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RD
RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8784
Experience:  CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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Do I need to collect sales tax on consulting services if I

Customer Question

Do I need to collect sales tax on consulting services if I am based in Texas? What about if my client is based in Ohio?
Submitted: 7 years ago.
Category: Tax
Expert:  RD replied 7 years ago.

Texas requires most service businesses to collect and remit sales tax.

Below is the link for some detailed information-

 

http://www.window.state.tx.us/taxinfo/taxpubs/tx96_259.html

 

I would suggest that you call the comptrollers office at 1-800-252-5555 and inquire about whether your specific service is required to collect and remit such taxes.

 

If the client is based in Ohio and the services are performed in Ohio than this would be an out of State service income and hence will not be subject to sales tax in TX.

Link to out of state sale-

http://www.window.state.tx.us/taxinfo/sales/faq_exempt.html#shipped1

 

 

Ohio does not charged sales tax on consulting services.

Link to Ohio sales tax on this service-

 

http://tax.ohio.gov/faqs/Sales/sales.stm#11

 

 

 

Let me know if you have any question.

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

 

RD and 3 other Tax Specialists are ready to help you
Customer: replied 7 years ago.
Actually I got this same answer from 3 times from just ask.tax but unfortuantely, while all 3 of you said most likely "yes, I need to pay tax on consulting income"; I spoke with my accountant and he said "no". There are few service businesses in Texas where by you need to collect sales tax; such as lawn care. So had I followed this advice, unfortunately I would be wrong. Please check this more clearly and don't just reference the tax website general information; that i can get for free.
Expert:  RD replied 7 years ago.

Please note that I provided you a link to determine if your services were within the type listed as taxable services on the State website.

 

Since the detailed nature of your services was not provided, it was not possible to say if the service was taxable or not as an YES or NO.....

 

 

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