Tax Exemptions? Your Policies?

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Audrey Levins

MGF, Master Grumble Framer
Joined
Apr 9, 2001
Posts
545
Loc
San Antonio, TX
Hey Grumblers!

I know, I know, I keep posting topics...as soon as I finish one, I think of another.
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Framechick's comment about some "interior designers" being ladies who don't want to pay tax on their own personal framing has brought to mind something that occurs at work from time to time....

As I understand it, a tax exemption only applies to people who are doing it a.) for charity or non-profit, or b.) for resale. (The reason being, I am told, because you cannot charge sales tax twice.)

But we get customers from time to time--lawyers, dentists, podiatrists, anybody with a tax license--who give us a tax exemption number when it is obvious that they are framing for personal reasons, and they have no intention of selling it. It seems to me that these people should not be allowed to use their tax exemptions for personal gain, just to avoid paying taxes because they happen to run a business.

My boss doesn't seem to care, and honestly, it's his business, but what are your opinions/policies on tax exemptions? Do you ask what the framing is for, or if it is to be resold, or do you take them at their word? And can my boss, for instance, get in trouble for allowing people to use their tax exemptions illegally?

I'm curious, so any information would be appreciated.

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I don't care what color your sofa is.
 
That's a good question.

Generally, we know who is using it for non-profit or for resale, and act accordingly. I have had one particular customer, who is a pathilogical liar (and folks, I'm being honest, you should try to have a conversation with this man without confusing yourself) and claims that his personal works are for resale because he has a business. I caught him in a lie once. No longer do I take "I'm exempt", although I know he owns his own business, I'm not exactly certain what he does, although he says it's something to do with the art world--I should hope not, you should see his tastes. Not to mention every time he comes into the store it's a REPAIR for LEAST amount possible..and he takes up SOOOO much of my time talking to me... and saying "don't you look pretty...you're very pretty these days"... ACK! .don't get me started (putting the soap box away_.

I've had store owners, from a French-Country shop, have things framed, and my boss did give them an extra discount AND tax exempt, because it was for resale, this we DO know for certain. (Personally I felt that if they wanted an extra discount they should have ordered the moulding length and cut and joined it themselves)... but that's just my opinion, I'm not the owner.

Most people are honest, but like I said, you do get those who aren't. Just ask them, Sir, is this for personal "use" ?.. if yes, them I'm sorry, I can't give you a tax exemption, if this was for your business, or for resale, I could. Trust me, if they wanted to, they could right it off without you giving them a tax exemption status. I've had customers TELL me they were going to.

Just my thoughts.
Egon

(and pardon my poor grammar... I'm a reader of novels not a writter of one)

[This message has been edited by Egon's cage (edited June 19, 2001).]
 
I believe that if whoever you are selling to has the proper credentials and indicates they are reselling the item you have to take them at face value.
You cannot be policing for the state dept. of revenue.
Suffice to say, if they get caught, at least in this state, the penalties can be severe. In Florida the dept. of revenue will do a random sampling of months and average the amount owed from those months. They will then assess the penalty based on 3 to 5 years of returns plus interest etc.
People who are cheating on the state are risking a lot for a little.
 
It's a matter of law, not a matter of policy for individual businesses.

According to our accountant, the state tax agency will force us to pay tax based on taxable revenue, on which we *should* have collected it, whether we did or not.

Unless the customer is a church, charity, or other non-profit entity with legal tax-exempt status; or buying for resale; we collect the tax.

Taxable customers who claim tax exemption, simply because they can get away with it, are breaking Ohio law. If they misrepresent their status, then *they* are risking a charge of tax fraud/evasion. The signed exemption certificate we keep on file could be used as proof in court.
 
In addition to a signed certificate of exempt tax status, I look at the actual state supplied tax exempt certificate. The all have an experation date. I make sure that the certificate is current. I ALSO MAKE SURE THAT THE CERTIFICATE IS ISSUED TO AN ENITY THAT WOULD BE RESELLING FRAMED ART. THAT IS A COMPANY PRODUCING TOOL AND DIE MATERIALS WOULD NOT BE APPRIPIATE.
In the State of Michigan, check each state for their specific laws, the seller (we framers) can be liable for the tax if we do not review the tax exempt status properly.

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Jerome Feig CPF ISA
Field Art Studio
Pleasant Ridge, MI
248-399-1320
248-399-7018 fax
 
In California we have a little card that must be filled out where the person claims that they are in a business relevant to receiving wholesale (non tax) from you and reports their "resale number". And, it is the frame shop's responsibility to verify that the number is a valid number. If and when it is discovered that the client was most likely not using the license appropriately (or it was a bogus number) the seller (frame shop) is liable for the sales tax.
 
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