What are selective sales taxes?

What are selective sales taxes?

A typical selective sales tax—which may have a different rate than the general sales tax—is a tax on the purchase of alcohol, tobacco, or gasoline, or a tax on utilities, such as electricity and telephone service.

What types of goods are generally exempt from a sales tax?

In general, clothing, groceries, medicines and medical devices and industrial equipment are sales tax exempt in many states (but don’t assume they’ll be exempt in all states.

What goods are subject to use tax?

Generally, if the item would have been taxable if purchased from a California retailer, it is subject to use tax. For example, purchases of clothing, appliances, toys, books, furniture, or CDs would be subject to use tax.

What purchases are subject to the general sales tax?

General sales taxes are taxes on goods and services purchased by consumers. The tax is a calculated as a percentage of the retail price and added to the final purchase price paid by the consumer. General sales taxes are separate from selective sales taxes on specific purchases such as alcohol, motor fuel, and tobacco.

Can I deduct state and local sales tax?

The Internal Revenue Service (IRS) permits you to write off either your state and local income tax or sales taxes when itemizing your deductions. People who live in a state that does not impose income taxes often benefit most from this deduction.

What is the difference between general and selective sales tax?

General sales tax applies the same tax rate to the purchase of all items. Selective sales taxes apply a higher tax rate to the purchase of specific items.

What qualifies as tax exempt purchases?

To qualify to be exempt from sales tax, the items you buy must not be used in your normal course of business. For example, you can’t buy copy paper and ask for a sales tax exemption, because you are using that copy paper in your office.

What are examples of taxes on products?

Taxes on products comprise value added tax, taxes and duties on imports and exports and other taxes on products (e.g. excise duties, stamp taxes on the sale of specific products, such as alcoholic beverages or tobacco, car registration taxes, taxes on lotteries, taxes on insurance premiums).

Who pays sales tax the buyer or seller?

In California, upon the sale of a business, the seller is responsible for collecting the sales tax; and, customarily, the buyer is responsible for paying the sales tax, as on any sale of merchandise in the ordinary course of business. Ordinarily, this is handled by the escrow agent at the closing.

Can I deduct use tax?

The IRS allows for a deduction of sales and use tax paid as an option for those who itemize their deductions, letting them choose between deductions for state and local income taxes or state and local sales and use taxes.

What are products and services subject to sales tax?

As the distinction between products and services blurs, it’s more and more difficult to determine which is which for sales tax purposes. And states are all over the place, each enacting laws that seem logical but might be different from other states. For example, if your CPA prepares your income tax return, is that a service or a product?

Are there any products that are exempt from sales tax?

Products Exempt From Sales Taxes – In Most States. States vary greatly on the products and services they tax. For example, most states do not charge sales tax on food sales, but a few (Arkansas, Virginia, West Virginia, and Tennessee) do charge sales tax on food.

Do you have to pay sales tax when you sell something?

Most states charge sales tax on most products sold in the state, but sales taxes on services vary widely. Sales Taxes on Products for Resale The U.S. doesn’t have an indirect tax (like a VAT tax ) on which taxes are imposed at all stages of the production process.

How much is the state sales tax on a product?

The state levies of total sales tax of 8% (state tax of 5% + country tax of 3%). The price before this tax is $340 for a product. How much should the business collect from the customer?