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Angie, Tax Preparer
Category: Finance
Satisfied Customers: 226
Experience:  Bookkeeping, Profit and Loss, Balance SheetsAll types of US Taxes, Tennessee taxes, Personal, business, payroll, sales tax etc.
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I have a C corp in Texas. My company does Ecommerce

Customer Question

I have a C corp in Texas. My company does Ecommerce (Ebay/Amazon etc). We already have a Texas Sales & Use Tax Permit. Many places I got to buy my inventory, does not charge sales tax. But some small retail outlets refuses to accept it and charges taxes.
How do I go about asking for a refund from the Texas State. Do I claim sales refund monthly, or Annually? Also when I report my Quaterly sales tax, can I deduct the amount during that time. I am a novice, please guide.
Submitted: 1 year ago.
Category: Finance
Expert:  Angie replied 1 year ago.

The state of Texas will not owe you a refund. You cannot deduct the amount of sales tax you paid to a retailer from the sales tax you pay on your quarterly return.

You will simply need to add whatever amount that you paid to the retailers who will not accept your resale certificate into the cost of the product you are selling.

When you sell a product on Amazon or Ebay and it is shipped out of state, you do not collect sales tax. You will only collect sales tax on sales where the customer is inside of Texas.

Many people misunderstand sales tax...thinking they are being billed.... sales tax is actually an amount you are collecting from a customer and then sending to the state. For example:

You sell an item to me in tennesee for $10.00, I pay you $10.00....when you file your sales tax return you report the 10.00 as income but it a nontaxable income so there is no tax due on this sale.

However if you sell that same item to someone in Texas.... you bill the client $10.00 plus the sales tax rate (i'm going to use 10% just for illustration) so you collect 11.00 from the client. You are essentially holding on to that $1.00 until you file your sales tax return then forwarding it to the state. So on that sales tax return (using both sales) you will report 20.00 in income, 10.00 of that is nontaxable because it was received by me in tennessee...and the other $10.00 is taxable but you collected that $1.00 from your customer, so you will send in $1.00.

Whether or not you pay sales tax on the item doesn't affect the sales tax return...essentially this item is being double taxed, but, if the retailer refuses to accept your exemption certficate, you simply must increase the selling price of your item to cover the amount you paid for it.

Hope this helps

Customer: replied 1 year ago.
Thanks, ***** ***** a detail answer. I just google up and I see on the texas state website it says I can claim refund for 4 years? you pls confirm?
Expert:  Angie replied 1 year ago.

That is true...but you can only claim a refund for taxes you paid into the state in which you did not owe. (If you paid taxes on products that were sold and shipped out of state)