SERVICE BUSINESSES
Additional Things to Know:
Does Your Business Need to Collect Sales Tax?
Service oriented businesses generally do not need to collect sales tax. Persons engaged in the business of rendering service are consumers, not retailers, of the tangible personal property which they use incidentally in rendering the service.

 

When To Collect Sales Tax:

If, in addition to rendering service they regularly sell tangible personal property to consumers, they are retailers with respect to such sales and they must obtain a license, file returns, and remit tax on such sales.

 

Example:
I am an interior designer and often purchase items on behalf of my customer. I then resell those items to the customer at cost. Do I need to charge sales tax?

 

Yes.
Sales tax must be collected on all tangible personal property sold to your customers since the true object of the test is the furnishing of the property. You must obtain a sales tax license from both the State and City of Aspen and remit tax accordingly. Note: When you purchase the items for resale, you must present your resale certificate (issued by your home state) to the retailer in order for the transaction to be exempt from sales tax.

 

When In Doubt:

When in doubt, collect the tax. If the vendor and purchaser disagree on the application of tax, the vendor must collect the tax. The vendor should give a receipt to the purchaser showing how much tax was collected. Advise the purchaser to contact the City for a Claim of Refund form. The vendor is ultimately responsible for the collection of sales taxes.