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Tax on Targets ?

Discussion in 'Uncategorized Threads' started by bayrat, Apr 25, 2008.

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  1. bayrat

    bayrat TS Member

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    A quick check with you state comptroller's office will answer the question for you. However, I would think that if the club paid state and local sales tax on the targets when you bought them from your supplier then no additional sales tax would be due. That would be a "tax-on-a-tax" situation.

    The Bayrat
    POC, TX
     
  2. Gary Waalkes

    Gary Waalkes Well-Known Member

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    If someone who knows and understands your state law gives you advice, you should give that advice some weight.
     
  3. BIGDON

    BIGDON Well-Known Member

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    leadvail; Before I bet the farm on dynapro's advice, note he asks the state after the advice, I would go to the state dept. in your state that handles sales tax and get a real clarification as it pertains to what you do. Services can be taxed, again depending where you are. Your accountant just might know what he is talking about.

    Don
     
  4. Dickgshot

    Dickgshot Well-Known Member

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    Don's got it right.
    -Another CPA
     
  5. phirel

    phirel TS Member

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    Clubs purchase targets for resale. A sales tax must be paid by someone. In the states I am familiar with, services are not susceptible to a sales tax.

    Pat Ireland
     
  6. Texas Yankee

    Texas Yankee Member

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    The Texas club I belong to went through this very problem about five years ago. It took a lot of negotations with the tax people and bookkeepers to resolve the situation. They were understanding and allowed us to pay the $30,000.00 over a three year period. We now pay our quarterly taxes on time for sure.
     
  7. Frank C

    Frank C Well-Known Member

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    just advise that the "customers" are paying to shoot the gun 25 times, and it just happens that the targets are getting in the way.....
     
  8. Dave P

    Dave P TS Supporters TS Supporters

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    Don't you pay sales tax when you buy them? Aren't you licensed as a not -for -profit organization. We have been for 30+ years and no problems yet.
     
  9. stokinpls

    stokinpls Well-Known Member

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    Sounds like:

    A. Something Obama or Clinton would come up with (Socialists can never
    get enough tax revenue).

    or

    B. Another reason to quit.
     
  10. happy

    happy Member

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    Contact Wisconsin trapshooting association. I think they had this problem a couple years ago.
     
  11. dvice

    dvice TS Member

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    In MN someone has to pay the tax. Not for profit does not exempt you from paying tax. The end user is responsible to pay. I have had many disscusions on this and other tax issues-the bottom line is the department of revenue doesn't have a clue. They will tell you something different each time you ask. We are selling a service that they believe is taxable-the total amount-not just the targets. Check wih your department of rev to get todays story.Dave Vice
     
  12. shot410ga

    shot410ga Well-Known Member

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    I have to pay sales tax on targets at my club.
     
  13. bill1949

    bill1949 Well-Known Member

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    We purchase our targets out of state and must pay sales tax in our state on our target purchase, not when they are shot...Bill
     
  14. SR1

    SR1 TS Member

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    Thats the only thing here in new york state thats not taxed.
     
  15. halfmile

    halfmile Well-Known Member

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    We pay in Wisconsin, the tax hell state. We don't charge it separately but the state gets their money. So many targets thrown, so many pennies to the state.

    Sux.

    HM
     
  16. pendennis

    pendennis Well-Known Member

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    Most businesses, and that includes private clubs, retailers, and manufacturers, are able to remit sales tax to the state on a periodic basis, and not on each transaction. Those direct remittances are generally by permit, issued by each state. Whether an organization is charitable or not, is not the issue. Unless the organization is specifically exempt, then sales tax has to be paid. If your organization is exempt, you can recover the sales or use tax paid either by not paying, or getting a refund from the state to which the tax was remitted originally.

    There is also some confusion about the term sales tax. Sales tax is generally paid when an item is purchased, wholesale or retail, within the taxing jurisdiction. Tax may be deferred to the final customer. Generally, use tax is levied on purchases made out-of-state and consumed within your state.

