Charged Sales Tax To have Lumber sanded?

[Mark R Webster]

I live in California. I glued up some wide panels out of solid wood and took them to a lumber yard that had a wide belt sander to have them run them through to clean them up. When I paid for the panels I was charged sales tax. It was my wood I made the panels, they just sanded them down. I assumed there would just be a labor charge and no sales tax. Anyone know if this was appropriate (in California)? Thanks

[Bruce Wrenn]

Here in NC, I now have to collect sales tax on my labor (7.25%.) Because I'm self employed, it amounts to a 7.25% income tax surcharge in addition to income tax paid on earnings. Labor covers the costs of operating a business, which includes other things that you have already paid taxes on. Think, gasoline, electricity, phone service internet, tools, etc. It amounts to double taxation. When you do business deductions from earnings, it amounts to an almost 50% surcharge on actual earnings. Our legislator says they cut taxes. Millionaires no longer pay sales tax on yachts, and airplanes, so Joe Smuckerelly has to pick up the slack.

[Mark R Webster]

Interesting

[Greg R Bradley]

Doing business in California is interesting to say the least. It makes you want to kill all the legislators. I've learned more than I really wanted to know about Sales Tax requirements after having several people from the state board audit me, usually 2-3 people for several days at a time. Like a lot of our laws, it isn't black and white but open to interpretation so that these dirtbags can justify their salaries while they suck the blood of people who actually work for a living.
Most people interpret the law as labor being non taxable and materials being taxable. Actually the code says all sales are taxable with certain exemptions. Some of those exemptions are "installation labor", "repair labor", and other items. So many people could interpret an labor as improving an item or any other type of manufacturing or fabrication as being taxable.
So if you buy an item an pay someone to install it, the installation labor should be nontaxable. If you pay someone to repair something, the repair labor should be nontaxable. If you pay someone to build something, the labor IS taxable and many people miss that.
It is easy to see how the company doing the sanding would consider that an improvement and therefore taxable but many providers would consider that a service and not charge tax, at least until they are audited by the State Board of Equalization who may decide that some of that WAS taxable.
Clear as mud, right?

[Bradley Gray]

sales tax on labor in Ohio too

[Mark R Webster]

I guess it could be worse for us then.

[Mark R Webster]

Hi Greg, Thanks, actually that helps! The local company gave me the impression that the State Board of Equalization had told them specifically they had to charge sales tax for this type of service. Maybe they were recently audited and as a result were "toeing" the line.

[Rick Malakoff]

I live here and that's a new one, I could see if you bought the lumber there and had it sanded there would be sales tax on the total sale.
But if you got in touch with the State Board of Equalization they would say "Oh yes you have to pay sales tax on that" how else would the state be able to pay for The Bullet Train, lets not forget the dam. What Dam?

Rick
Sick and tired how this state treats it's taxpayers!!!

[Rick Malakoff]

One other thought, I use to build homes and there was never mention of sales tax on the labor to build them.

[Mark R Webster]

Doesn't make sense to me.

[Peter Kuhlman]

Sales tax to me always meant tax on a physical object purchased. In Michigan I only paid tax on parts, materials but never labor as on a car repair. Here in Louisiana I don't understand at all how it works. I pay sales tax on movie rentals, movie tickets, auto repair labor. I don't pay any sales tax on contractor supplied and installed items like windows, home remodeling projects. Weird! With the state $1billion in the red we will see major tax increases next year and we are already at 10% sales tax. That really hurts on automobile purchases and other expensive items. Tax on a new car is more money than my first new car cost total - yea I am that old!

[Rod Sheridan]

Where I live we have an HST (Harmonized Sales Tax).

It covers Federal and Provincial taxes, and is applied to labour, goods, services etc. There are almost no tax exemptions for it.

To me, paying tax on labour looks normal..........Rod.

[Scott Brader]

The convoluted sales tax laws in California are what led our company to stop all sales directly to our customers all over the country and only sell through distributors. Their quarterly forms took us tons of time and we had to track over 70 taxing entities just for CA. We're a small company (9 people) in WI and we just couldn't justify all of the headaches and hassles of the sales tax reporting, etc. required. Selling through distributors only has made my job a lot easier because we do not make taxable sales anywhere in the country. I know this doesn't really address your tax on labor issue. Sorry...

[Jim Becker]

Sale tax is "local" and regulations are at the state level for the most part. Some jurisdictions require collection on services; some do not. Your jurisdiction's requirements should be readily available on their public web site.

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BTW, folks...don't turn this "political" as that is not permitted at SMC per the TOS.

Jim
Forum Moderator

[Mark R Webster]

Thanks all for the very enlightening responses. Having lived in CA all my life I didn't realize "State" sales tax could be so different based on where you lived. We on the other hand have often seen regional add ons to the basic "sales tax" for various reasons. Yes Jim I agree let's get "political". That was not my intention. My main goal was to determine if my lumber yard had misinterpreting the tax laws here in CA. It just didn't make sense based on my limited understanding of labor and sales tax.