"Bob G." <rg327_remove_[at]adelphia.net> wrote:

- quote -

It is inaccurate to say that Texans pay 6.25% sales tax.
The actual sales tax paid "at the register" varies from
locality to locality. I pay an additional 2 percent to the
county (the max allowable) for a total of 8.25% sales tax on
all taxable purchases.

It *is* accurate to say that Texans pay no state income tax.
I hope you realize that our state legislature meets only
once every two years, and spends less per capita on
social-service-types of expenditures than most other states.
But then, we pay higher property taxes and school taxes
than most other states as well. Which is logical given the
state's historical general attitude in matters such as
these: that is, local governments can service localities
better than big governments can.

Thus, our state government provides limited services (in
general) and collects smaller revenues. But that leaves it
to the local governments to do the servicing and the
collecting. Don't think for a moment that because the state
sales tax is only 6.25% that this is the limit of our
taxation. It's not.

~Bill in Tx

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- quote -

------------------
Taxes Fair... lol

A texas resident pays a 6.25 percent sales tax and does not
pay any State Income tax...

As a Maryland resident I "only" pay a 5.00 percent sales
tax.. But I also pay a State & local Income taxes...

I have no problem with this except I have a funny feeling
that the extra 1.25 percent I would have to pay in Texas for
sales taxes would be a hell of a lot less then the amount
that I pay each year for Maryland State Income taxes....

Seriously It does make sense to allow Texans to deduct their
sales taxes... but it would make just as much sense to allow
everyone to deduct all taxes paid to any state... Income,
sales, personal property etc....

If I did not find anything to complain about Taxes, my wife
would know I was very very ill ...

Thanks
Bob

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Andy wrote:
- quote -

Aye, but who's NAME is on the invoice? And who wrote the
check for those materials?

- quote -

who paid the invoice in HIS name I just bet you.

- quote -

So the sub don't enter into the equation.

- quote -

... TO the contractor and not directly to the materials
dealer.

- quote -

Since you didn't quote anybody I can't figure out to whom
you are responding, but ......

Nope, don't make no difference atall.

If I call one of my clients and contract with him to build
me my dream house, he does everything; buys material (and
pays sales tax on same), engages subs, superintends the
whole project and for that I pay him a lump sum at
completion, probably out of proceeds of a construction loan
at local bank.

that's all I get, the house and the mortgage. No bill with
a breakdown of sales taxes paid BY him because said sales
taxes are assessed ON him under the operation of state law.

Happy New ChEAr$,
Harlan Lunsford, EA n LA

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Andy wrote:

- quote -

You haven't mentioned what state you are in. The only thing
that will make a "difference" is applicable state law. If
state law IMPOSED the tax on the subcontractor (probably in
the form of a "use" tax), then you get no deduction for it.
If, however, state law IMPOSED the tax on you (and you can
prove that you paid it), then you do get a deduction. It's
just that simple.

The price of everything we buy includes the consequences of
numerous taxes: income taxes, property taxes, payroll taxes,
sales & use taxes, gross receipt taxes, etc. But you only
get to claim a deduction for these if YOU are the taxpayer
upon whom the tax is IMPOSED.

FWIW, the taxation scenario you described would be patently
improper in my state (Washington). Around here, the "sub"
should have procured the materials without paying sales tax,
and without charging sales tax to the "general." In turn,
the GENERAL should have charged you for sales tax on his
invoice. If the sub had inadvertently paid sales tax on his
purchases, that is a matter that he would have to work out
on his own; he would not be entitled to bill YOU for it. I
point this out simply to demonstrate how sales tax
procedures vary from state to state, and why you therefore
must seek advice that relates to your particular state.

MTW

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Harlan Lunsford wrote:

In fact plumber gives you an invoice only for the
- quote -

Andy responds:

Nope. On a "cost plus" contract, each job is kept
separately and an invoice given to ME shows the material,
the tax paid on the material, and the labor....for the
sub's contribution to MY project only.

If the contract were "turn key", only a finished product
is bought (like buying an automobile), and the buyer has
no idea (or interest) on how much the screws for the
ash tray cost, so no records are kept.....

"Cost Plus" is a great way to track the expenditures,
PROVIDING the contractor and the sub-contractor don't have
anything going on under the table. Not reccommended for
anyone who is not detail-oriented, tho. Or for working
with contractors who prefer to bid on a completed job.....
Andy

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Bob G. wrote:
- quote -

Andy responds:

Bob, my understanding is that , on the federal tax return,
taxpayers will have a choice of deducting EITHER the state
sales tax they pay OR the state income tax they pay.....
Some states,like Texas, do not have a state income tax, and
make up the revenue by charging a higher sales tax. Until
now, the residents of Texas (and others) were not able to
recover this inequity, since only the state income tax was
deductible....

Seems fair to me. Especially since those in other states
have a choice.....

Andy

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Andy replies:

OK...

I have in my hand an invoice that says how much was paid for
the material. How much for the tax. And how much for the
labor...

I gave the money to the builder.

Then , he have the money to the sub contractor....

NO MONEY AT ALL was paid for the material by the sub
contractor...

ALL MONEY paid for material and taxes was paid by me....

I really don't see the issue....

Perhaps you are thinking that houses are bought "off the
shelf" like you buy a TV at Walmart....

In THIS case, it was a "cost plus 11%" contract, with me
paying ALL cost plus 11% to the contractor for overseeing
the work......

Don't you think that makes a bit of a difference ???

Andy

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Andy wrote:
- quote -

Andy, I completely understand your logic. Really I do. But
that's not how the tax law reads. To be deductible, a tax
must be imposed on you. No, I can't quote you chapter and
verse in the U S tax code, but it's there, as others will
attest.

