Quote Originally Posted by Alan Klein View Post
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.
Not so. When the tax return is filed with the state by the vendor, the sales tax due is 6% of the gross sales, less any discounts allowed by the state. If the business collects sales tax separately, the gross sale is net of sales tax collected and it goes against the calculated amount on the return. If you don't identify tax on the receipt, you have to calculate your tax due to the state on that total, at whatever the going rate is. The state doesn't give up $3.40 per transaction because the dealer doesn't identify the tax separately.

You might show a gross sale of 943.40 adding 56.40 in sales tax, to come up with $1000, but if you don't break it out on the receipt, you have to remit sales on $1000 to the state.

I've gone through a number of audits with state sales tax auditors, and they never let that one slide.