Threw customer out of store!!! I did it!

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UzZx32QU

UzZx32QU

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I just had a jerk client that I fixed an old piece of crap frame for. Did a nice job on it and took too much time to do it.

I don't charge separate labor and it listed on the work order as a fix.

He complained about the 2.XX charge for sales tax. I said I would remove it, I was and still am going to pay it. But he said I was breaking the law by not charging separate labor and materials and he will be calling the sales tax people on me. This after I was giving him his money back anyway. What a jerk. I then gave him back all his money and told him to take his picture and get out. He refused to accept the new receipt that showed the return of his money, he took the money though. I need this s # i t on a 38.00 job? What log do people like this crawl out from under in the morning.

I consider a fix a fabrication job which is taxable because small items are used and not charged separately for. I asked the sales tax folks also years ago and that was their understanding.

:soapbox: Maybe he will go to the big M next time.
 
Somehow I dont think the sales tax people are going to be upset if you are paying them more taxes than you owe!

Some people just have to complain. They are so miserable that they want to share.
 
Services in Ohio are all taxed now. I have always charged tax even when services weren't. Fitting includes misc supplies which would be taxed.
 
That really sucks. Yeah, one would think they wouldn't be too upset if you're charging more but you never want to deal with this kind of thing. One agent may have ok'd the way you do things, but things seem to be far too open to interpretation and you never know what the next guy will do. We had a kiosk and a larger location in the same shopping mall that were near each other but were under 2 separate leases. An agent was doing his holiday shopping and saw them and checked us out ( I don't believe that but it's what they told us. ) and fined us for paying sales tax using one vendors license. We got a refund for overpaid taxes and then they fined us for operating without a vendors license and paying no sales tax on the other. Rather ruined my Christmas that year, and the next, and the next. ( My fondest Karma wishes to the soul who saw that and took a shot at reporting us. Hiya! ) You catch a guy like that and you're in for a real headache.

But thanks for posting! If you can do it then I feel better about sending away my customer yesterday too.
 
My accountant wanted to have a seperate labor charge. He came here and I walked him through exactly how an order is processed and made. He went to the local IRS office to discuss it with them. Keep in mind he wanted to seperate the charges! After discussing it out with the IRS office they said that would be next to impossible and we would probably loose an audit anyway!

Armed with that info, I would probably wouldn't have been so polite about it as you were.
 
My thinking is that if you go to a place where they make furniture, the craftsperson doesn't break out the labor from the materials when he sells it to you. Why then should we break out the labor on the work we do? How do you figure just how much labor for each step in the process? Everything you do goes to creating a finished product. It's not like an auto mechanic where the distinction between parts and the labor is clearly defined.

I tax the whole thing unless the job is purely repairing a frame and no materials are used to create a new product.
 
I've had people argue that they don't have to pay tax on labor before. I've felt like asking them what IRS office they work for, cause they seem to know so much about the tax system. As stated above , I think it would be very difficult to break out labor on each job.
Also, for all us framers out there who are too chicken to throw anyone out, good job!!
Bill
Ocean Art
 
surferbill said:
I've had people argue that they don't have to pay tax on labor before. I've felt like asking them what IRS office they work for, cause they seem to know so much about the tax system. As stated above , I think it would be very difficult to break out labor on each job.
Also, for all us framers out there who are too chicken to throw anyone out, good job!!
Bill
Ocean Art
Click to expand...

Me too, Bill. Frankly, I just don't need the hassle of breaking out the labor and running all the calculations. For those few instances, it's just cheaper overall for me to pay the extra ONE DOLLAR in sales tax. Filling out the monthly sales tax return is such a complicated timesuck, I don't need it to be worse.

I suppose there's a way to configure various charges in your POS to be taxable or non-taxable. I did this recently for shipping charges. But in general, it just isn't worth the time and effort.

"Oh, you don't want to pay sales tax on the labor component of that $38 repair job? Well, as it turns out the labor was free, but the mending plates, screws, putty, etc. come to...$38!"
 
Sales Tax

Believe me, the State Board of Equalization is more upset if you don't charge sales tax on an item than if you do. Here in CA, all portions of a manufactured product are taxable. We only waive the sales tax for out of state sales shipped out of state, and resale. We have a file--They MUST have a card in that file, or they pay tax. Resale forms are now available for download in most states. I have the blank forms right in the shop so there is no excuse for people saying, "Oh, I forgot my card."
 
Kirstie, I believe you also have to pay sales tax anytime you post anything online that includes the words "State Board of Equalization."

Oops@!! That'll cost me!
 
You beat me to it Paul. I was just going to add that I cover my back end on all sales so I don't end up with red flags. If in doubt...call your accountant or local tax office and get it in writing. There are literally forms for everything.

I've had customers tell me they will give me cash so I can pocket it if they don't have to pay sales tax.:icon9:

Lori
 
I love resale and out of state sales. I HATE HATE HATE HATE HATER collecting sales tax. The extra paper work to keep those sales seperate is well worth not having to cut a bigger check. To me anyway.

Carry on.
 
Creative Chicks said:
...

I've had customers tell me they will give me cash so I can pocket it if they don't have to pay sales tax.:icon9:

Lori
Click to expand...

I have a customer who does that too. I actually take him up on the offer and adjust my pretax sales price then pay the tax. He doesn't understand that I can't pocket the cash ...I'd be the first to be caught!

