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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10169
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I will be selling equipment to our parent company in

Customer Question

I will be selling equipment to our parent company in Germany. They in turn will be selling the equipment to another German company. We will ship the equipment to the American subsidiary of the German company. Do we have to charge sales tax?
JA: The Accountant will know how to help. Is there anything else important you think the Accountant should know?
Customer: no
Submitted: 2 months ago.
Category: Tax
Expert:  Lane replied 2 months ago.

Hi ...

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Is this equipment that you sell as your business. (Is this equipment a product line for you)?

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Describe what your business does.

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And tell me your state

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(and we can go from there)

Customer: replied 2 months ago.
This is product we manufacture.
We manufacture power distribution equipment used in mining and industrial applications.
The product will be made in West Virginia.
Expert:  Lane replied 2 months ago.

Excellent ... states' sales tax laws differ greatly ... and TYPICALLY when there is no nexus (your delivering AND having a physical presence in the state) there is no sales tax liability

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However some states have a use tax or other tax that apllies when sales tax is not paid in another way.

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bear with me a moment while I look a WV code

Expert:  Lane replied 2 months ago.

In West Virginia, the law starts with the assumption that all sales are taxable unless specifically exempted.

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Then, there are three TYPES of exemptions; Per se exemptions, (no exemption certificate needed), exemptions for which exemption certificates are required, and refundable exemptions.

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Under the second category, there appears to be an exemption that would apply here:

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"Controlled Groups--purchases of services by one corporation, limited liability company or partnership from another corporation, limited liability company or partnership when both entities are members of the same controlled group"

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This type of exemption must be claimed by using a current tax exemption certificate. If a vendor fails to obtain a properly completed exemption certificate from the purchaser or if the purchaser refuses to provide a certificate, the vendor must collect the tax and purchaser must pay the tax.

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(W. Va. Code §11-15)

Expert:  Lane replied 2 months ago.

Finally, you'll see the definition of controlled groups here: https://www.law.cornell.edu/cfr/text/26/1.1563-1

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Please let me know if you have any questions at all here.

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And if you DON'T have other questions Your positive rating … (by using those the stars or faces on your screen, and then clicking “submit”) …would be appreciated!

Otherwise I receive no compensation for the work.

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Thank you,

Lane

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I hold a law degree, with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in financial accounting & tax, a BBA, and CFP & CRPS designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, since 1986.

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