Reporting Sales Tax
As previously stated, the purpose of a seller’s permit is to provide the state with a means of collecting sales tax. To accomplish this, the sales tax must be accounted for by the final seller and sent to the state along with a report of the sources of those taxes. For this reason, the seller must keep accurate records on the types of sales made and the amount of sales falling within each of the following categories:
- Gross sales
- Purchase price of property you bought without paying sales tax and that you used for purposes other than resale
- Sales to other retailers for purposes of resale
- Nontaxable sale of food products
- Nontaxable labor (repair and installation)
- Sales to the U.S. government
- Sales in interstate or foreign commerce to out-of-state consumers
- Bad debt losses on taxable sales
- Other exempt transactions
Note:
Sales tax rates may vary from county to county. When you are selling out of your local area, you will collect sales tax based on the current rate in that area. You will also be required to keep an accurate record of those sales. In many cases a portion of your state’s sales tax may be designated as belonging to a transit district, special assessment, etc. For instance, the State of California has many transit districts that are allocated one half of one percent to support their mass transportation systems. Therefore, a retailer from Los Angeles selling at a trade show in San Francisco will have to report the amount of those sales so the fund may be properly divided by the state agency.
