- quote -

That's why so many industrial engineers have tax practices.
We manufacture tax returns. ;-)

Linda Dorfmont E.A., CFP, CSA
Fellow, Institute of Industrial Engineers

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"Paul Thomas, CPA" <paulthomascpapc[at]bellsouth.net> wrote:
- quote -

As far as sales tax goes (at least here in CA) the theory is
that in one case you parimarily want to end up with
something tangible as opposed to ending up with the result
of services. It's not always an easy line to draw.

I remember one case concerning a keypunch operation. They
provided primarily services (punched cards) - the cost of
the cards was insignificant or they may have given them away
at no extra charge. But since the client's interest was to
end up with punched cards that he didn't have before, it was
held to be the sale of goods and the entire amount taxed.

Now if the client had obtained the cards elsewhere or at a
different time and then brought them in for punching, they
would have given him nothing he didn't have before, but his
goods would have been altered by the services. In that case
no sales tax.

- quote -

I suppose you do in some respect manufacture tax forms. And
if the client's primary purpose for having you do so would
be to put it on the wall and show it off to all his friends,
I'd think it would be more reasonable to call it
manufacturing. But your client's primary purpose is the
effects of the return and your services, not the return
itself.

Should a university charge sales tax because, at the end of
the day, the student is really just buying a diploma?

Stu

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"Seth Breidbart" <sethb[at]panix.com> wrote

- quote -

The way I see it, yes, and sales tax is due on the entire
sales price.

This as opposed to a simple hemming of sleves or pantlegs.

- quote -

I'd wager it'll come down to the degree that the underlying
goods and materials are modified in their use. Cloth can be
used for may purposes. It can be manufactured into many
different products. The act of embroidering initials on a
set of towles is vastly different from the act of
manufacturing the towel itself. The shirt is already made,
and embroidering it doesn't change it's use.

- quote -

Then would you be willing to argue in tax court that I
manufacture tax returns? After all, there's more work
involved in creating a tax return than printing from a disk.

--
Paul Thomas, CPA
paulthomascpapc[at]bellsouth.net

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- quote -

If I bring in my shirt and they embroider something on it,
then sure, they're providing a service.

But if they sell embroidered shirts, and I specify the
underlying shirt and the pattern, don't they then
_manufacture_ the embroidered shirt?

If I go to a tailor to make me a suit, he already has the
cloth, he just cuts and sews; is that manufacturing? Where
do you draw the line between that and embroidery?

- quote -

If I go to Kinkos with a CD and tell them to print and bind
a book from its contents, I'd consider that manufacturing.
If I go with a tax form and have them copy it, that isn't.

Seth

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Paul Thomas, CPA wrote:
- quote -

Nope. Because the shirt is already manufacturer and this
embroidering is a service. Although I just bet you store
will charge sales tax on it; and everything of course.

- quote -

We agree then, to disagree. Sales tax being charged is not
THE only indicator I admit, but one factor in several
perhaps.

ChEAr$,
Harlan

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"Harlan Lunsford" <hnslunsford[at]bellsouth.net> wrote
- quote -

Are you implying that the retail store in the mall, that
will custom embroider the shirt you pull from the rack is a
manufacturer for the credit?

Kinkos doesn't qualify for the manufacturing credit on a
huge part of their income. But there may be something they
do that qualifies as domestic manufacturing. The
applicability of sales tax to the bill is not any indication
of a manufacturing activity.

--
Paul Thomas, CPA
paulthomascpapc[at]bellsouth.net

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Paul Thomas, CPA wrote:
- quote -

Now what kind of "services" would a printing manufacturer
provide that are not built into the price of the products
sold? Unless the company also provides design services I
would say all activities are domestic production activities.

A similar question came up elsewhere, the questioner wanting
to know whether or not to send a 1099-misc to the printer
since what he bought were "custom" printed. One factor I
mentioned there and perhaps would pertain here is whether or
not sales tax is applied on all invoices.

ChEAr$,
Harlan Lunsford, EA n LA

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<anngao[at]gmail.com> wrote

- quote -

It sounds like you will have - or may have - split income,
from manufacturing as well as services. Much like McDonalds
isn't manufacturing hamburgers for it's customers, it's hard
to look at printing business cards as a manufacturing
activity. That being said, there probably are many products
you do manufacture, even if they have additional service
processing like specialty printing, so segregating the
income by source could generate some tax break. Starbucks
would have to do this, if they manufacture their own beans
and grind for sale, as well as sell brewed coffee (a
service).

This is new enough that you'll have to make a lot of
judgment calls and tweak it along the line as you hear of
regulations and court cases that favor you, as well as those
that do not.

--
Paul Thomas, CPA
paulthomascpapc[at]bellsouth.net

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Our company is a manufacturer of printing products such as
business card and all of our plants are in the US. I joined
a CPE seminar last week and I found the section 199
regarding the domestic production deduction.

Could anybody let me know if our company will qualify the
sec. 199 and the deduction? Thanks so much.

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