Q:

Hi Kerry,

 

Sorry to bother you, but could you answer one more question for me? I'm

working on selling my machine tool in California and I would like to

print out the sales tax law regarding collecting sales tax on the sale

of capital equipment. A lot of people are surprised when you tell them

there is sales tax on the sale.

 

Thanks for your help, I really do appreciate your time.

A:

Basically, any sale of an item is subject to sales tax unless it is specifically exempted.  For Calif. sales tax purposes, the exemptions are detailed in Publication 61, which can be downloaded from the BOE.

Depending on where and how the equipment will be used by the buyer, there may be an exemption.  Unless you can find a specific reason to exempt the sale from sales tax, you need to collect it and pay it to BOE.  If a buyer feels s/he qualifies for some kind of obscure exemption, you should make that person document that fact either in the BOE regs or by obtaining a written statement from the BOE stating that fact.  The regs are also on the BOE website.

If you were to not charge sales tax and the BOE ever checks you out and discovers that you should have charged it; they will require you to pay it plus penalties and interest.

Your personal professional tax advisor should be able to give you more specific advice.

Good luck.

Kerry Kerstetter

Follow-Up:

Hi Kerry,

 

Thank you.

 

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 2/22/2007 08:49:00 PM Send this post: