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Posted by Bob Sandler on May 5, 2007, 6:36 am
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To which state do we (a company) owe sales or use tax in the
following scenario? We buy a computer and have the seller
ship it to our office in New Jersey. There we install some
software on the computer. This takes a few days. Then we
ship the computer to our office in Arizona, where we use it
in our business.
Does it make any difference what the specific states are?
Would the answer be different if two other states were
involved, or is there a general rule that will apply for all
or most states? Some other likely combinations are New
Jersey-Florida, Colorado-Nebraska, Colorado-Arizona, and
Nebraska-Missouri.
Thanks.
Bob Sandler
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Posted by Paul Thomas, CPA on May 7, 2007, 1:29 pm
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> To which state do we (a company) owe sales or use tax in the
> following scenario? We buy a computer and have the seller
> ship it to our office in New Jersey. There we install some
> software on the computer. This takes a few days. Then we
> ship the computer to our office in Arizona, where we use it
> in our business.
>
> Does it make any difference what the specific states are?
Arizona state tax laws apply to the cost of the finished
product "placed in service".
> Would the answer be different if two other states were
> involved, or is there a general rule that will apply for all
> or most states? Some other likely combinations are New
> Jersey-Florida, Colorado-Nebraska, Colorado-Arizona, and
> Nebraska-Missouri.
No state applies sales tax to goods that just pass through
their state. The all apply the sales tax to goods used or
consumed in their state. That's the general rule then.
Look to the sales tax laws of the state in which you first
begin using the finished goods for your business purpose.
--
Paul A. Thomas, CPA
Athens, Georgia
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
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Posted by davidkaifuku1 on May 7, 2007, 1:29 pm
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> To which state do we (a company) owe sales or use tax in the
> following scenario? We buy a computer and have the seller
> ship it to our office in New Jersey. There we install some
> software on the computer. This takes a few days. Then we
> ship the computer to our office in Arizona, where we use it
> in our business.
>
> Does it make any difference what the specific states are?
> Would the answer be different if two other states were
> involved, or is there a general rule that will apply for all
> or most states? Some other likely combinations are New
> Jersey-Florida, Colorado-Nebraska, Colorado-Arizona, and
> Nebraska-Missouri.
I am not especially a sales tax expert, BUT
1) The specific states can matter, but the general
principles are usually similar.
2) In theory, it is an "end user sales and use tax", so only
the Arizona office should pay. In practice, the retailer
usually pays sales tax, and rarely collects for out of
state.
3) There is an exemption for manufacturers or intermediary
resellers (in this case NJ), so NJ wouldn't pay.
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by Harlan Lunsford on May 7, 2007, 1:29 pm
Please log in for more thread options Bob Sandler wrote:
> To which state do we (a company) owe sales or use tax in the
> following scenario? We buy a computer and have the seller
> ship it to our office in New Jersey. There we install some
> software on the computer. This takes a few days. Then we
> ship the computer to our office in Arizona, where we use it
> in our business.
>
> Does it make any difference what the specific states are?
> Would the answer be different if two other states were
> involved, or is there a general rule that will apply for all
> or most states? Some other likely combinations are New
> Jersey-Florida, Colorado-Nebraska, Colorado-Arizona, and
> Nebraska-Missouri.
I'll bet a dollar to a donut that if both states knew about
it, both would want use tax.
ChEAr$,
Harlan Lunsford, EA n LA
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by Bob Sandler on May 8, 2007, 1:11 am
Please log in for more thread options > 2) In theory, it is an "end user sales and use tax", so only
> the Arizona office should pay. In practice, the retailer
> usually pays sales tax, and rarely collects for out of
> state.
We (the company) pay use tax to every state we operate in,
so I'm not so much concerned about whether the seller
collects the tax. In this case, though, the seller will want
to collect NJ tax, so if it's really Arizona that should get
the tax, we'll have to find a way to convince the seller.
> 3) There is an exemption for manufacturers or intermediary
> resellers (in this case NJ), so NJ wouldn't pay.
The NJ office is not reselling the computer - just sending
it to another location of the same company.
Bob Sandler
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
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