Also remember that deductions are ours not by right, but by
the grace of congress.

Happy New ChEAr$,
Harlan Lunsford, EA n LA

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Andy wrote:

- quote -

Ah now you have it. From Home Depot, you will be THE
purchaser, and can deduct the sales tax. Don't matter
about middle men.

Now, if your plumber buys supplies from his local
wholesaler, and uses same plus maybe a hot water heater on a
job for you, would the sales tax (pro rated on supplies plus
actual on the heater) be otherwise deductible for you?
Nope. In fact plumber gives you an invoice only for the
total. (I'm NOT commenting on whether or not such sales
would be deductible under current law.)

Happy New ChEAr$,
Harlan Lunsford, EA n LA

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Seth Breidbart wrote:
- quote -

Oh geesh, Seth! Here I was pretending to be a demicrack.
Work with me here. (grin

Happy New ChEAr$,
Harlan Lunsford

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Bob Sandler wrote:

- quote -

Well... not exactly.

Look at it this way, we ALL get the standard deduction.
It's not an extra benefit granted by congress.

What congress did do, in it's finite wisdom, as to
allow/let people itemize provided they started back over at
zero.

To say that we non itemizers are getting a benefit is
putting the cart before the mule.

Happy New ChEAr$,
Harlan Lunsford, EA n LA

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Harlan Lunsford wrote:

- quote -

Andy responds:

I disagree. The purchaser is paying the tax as the
total amount for the materials and the tax is passed on
to him. The builder does not pay one single cent for anything
that he does not charge to the purchaser.

For instance, for the roof, the roofer pays 2000 for
materials, 200 for tax, and 4000 to his laborers. He then
sends the invoice for 6200 to the builder, who adds 11% and
then sends the new invoice to the purchaser.

If the purchaser does not pay the 6200, the roofer doesn't
get his money, and files a lien on the house.....

In other words, EVERY CENT comes from the purchaser and
NOTHING comes out of the pocket of the builder, or the subs...

Just the same as if I went to Home Depot and bought the
2000 worth of shingles myself and nailed them on. The person
with the final product is the one who actually pays the tax,
even tho it may come thru several middlemen.

Andy

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Harlan Lunsford wrote:

- quote -

Harlan,

In this case, the subcontractor buys the material and
pays the sales tax on it. He puts on the roof and then
gives an invoice to the builder for his material cost,
including taxes, and his labor.

The builder adds 11% to that amount and bills ME...

Therefore, I am the one who pays the tax, since every bit
of the expense that resulted from the sale was passed to
me on an invoice.

The sub may not actually pay for his material until I
pay the contractor and the contractor pays him....

Therefore "I" am the one who actually pays the sales
tax on the material, as surely as if I bought the shingles
myself and delivered them to the roofer, which is often
done....

Andy

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Harlan Lunsford <hnslunsford[at]bellsouth.net> wrote:

- quote -

What you really mean is, you get a deduction for a lot more
than the amount you should be entitled to.

Seth

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- quote -

It seems to me that you are the one getting a break that
many other people don't get: you get to deduct more than the
total amount of your itemized deductions. (I assume that's
why you don't itemize.) Some people don't even get to deduct
the full total of their itemized deductions.

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Bob G. wrote:
- quote -

Well Bob, I don't think it's fair either. Here I do not
itemize (federal) deductions, so many people are going to
get a break I don't get. How bout dem apples?

And of course the state of Alabama won't allow sales tax
deductions either.

LOL.... I also love taxes.

Merry Christmas, Y'all
Harlan Lunsford, EA n LA

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Mark Rigotti, CPA wrote:

- quote -

Well let that surprise you then. (grin) For I would be
very surprise to find the contractor got out of paying sales
tax on materials. Just goes to show, Alabama and Georgia are
different from Michigan in more ways than one

- quote -

Different tax of course.

Years ago when I was supervising 8 24 hour convenience
stores, everybody thought that you couldn't charge sales tax
on that portion of the price for wine/beer/cigarets which
was for state sin taxes, since that was equivalent to "tax
on a tax". And then when I got into the tax business (much
less stressful than above), I indeed found out that the
state allowed a deduction on sales tax return for such
taxes. No more, of course.

Meerrryyy Christmas, Y'all.
Harlan Lunsford

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"Bob G." <rg327_remove_[at]adelphia.net> wrote:

- quote -

The new federal law does not allow anyone to avoid paying
state taxes. It's each state's state law that allows that.

as I have to do hehr in
- quote -

And you've been able to deduct your Maryland state tax from
your federal taxes all these years. I don't know if it's
fair or unfair, but seems like a payoff to some blue states
(Texas and Florida, for example).

- quote -

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Andy" <andysharpe[at]juno.com> wrote:

- quote -

Very interesting... I only look over this NG from December
until the day I mail my tax returns into the IRS...

But I did not know anyything about this NEW LAW... but it
seems to me that it allows residents of States ..like Texas
.... to completely avoid writing a check to their States
Comptroller of the treasury as I have to do hehr in
Maryland... YET to deduct Sales Taxes from their Incomes on
Federal Returns...

DAMN.... seems kind of unfair to me...since I buy as much
at retail as the guy in Texas and pay sales taxes... PLUS I
write that damn Check to Maryland every April also...

LOl...
I love taxes....

Bob Griffiths

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Andy wrote:

- quote -

Here's a quick answer to your question. To be deductible
the sales taxes must be imposed on you, which is not the
case here, the builder pays the tax, so you can't deduct
them, even if you knew what they were. But of course the
builder can deduct them, since he pays them. Well, maybe
not in all states, but most.

ChEAr$,
Harlan Lunsford, EA n LA

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