Sales Tax: What It Is And How It Is Imposed?
A sales tax is a tax that is placed on the purchases of goods or
services. The federal government does not have a national sales
tax. Qualifying products or services are only taxable by a
particular state government.
Each state has the ability to impose their own sales tax rate.
At the current time Oregon, New Hampshire, Montana, Hawaii, and
Delaware are the only states that do not impose a state sales
tax. It is possible for different counties inside these states
to impose their own local sales tax. The local sales tax
generally depends on the preferences of local lawmakers and
taxpayers. States that do impose a state sales tax also allow
individual counties to impose an additional local sales tax. The
combination of a local sales tax and a state sales tax is the
total sales tax shoppers pay when purchasing taxable items.
In addition to imposing their own state sales tax, each state
has the option of allowing tax exclusions on certain items. Each
state will vary; however, it is not uncommon for certain foods
and medications to be excluded from a state sales tax. There are
also many states that regularly offer sales tax breaks for a
period of time. New York, for instance, generally has a period
of one week that clothing is excluded from the state sales tax.
This week typically occurs before children go back to school;
therefore, it gives many parents and other taxpayers a great
deal when purchasing back-to-school or work clothing. While a
state government may impose a state tax break each local county
has the option of doing so too. A break from both local and
state taxes does occur; however, it is completely optional and
up to the lawmakers of a particular county.
There are certain circumstances when an individual who may be
required by their state to pay a sales tax gets around doing so.
These situations most commonly occur when an individual travels
to an area that does not have a state sales tax or when items
are purchased over the Internet. The majority of online business
retailers will impose state tax when an item is purchased over
the Internet; however, items purchased from a small online
business or an online auction site are generally not taxed.
These types of purchases must be reported on an income state tax
return. Each state is likely to use a different method for
determining how much sales tax an individual must pay on items
or services purchased without being taxed. It is also possible
for an additional local tax to be imposed on those items that
were purchased outside of the state or county that an individual
resides in. http://www.taxhelp
directory.com/statetax/
If an individual reports the amount of sales tax they need to
pay with their state incomes taxes, the information will be
computed together. This allows many individuals to automatically
apply their estimated state tax return to the amount of money
they owe on any local or state sales taxes. As with traditional
taxes owed, the amount of money owed on sales tax must be paid
for by the April 15th tax deadline. Individuals can file for a
deadline extension; however, the estimated amount of money owed
must still be paid on time. Individuals who are unable to pay
the amount owed on sales tax are subject to late fees and
additional penalties.
Individuals who do not report items they purchased without
paying state or local sales tax put themselves at risk for fines
and penalties. To prevent yourself from being fined by your
state, taxpayers are encouraged to keep documentations of all of
their online and out-of-state purchases even if a sales tax was
paid. Keeping yourself organized and prepared is the best way to
prevent yourself from being audited or penalized by your state
government.