He does enough business with me that I don't worry about giving up the 6%. Last year over $ 5000.00 in biz.

If I'm ever audited I have paid the tax and can prove it.
 
Bill, you did the right thing, throwing him out was a good idea. Myself, I wouldn't have given him a penny back. In California, if you provide any of the materials, a nail, a screw, paint, whatever, the whole project is taxable. There are some industries where the labor and parts can be separated, such as a mechanic, that does not apply to light manufacturing, which is what picture framers fall under. You could have just told the clown that your price for a screw eye, or whatever you used, is $38.00. As far as threatening to report you, I would have handed him the telephone and told him to get started, now! It just rubs me wrong when people threaten me.

John
 
Labor (services) is taxable in this state...well some labor. It seems that the only services that are not taxable are those of doctors and attorneys...now how did that happen?
 
Unless your customer is a member of the clergy or able to produce a resale number and a reason to be able to use it, NEVER offer to knock off the tax, even if you say you'll still pay the state. I once worked for a certain person who made clamps. One day two men came into the shop with an armload of art. They stayed for hours, and the final tally was in the neighborhood of $10,000.00. They asked my boss if he would take the tax off if they paid cash. As I was furiously shaking my head, he told them "Sure!". The first man reached into his pocket, took out his wallet and produced an IRS ID.
Long story short, we were padlocked, the computer and file cabinets were hauled away, and he was hit with a $50,000 tax levy.
The moral of the story? You never know who you're dealing with, so deal straight.
 
What about these specials we see from furniture stores and the like offering to pay the sales tax for a big weekend event. Car dealers do it as well. Surely this is legal. The customer is just paying less pre tax and sales tax is getting paid.
 
I think it was in the terminology. You can surely discount the sale and then pay the tax. However, if you say you'll take off the tax it would imply you aren't paying the tax and and therefore probably not reporting the income. That's why the IRS Federal Agents weren't happy about the situation.
 
Kirstie said:
What about these specials we see from furniture stores and the like offering to pay the sales tax for a big weekend event. Car dealers do it as well. Surely this is legal. The customer is just paying less pre tax and sales tax is getting paid.
Click to expand...

We see that here in Texas and other states that do a tax-free weekend for clothes and schools supplies. A lot of other merchants advertise tax-free weekend sales to jump on the bandwagon. There's always a lot of gymnastics involved not to call it tax-free, but as a discount offered that is equal to the sales tax. The tax is still collected and paid of course.
 
Here in Idaho, the codes specifically says that businesses cannot pay the sales tax for the customer, so we don't see those "we'll pay your salestax" sales.

The code also says that if labor is itemized on an invoice, it is not taxable. The only time we itemize labor is for picture hanging jobs and the POS calculates the invoices correctly, but it cannot calculate the monthly sales tax payable accurately when we have any of those labor only sales. Needless to say, it's a PIA to generate the report to the state when there are a few of those sales.
 
I've been informed that if you post a sign (can be small) that says -- Sales tax is included in all sales prices -- it cover's the potential liability when you sell something for a fixed dollar amount like $10.00. (You would take the sales tax out of that $10.00--at 5% that would be 9.52 plus .48 sales tax.)
 
Bogframe said:
Unless your customer is a member of the clergy or able to produce a resale number and a reason to be able to use it, NEVER offer to knock off the tax, even if you say you'll still pay the state. I once worked for a certain person who made clamps. One day two men came into the shop with an armload of art. They stayed for hours, and the final tally was in the neighborhood of $10,000.00. They asked my boss if he would take the tax off if they paid cash. As I was furiously shaking my head, he told them "Sure!". The first man reached into his pocket, took out his wallet and produced an IRS ID.
Long story short, we were padlocked, the computer and file cabinets were hauled away, and he was hit with a $50,000 tax levy.
The moral of the story? You never know who you're dealing with, so deal straight.
Click to expand...

Wow. I wouldn't think that the IRS would spend the time or manpower on something so relatively small like that. It makes me think that they were suspicious of the owner for other reasons and did that to make their case.

On the other hand, considering how much of a bloated overstaffed corrupt bureaucracy it is, I suppose that they could spend their time and our dollars busting a small-time cheat.
 
I was wondering the same thing Ron.
 
In my first shop in California,in the mid-80's, I actually had my front door padlocked by the State Board of Equalization for underpaying sales tax. I was not taxing labor or the fitting charge, and it was listed seperately from materials on my work orders. A frame shop owner in No. Calif, the one who helped me get started, had the same thing happen a couple years before, andtook her case all the way to the Supreme Court and won. I had an attorney contact the Tax Board with information from that case. They brought my files back, took the padlock off the door, sent me a written apology and had to pay me for the 4 days I lost business.

I recently attended a 1/2 day workshop given by the Nevada Department of Taxation, specifically to clear up this very issue. 3 auditors presented the workshop and told me specifically, that in Nevada, my labor and fitting charge are exempt from sales tax, as long as it is listed seperately on my work order. what Kristie just said. There is a place on our monthly sales tax reporting form that lists exemptions. They told me to write down their names and if I was ever questioned about it, to refer back to them for verification that I was given the correct information.
 
Val, I hope those 4 days they reimbursed you for were the 4 days that you were going to be swamped with wealthy customers buying $10,000 closed corner frames!
 
Don't I wish! They took the previous month's daily sales and averaged it.
 
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