texas, but in GA, services are usually not taxed under sales tax. You should check with someone who knows Texas law on this one.
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Old 01-28-09, 03:45 PM   #3
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Hey all,

About to submit an invoice for my first couple of weeks as an IT consultant. I don't think I'm supposed to charge sales tax but wanted to get your thoughts (I know I know - I'm looking for an accountant still...)
I don't and haven't for nine years that I've been doing this, all on the advice of my Iowa CPA.
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Old 01-28-09, 03:57 PM   #4
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Services don't generally come with sales tax. I say no.
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Old 01-28-09, 03:58 PM   #5
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http://www.window.state.tx.us/taxinf.../tx96_259.html

Apparently in Texas you do
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Old 01-28-09, 04:10 PM   #6
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that's f'd up mang.

I've consulted for 15 yrs. and never taxed me labor. I tax goods. My service is not a good. But it is good. And good for me.

oh yes, land of the free alright....
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Old 01-28-09, 04:30 PM   #7
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Be sure you work out whether you are a contract employee (1099) or a service provider. If you plan to invoice them like you are your own company, you should have a business license and a state authority to collect sales tax. I'm not 100% sure about TX, but generally this is how it is set up.

You're probably better off being a contract employee and just getting a 1099 at the end of the year. Don't forget to file your quarterly withholding statements...
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Old 01-28-09, 04:53 PM   #8
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Yes, we're going the 1099 route.
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Old 01-28-09, 04:54 PM   #9
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I know that in the boating industry, we charged tax on parts and labor in Texas.
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Old 01-28-09, 04:56 PM   #10
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I would assume the principle of sales taxes is similar to VAT in Europe. For VAT you can't charge it if you are not registered with the relevant tax authority and more importantly you cannot reclaim the tax charged on you by your suppliers. If you invoice above a threshhold of taxable goods/services you have to register and charge and pay it over to tax authority. They might audit you to make sure you are charging correctly and paying over the full amount.
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Old 01-28-09, 04:57 PM   #11
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that's f'd up mang.

I've consulted for 15 yrs. and never taxed me labor. I tax goods. My service is not a good. But it is good. And good for me.

oh yes, land of the free alright....
I am from California as well and I agree, it seems odd (only because we aren't used to it).

However, I am well aware that states have different laws and would never assume what makes sense to me applies to all states. When it comes to taxes, all states need money and they get it from different sources. Texas does not have state income tax. THAT would be nice!!
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Old 01-28-09, 04:58 PM   #12
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Yes, we're going the 1099 route.
Then you are an employee and no sales tax is involved, afaik...

edit: check with a local expert, because I could be wrong.. I'm not from TX...
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Old 01-28-09, 05:08 PM   #13
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^ If he/she is issued a 1099, it has more to do with his business structure than anything (incorporated vs. not inc, llc, llp etc). It would have no impact on the taxable status of his service.

Speak to a local expert, or call the Texas Department of Finance

I am a NY CPA and can tell you from my experience there is nothing wackier in the tax code of this country than the State by State differences of what is taxable and what isn't. services, goods, etc. there is no rhyme or reason to it.
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Old 01-28-09, 05:12 PM   #14
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I am from California as well and I agree, it seems odd (only because we aren't used to it).

However, I am well aware that states have different laws and would never assume what makes sense to me applies to all states. When it comes to taxes, all states need money and they get it from different sources. Texas does not have state income tax. THAT would be nice!!
ahhhh... no income tax - well there you go. they then tax the crap out of everything else!
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Old 01-28-09, 05:38 PM   #15
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what exactly do you do for them? http://www.window.state.tx.us/taxinf.../tx94_127.html
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Old 01-28-09, 06:43 PM   #16
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^ If he/she is issued a 1099, it has more to do with his business structure than anything (incorporated vs. not inc, llc, llp etc). It would have no impact on the taxable status of his service.

Speak to a local expert, or call the Texas Department of Finance

I am a NY CPA and can tell you from my experience there is nothing wackier in the tax code of this country than the State by State differences of what is taxable and what isn't. services, goods, etc. there is no rhyme or reason to it.
yep...I'm a GA CPA and refuse to try to answer tax questions due to the differences between the states.
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Old 01-28-09, 07:06 PM   #17
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Be sure you work out whether you are a contract employee (1099) or a service provider. If you plan to invoice them like you are your own company, you should have a business license and a state authority to collect sales tax. I'm not 100% sure about TX, but generally this is how it is set up.

You're probably better off being a contract employee and just getting a 1099 at the end of the year. Don't forget to file your quarterly withholding statements...
And don't be like our new Treasury Secretary, and neglect to pay the full amount of the FICA tax.
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Old 01-28-09, 07:11 PM   #18
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ahhhh... no income tax - well there you go. they then tax the crap out of everything else!
Of course, California does have an income tax, and they still tax the crap out of everything else. When I lived there, many years ago, they were trying to figure out how to go about charging property tax on the value of programs stored on computers. They gave it up at the time...too hard to figure out what to charge...but I don't know what they've done since.
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Old 01-28-09, 07:21 PM   #19
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I believe Texas is like NM and the tax is more of a gross receipts tax than a sales tax, so yes you need to collect, report and pay the tax. But of course check with your state finance dept rather than take advice from some schlep like me on the intrawebs.
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Old 01-28-09, 07:42 PM   #20
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I wouldn't.
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