Can I use a re-sellers permit for products I don't make a profit on?
April 2, 2012 8:28 PM Subscribe
Can I use a re-sellers permit for products I don't make a profit on?
In an attempt to be brief:
I want to order shirts from wholesale sites to get bulk pricing (don't care as much about being tax free) for my silk screening - so i need a re-sellers permit. Can I legally do this if i am giving out the shirts free/as donations, or not making any profit on the end products?
This is by no means a business, I am not making money, I am not trying to avoid paying taxes on goods. I want to access suppliers that require a re-sellers permit.
Can I do this? And if so, do you have to keep track of any special tax stuff? I am clueless about the tax/paper trail end of things unfortunately.
In an attempt to be brief:
I want to order shirts from wholesale sites to get bulk pricing (don't care as much about being tax free) for my silk screening - so i need a re-sellers permit. Can I legally do this if i am giving out the shirts free/as donations, or not making any profit on the end products?
This is by no means a business, I am not making money, I am not trying to avoid paying taxes on goods. I want to access suppliers that require a re-sellers permit.
Can I do this? And if so, do you have to keep track of any special tax stuff? I am clueless about the tax/paper trail end of things unfortunately.
The taxing authority probably isn't going to care what sort of profit you are making, zero or otherwise. If you are giving it away, they're likely to decide that you owe use tax on it.
Talk to your state taxing authority, fully disclose what you are doing, and ask them for a written response as to what sort of tax obligations your business will incur. Don't bother trying to claim it isn't a business. It buys merchandise wholesale. It manufactures printed shirts. It generates a product. If it looks like a business and sounds like a business, it's a business.
Once you understand what your tax obligations will be, you're then in a much better position to operate your business without fear of the tax man coming for you and your "I didn't think this was a business" business. Also, they'll be happy to put you in touch with the people one door down who issue your state (re-)seller's permits.
Do note that it's best to follow this advice closely, particularly including the "written response" bit. It is perfectly possible that you might run into someone in your taxing authority who is more reasonable and sympathetic than the law technically allows, and if they tell you that you don't need to worry about taxes for your "hobby", when an auditor down the road decides that you operate a "business", that bit of paper can be the difference between "well, our advice was wrong, you owe taxes starting from now" and "you owe taxes dating back to when you started."
posted by jgreco at 9:12 PM on April 2, 2012
Talk to your state taxing authority, fully disclose what you are doing, and ask them for a written response as to what sort of tax obligations your business will incur. Don't bother trying to claim it isn't a business. It buys merchandise wholesale. It manufactures printed shirts. It generates a product. If it looks like a business and sounds like a business, it's a business.
Once you understand what your tax obligations will be, you're then in a much better position to operate your business without fear of the tax man coming for you and your "I didn't think this was a business" business. Also, they'll be happy to put you in touch with the people one door down who issue your state (re-)seller's permits.
Do note that it's best to follow this advice closely, particularly including the "written response" bit. It is perfectly possible that you might run into someone in your taxing authority who is more reasonable and sympathetic than the law technically allows, and if they tell you that you don't need to worry about taxes for your "hobby", when an auditor down the road decides that you operate a "business", that bit of paper can be the difference between "well, our advice was wrong, you owe taxes starting from now" and "you owe taxes dating back to when you started."
posted by jgreco at 9:12 PM on April 2, 2012
Response by poster: I am in Washington
The states website seems to have a decent amount of information- and an email address to ask questions. Thanks jgreco, I will send them an inquiry about it.
Wasnt sure if they would be able to answer questions about your specific situations or not- Like asking for investment advice from your local bank or something.
posted by bleedfoot at 9:53 PM on April 2, 2012
The states website seems to have a decent amount of information- and an email address to ask questions. Thanks jgreco, I will send them an inquiry about it.
Wasnt sure if they would be able to answer questions about your specific situations or not- Like asking for investment advice from your local bank or something.
posted by bleedfoot at 9:53 PM on April 2, 2012
Yeah, well, ours likes to be as vague as possible, but they seem to answer very specific questions with satisfactory answers. That's part of why I suggest not even trying to get into a debate about whether or not it is a business. Most people would consider it sufficiently business-like, possibly with a proprietor who had no idea how to make money. ;-)
Either way, if you get a written response, you then have something to point to that says you made a reasonable effort to determine what you were supposed to do. That by itself could be meaningful if you ever had to argue an adverse decision in the future.
posted by jgreco at 5:42 AM on April 3, 2012
Either way, if you get a written response, you then have something to point to that says you made a reasonable effort to determine what you were supposed to do. That by itself could be meaningful if you ever had to argue an adverse decision in the future.
posted by jgreco at 5:42 AM on April 3, 2012
Some companies will do quantity pricing based on simply quantity without demanding to see a business licence, state tax ID number, or this re-sellers permit you reference. For some industries wholesalers even want to see things like a picture of your store or a yellow pages listing.
If you are trying to buy these from an in-state company, you might have an easier time ordering from elsewhere -- generally a company in your state will need some information from you if they won't be charging you some sort of tax. If it's very difficult to get tshirts this way for whatever reason, it might be worth avoiding future tax problems by driving to Portland and buying shirts there.
If you happen to just need white I know the name of a vendor that won't demand this, don't know anything off the top of my head for a bigger color selection but it will probably take much less time to find one than to keep track of the special tax stuff and file it yearly or even quarterly.
posted by yohko at 7:07 PM on April 3, 2012
If you are trying to buy these from an in-state company, you might have an easier time ordering from elsewhere -- generally a company in your state will need some information from you if they won't be charging you some sort of tax. If it's very difficult to get tshirts this way for whatever reason, it might be worth avoiding future tax problems by driving to Portland and buying shirts there.
If you happen to just need white I know the name of a vendor that won't demand this, don't know anything off the top of my head for a bigger color selection but it will probably take much less time to find one than to keep track of the special tax stuff and file it yearly or even quarterly.
posted by yohko at 7:07 PM on April 3, 2012
Ask your question at least twice, if you can. I'm also in Washington, and when the sales tax changes went into effect a couple years ago, we had questions on how to tax our on-site copier service calls. One written response said to tax it at the Anacortes rate, because that's where we are located and where the calls are dispatched from. Another written response said to tax it at whatever the local rate is at the location where the work is being performed. Two completely conflicting answers, both from the state DOR.
posted by xedrik at 8:10 PM on April 3, 2012
posted by xedrik at 8:10 PM on April 3, 2012
This thread is closed to new comments.
posted by brainmouse at 8:34 PM on April 2, 2012