    If you order a pair of boots from Cabelas, you owe use tax to the state where the goods are delivered. Thus, if they're shipped from Nebraska to Michigan, you will owe use tax at the rate of 6% to Michigan. Now, since Cabelas has a "brick and mortar" presence in Michigan, then they may collect the tax and remit directly to the State of Michigan Treasury. If you purchase the boots from Cabelas in Michigan, and take them to Ohio, the state generally considers the transaction a "wash", and doesn't attempt to collect, then have you file for a refund from Michigan. Think of unmanageable. However, some states would like for you to remit any differences (you pay 6% to Michigan, and your home state has 8%). Also think chaos.

    If your club ordered targets from someone like Dawson Enterprises, in Ohio, and had those targets shipped to Michigan, your club will owe 6% use tax to the Michigan Department of the Treasury. How your club collects that cost (targets + shipping + tax + overhead) is entirely up to the management of your club. That's usually what line fees entail.

    If your state has an income tax system, there is generally a portion of those forms which allows you to "fess up" and pay use tax on any out-of-state purchases when you pay your income tax. The state WILL collect the tax, directly or by transaction.

    Best,
    Dennis
     
  17. Dickgshot

    Dickgshot Well-Known Member

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    leadvail: You need to be cautious about relying on the advice you get over the phone from somebody from the government (IRS or state) Most CPA's know this. That's why BIGDON recommended that you talk to your own accountant. Ever state has different rules. Generally where service and product are sold together, each must be SEPARATELY STATED in order for the services portion to be excluded. However, I think the fact that the targets are "used up" rather than title transfered to the purchaser, makes the entire transaction non-taxable.
     
  18. 870

    870 Well-Known Member

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    leadvail:

    Despite someone getting pissed off, those are not ignorant replies you have received. The quality of advice received over the phone from the IRS or the state tax departments depends entirely on the individual you are talking to, and it specifically cannot be relied upon to avoid penalties in the situation where you rely on that advice and it turns out to be wrong.

    I don't know how detailed you were in you phone conversation, but the reply makes sense to me. If you asked "do we have to charge sales tax to shooters when they are charged to shoot a round of trap?", and they responded no, that makes sense because they appear to look at it as the targets are not being sold; instead shooters are paying to use your facilities to participate in a round of trap shooting and the targets are simply an item consumed by the trap machine as part of the shooting activity. This is how NYS treats targets.

    The part that may not have been asked is "if the targets are not considered as being sold, does the club have to pay sales tax upon the purchase of the targets?" The answer to that is most likely yes. The Club cannot honestly use a resale certificate if they are not considered as selling targets. Since you buy from out of state, you likely have a "use tax" liability, which, depending on your particular state, probably requires payment at the time you file your sales tax return, or if no return is otherwise required, within a set period of time after the targets are delivered into your state.

    As was posted already, sales tax is generally a tax imposed upon the final consumer. If your state deems it that you are not selling the targets, that means you are the final consumer of the targets and are responsible for paying the tax. Keep in mind that most non-profits are not exempt from sales tax. Maybe your state is different, but 501(c)(7)'s are fully subject to sales tax around here.

    Also, in my state there is no sales tax on the shooting fees, since there is an exemption for participatory sports. Since targets are not being sold, and any fees charged are exempt, that means there is no sales tax to charge to shooters at all.

    I know that many clubs ignore these rulings also.

    Last piece of advice, if there is any other code section that you might seek your income tax exemption under, consider it. 501(c)(7) may not be the best section, but then again it may be the only option.
     
  19. BIGDON

    BIGDON Well-Known Member

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    dynapro; It really pains me that you are pissed off after the smart ass know it all answer you gave (since deleted). As far as saying it to your face any ffing time. Your arrogant, dumb ass comments on other subjects have been well noted. If you are a CPA as you "luckily" admitt good luck on finding work because my company sure as hell wouldn't hire you as others should be forewarned.

    All any person did was to tell him to procede with caution and if that is to much for you to bad.

    Don
     
  20. BIGDON

    BIGDON Well-Known Member

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    dynapro; See you deleted another message. You are a real work of art. A real gutless wonder.

    Don
     
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