Sales Tax

I'm a primary contractor and I hire electrical contractors to run conduits and install panels at my customer sites. I've been charging sales tax to the customer directly and not pay any sales tax to my sub electrical contractor. One particular sub contractor thinks otherwise. Anyone run across this and do you pay sales tax to your sub contractors?

And do you regularly ask your accountant PLC-related questions and expect good answers?

With all due respect, call your accountant about this one since every situation will vary, especially by state.

Dude, already talked to the accountant and she backs me up. Just want to know how others here handle it.

I don't know how it works in your state, but around here if you can't produce a certificate of resale exemption, the sub is obligated to collect the sales tax from you and report it to the state. If you have a resale exemption, inform the sub and they should stop charging you for it.

If that's not the way it works in California, then you should be able to deduct the sales tax you paid to the sub from what you have collected from your customers when you have to reconcile with the state. Either that or pass along the sales tax charges from the sub to the customer.

As a sub-contractor at times I guess it depends on situation.

If I supply panels, conduits, or any material then I used my tax number to obtain them; therefore will charge you the taxes associated with them, unless as mentioned there is an exemption involved but that gets into some serious details. Basically the state will have to know why merchandise was bought and resold but no taxes obtained.

Labor, as I know it, is not taxable; therefore if I am just supplying labor then I cannot charge taxes.

Thanks guys. I do have a resale cert and have being doing it as Steve pointed out. I guess it's just a little bit more accounting paper work to pay the sub contractor tax and pass it on to the customer.