Originally Posted by
Alan Klein
Of course the seller collects and pays the sales tax. But your amounts aren't correct. It's not $60 tax on $1000 since the $1000 also includes the sales tax despite the seller telling the public there;s no sales tax. You have to work the numbers backwards. If he collects $1000 from his customer and the state sales tax is let's say 6%, the actual product was sold for $943.40 + 6% sales tax ($56.60) = $1000. The seller must send the state $56.60. He's left with $943.40 to cover his costs, overhead and profit. To figure the tax due in situations like this, the formula is to divide the final selling price by 100% + sales tax percent to get the original net selling amount. So in this example of 6% sales tax, $1000/106%= $943.40. Sales tax: $1000-943.40= $56.60.
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