SALES VS. USE TAX
This tax is imposed on retailers for the privilege of selling tangible personal property in the state.
What is sales tax?
In both states, this generally determines local sales tax for in-store transactions.
What is the seller’s place of business?
This exemption allows a purchaser to buy items without paying tax when they intend to resell them.
What is a resale exemption?
This type of construction contract states a single price that includes materials, labor, and fabrication without separating charges.
What is a lump-sum contract?
In CA, most leases are treated as this type of transaction.
What is a continuing sale and purchase?
This tax applies when taxable property is purchased without tax and brought into the state for storage or consumption.
What is use tax?
In California, this numeric code identifies the jurisdiction used to allocate local sales and district taxes.
What is a tax area code (TAC)?
This document must be properly completed to support a resale exemption.
What is a resale certificate?
Under this contract structure, materials and labor are billed separately, changing how tax is applied.
What is a separated or time & material contract?
This party is usually responsible for collecting tax on lease payments.
What is the lessor?
This concept determines whether a transaction is treated as a sale or a purchase for tax purposes based on seller involvement.
What is place of sale?
Texas uses this event to determine which local taxes apply to a transaction.
What is consummation of the sale?
Exemptions must be supported by this to withstand audit scrutiny.
What is documentation in the books and records?
In both CA and TX, this party is generally considered the consumer of materials used to improve real property.
What is the construction contractor?
What is the lessor’s tax election?
What is use tax exemption and sales tax liability?
In both CA and TX, this sourcing rule assigns tax based on where the buyer receives or first uses the property.
What is destination-based sourcing?
When a transaction cannot be tied to a specific business location, California allocates local tax through this method.
What is countywide or statewide pooling?
In both states, exemptions are strictly construed and must be this.
What is narrowly interpreted?
This location generally determines where local tax is sourced for construction materials incorporated into real property.
What is the job site?
Insurance companies are exempt from this tax but trigger the other.
What is use tax exemption and sales tax liability?
This legal principle ensures that a transaction is taxed once, but not twice, under sales and use tax law.
What is tax complementarity?
This common registration issue occurs when a business is assigned to the wrong taxing jurisdiction.
What is a border error?
Failure to document exemptions may result in this during an audit.
What is a tax assessment with penalties and interest?
This principle explains why invoice formatting alone does not alter the tax treatment of a construction agreement.
What is contract-based tax determination?
This type of lease is not considered a continuing sale.
What is a lease taxed on purchase price?