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SALES TAX and USE TAX

  • January 2019 | by Abbott Pratt & Associates

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    The increasing complexity and required compliance to Sales and Use

    Tax are causing confusion for many business owners.  Most often, the uncertainty is about what is taxable on initial purchase, and what is subject to tax on resale. For Veterinarians, the difficulty has heightened with the increased use of online pharmacies.

    Use this chart as a starting point to assist with your Sales and Use Tax filing needs.

    Sales Tax

    1. Determine if the item is tangible property

        a. If yes, is it for resale or is it to be used in-house

    2. If used in-house

        a. Company pays sales tax on the item at the time of purchase

                   i. Examples: Fixed assets, surgical supplies, office supplies, reminder cards, injectables,

    anesthesia

    3. If used for resale

        a. The company does not pay sales tax when purchase from vendor

                   i. You will need to provide vendor with a completed form st-4 sales tax resale certificate

        b. The company collects sales tax from the customer at the time of sale

                   i. Examples: Dog food, leashes, pet medication, heartworm, flea & tick preventative,

    medicine compounds

                   ii. The only time the company would not collect sales tax from the customer on items

    used for resale is if the customer is a non-profit (animal shelter)

                             1. If the customer is a non-profit, the company needs to collect form st-5 sales

    tax exempt purchaser certificate stating collection of tax is not needed

         c. The company remits the collected sales tax upon filing sales tax return

    4. On-line pharmacy

    If the company uses an on-line pharmacy and the on-line pharmacy collects sales tax on behalf of the company and reimburses the company for the sales tax collected, the company needs to add the taxable sales and sales tax from the on-line pharmacy to the sales tax return filing.

    Use Tax

    1. If no sales tax was paid on the tangible item purchased for in-house use then a use tax needs to be calculated and paid

           a. Examples: Purchases on websites (amazon, ebay, etc.)

    Action Items

    1. Register for sales / use tax filing, files, and remit sales tax

    https://wfb.dor.state.ma.us/webfile/wsi/

    2. Complete Form ST4 Resale certificate and provide to supplies:

    http://www.mass.gov/dor/docs/dor/forms/wage-rpt/pdfs/st-4.pdf

    3. Review MA sales / use tax guide:

    http://www.mass.gov/dor/individuals/taxpayer-help-and-rsoures/tax-guides/salesuse-tax-guide.html#filing

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