Efficient Strategies for Sales Tax Savings SALES TAX
- Slides: 27
Efficient Strategies for Sales Tax Savings SALES TAX EXEMPTIONS YOU (POSSIBLY) AREN’T AWARE OF Presented by: Stephen Hanebutt, CPA Annual CPE Event For UTA Alumni And Friends August 11, 2016 www. salestaxtexas. com 1
Efficient Strategies for Sales Tax Savings THE RESALE EXEMPTION Seller Buyer/Seller www. salestaxtexas. com 2
Efficient Strategies for Sales Tax Savings THE RESALE EXEMPTION Also applies to rentals This includes replacement parts on rented items Many opportunities for restaurants www. salestaxtexas. com 3
Efficient Strategies for Sales Tax Savings TPP TRANSFERRED IN CONNECTION WITH A TAXABLE SERVICE When a provider of taxable services transfers tangible personal property in connection with the providing of the service, the tangible personal property transferred may be purchased tax-free by the service provider. www. salestaxtexas. com 4
Efficient Strategies for Sales Tax Savings TPP TRANSFERRED IN CONNECTION WITH A TAXABLE SERVICE ❖Janitorial Services ❖Lawn Maintenance Services ❖Pool Cleaning Services ❖Golf Courses www. salestaxtexas. com 5
Efficient Strategies for Sales Tax Savings THE MANUFACTURING EXEMPTION In general, a purchase of otherwise taxable TPP or a taxable service will be nontaxable when purchased by a manufacturer in the process of making a chemical or physical change to property being manufactured for ultimate sale so long as the item purchased is necessary and essential to the manufacturing process. www. salestaxtexas. com 6
Efficient Strategies for Sales Tax Savings THE MANUFACTURING EXEMPTION The manufacturing process is defined to be “Each operation beginning with the first stage in the production of tangible personal property and ending with the completion of tangible personal property. ” www. salestaxtexas. com 7
Efficient Strategies for Sales Tax Savings THE MANUFACTURING EXEMPTION Raw Materials www. salestaxtexas. com 8
Efficient Strategies for Sales Tax Savings THE MANUFACTURING EXEMPTION Manufacturing Equipment www. salestaxtexas. com 9
Efficient Strategies for Sales Tax Savings THE MANUFACTURING EXEMPTION Energy www. salestaxtexas. com 10
Efficient Strategies for Sales Tax Savings THE MANUFACTURING EXEMPTION Packaging Supplies ‣Boxes ‣Tape ‣Strappers ‣Labels ‣Pallets www. salestaxtexas. com 11
Efficient Strategies for Sales Tax Savings THE MANUFACTURING EXEMPTION Industrial Solid Waste Disposal ‣Scrap ‣Must be a result of the manufacturing process ‣Take a percentage www. salestaxtexas. com 12
Efficient Strategies for Sales Tax Savings THE MANUFACTURING EXEMPTION ‣Pollution Control Equipment ‣Quality Control Equipment www. salestaxtexas. com 13
Efficient Strategies for Sales Tax Savings THE MANUFACTURING EXEMPTION ‣Cleanrooms www. salestaxtexas. com 14
Efficient Strategies for Sales Tax Savings THE RESIDENTIAL EXEMPTION Improvements - the labor to improve real residential property is nontaxable (exclusion). If labor charges are separated from materials charges, the labor charges are exempt and the materials charges are taxable. If there is a lump-sum charge for both materials and labor, the entire amount is nontaxable. www. salestaxtexas. com 15
Efficient Strategies for Sales Tax Savings THE RESIDENTIAL EXEMPTION Applies to: ‣Single family homes ‣Apartment complexes ‣Nursing homes Does not apply to: ‣Hospitals ‣Most hotels www. salestaxtexas. com 16
Efficient Strategies for Sales Tax Savings THE RESIDENTIAL EXEMPTION ABC Carpet Cleaning Co. ‣Heavy clean ‣Deodorize ‣Spot treatment ‣Pet stains ‣Mildew treatment www. salestaxtexas. com 17
Efficient Strategies for Sales Tax Savings THE RESIDENTIAL EXEMPTION ABC Carpet Cleaning Co. ‣Water extraction ‣Furniture moving ‣Replace pad ‣Dehumidifier rental ‣Blower charge ‣After-hours service call www. salestaxtexas. com 18
Efficient Strategies for Sales Tax Savings THE RESIDENTIAL EXEMPTION Energy www. salestaxtexas. com 19
Efficient Strategies for Sales Tax Savings THE HOME BUILDER’S EXEMPTION Builders of residential properties are eligible. ‣Single family homes ‣Apartment complexes ‣Nursing homes www. salestaxtexas. com 20
Efficient Strategies for Sales Tax Savings THE HOME BUILDER’S EXEMPTION Applies to real property services. ‣Landscaping ‣Lawn and yard maintenance ‣Janitorial/custodial services ‣Waste disposal services ‣Pest control ‣Surveying www. salestaxtexas. com 21
Efficient Strategies for Sales Tax Savings EXEMPT ENTITIES ‣It is important to keep in mind that the sales tax exemption for exempt entities applies to their purchases, not their sales. ‣There is an exemption available to for-profit entities owned in a partnership by tax-exempt entities. www. salestaxtexas. com 22
Efficient Strategies for Sales Tax Savings NEW CONSTRUCTION EXEMPTION The labor to build newly constructed property is nontaxable (exclusion). If labor charges are separated from materials charges, the labor charges are exempt and the materials charges are taxable. If there is a lump -sum charge for both materials and labor, the entire amount is nontaxable. www. salestaxtexas. com 23
Efficient Strategies for Sales Tax Savings NEW CONSTRUCTION EXEMPTION New construction defined ‣Building new structures ‣Adding new usable square footage to an existing building (expansion) ‣Initial finish out work ‣Rebuilding from the ground up a structure that has been demolished down to the foundation www. salestaxtexas. com 24
Efficient Strategies for Sales Tax Savings OIL AND GAS EXEMPTION ‣Fracturing ‣Perforating ‣Workover ‣Acidizing ‣Logging ‣Plug and abandon ‣Pull back charges ‣Swabbing ‣Jetting www. salestaxtexas. com 25
Efficient Strategies for Sales Tax Savings MAINTENANCE OF REAL PROPERTY ‣Distinguished from repair, remodeling or restoration ‣Must be scheduled and periodic www. salestaxtexas. com 26
Efficient Strategies for Sales Tax Savings GOOD PROSPECTS FOR SAVING FROM HAVING A SALES TAX REFUND REVIEW ‣Manufacturers ‣Apartment Complexes and Nursing Homes (Property Management Companies) ‣Home Builders ‣Construction Companies ‣Oil and Gas Companies www. salestaxtexas. com 27
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