Understanding Tax Exemptions and Taxables
How Much is Taxable?
The tax base that sales tax and use tax is levied on is generally defined by states as "sales price" or "purchase price."
The amount is based on the consideration paid by the purchase which includes cash, credit, barter, exchange, etc.
States vary on what else is part of the tax base, such as
Delivery Charges
Discounts
Rebates
-
Trade-ins
Other taxes (e.g. tire fees, used oil fees, excise taxes)
Services necessary to complete the sale - e.g. even though a state may not tax installation services, if the
services are sold as part of tangible personal property and are deemed required as part of the sale then those
services become taxable.
When taxable and nontaxable services are sold together for one non-itemized price - i.e. as a "bundled transaction"-
then the entire sale is generally subject to sales or use tax.
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