So I am filling out my Q2 sales and use tax for IL for the first time. I
understand the form for the most part but here is my question:
I see where I have to state how much general merchandise and food I bought to
sell that I did not pay tax (for example internet purchase that did not
charge sales tax) on when I bought so I am paying tax on it now. I understand
that part but when I do sell it I do not see how to show them that I already
paid taxes on it . Which leads to me believe I have to both pay taxes on it
when I buy it and pay the full tax again when I sell it? I was under the
impression I only had to pay taxes on the profit.
Any one able to clarify this for me?
Thanks
The issue you refer to is "use tax." If you purchase items and use them in
the course of doing business rather than selling them, you must pay use tax.
For instance, if a caterer purchases food tax-free then uses some of it to
make samples to give away at a trade show, he/she would not be collecting
sales tax on the free samples, so they must pay use tax on it. The food was
essentially "used" in the course of doing business. The same thing applies to
items you might donate to charity. If, for instance, you donate items that
have been in inventory for a long time, then you have to pay use tax on the
value of the item.
If, on the other hand, you have items in inventory that you purchased
tax-free and you plan to sell and collect sales tax on at a future date, even
if that occurs in another quarter, you don't need to pay use tax on the
items.
kburger | Community Moderator |
7/9/2012 - 11:28 am
To find your answer you may want to try going to the Establishing a Business section of SBA.gov and click on Learn About Your State and Local Tax Obligations. Hope this helps!
BizResearcher | Window Shopper | 7/10/2012 - 12:02 pm
the course of doing business rather than selling them, you must pay use tax.
For instance, if a caterer purchases food tax-free then uses some of it to
make samples to give away at a trade show, he/she would not be collecting
sales tax on the free samples, so they must pay use tax on it. The food was
essentially "used" in the course of doing business. The same thing applies to
items you might donate to charity. If, for instance, you donate items that
have been in inventory for a long time, then you have to pay use tax on the
value of the item.
If, on the other hand, you have items in inventory that you purchased
tax-free and you plan to sell and collect sales tax on at a future date, even
if that occurs in another quarter, you don't need to pay use tax on the
items.
kburger | Community Moderator | 7/9/2012 - 11:28 am
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