How can a company that did not charge sales tax figure it out at tax time?

Question

I know a company that never charged sales tax over the year. They did hundreds of sales and even some services. How can they calculate the sales tax (that they now have to pay) from the gross sales (in other words, is there a formula for built-in sales tax?) Without having to go through each and every sale or service job and try to figure it out ...

Answer 1

If sales of parts are taxed and services are not, they have to go through all invoices to figure it out. Of course it they don't care about overpayments they can treat all sales as taxable and just take total sales times the tax rate.

Answer 2

What the company has done is priced their product (or service) tax in, which is perfectly legal for them to do.



So if their revenue was $1,000,000, that includes the tax. So you just have to back the tax out.



Revenue = Sales x (1 + Taxrate)

Sales = Revenue / (1 + Raxrate)

Tax = Revenue - Sales

Answer 3

Probably at that time the simple and easiest way possible gross sales X the sales and use tax rate at that time and JUST pay the amount owed to the local taxing authority as required to do since the amount is NOW past due RIGHT.

1000.00 X 10% = 100.00 sales and use tax owed at that time OK

Hope that you find the above enclosed information useful. 06/17/2013

Answer 4

if the sales tax is included on all their taxable sales take the total amount of the sales and divide by 1.xx % of the sales tax rate, this gives you the taxable sales and the difference from the gross and this amount is the amount or your sales tax

Answer 5

If tax was never added to the sales you would multiply sales x tax rate in your state. For example, if yearly sales were $50,000. X 6% = $3,000. Tax due.

Answer 6

They would owe the tax on top of the sales. Sales x sales tax. Built in sales tax. If the rates were inclusive of tax then it is sales(1-tax rate). Simple algebra.



Probably must be paid to taxing authority quarterly.