Sales Tax Laws You Didn't Know Existed
Sales tax laws can vary from state to state and product to product. Businesses that operate in several states may face unusual hurdles to sales tax compliance. We've rounded up some of the weirdest sales tax laws out there, as well as tips on how to properly collect and remit sales tax.
- Iowa is the 4th state in the country for ice cream production and ranks 12th in total pounds of milk produced. Milk and milk products, including packaged ice cream, are exempt from sales tax.
- In New Jersey, pumpkins are untaxed unless they are painted, varnished, or altered into decorations.
- In Illinois, candy that contains flour is not considered candy but instead, counts as food and is taxed normally. That means flour-containing sweets like Twix and Twizzlers are not taxed the same way as flourless Snickers bars.
- In Richmond, Virginia, if you order between one and five doughnuts, that's considered a meal and is taxable. If you order six or more doughnuts, it's assumed that you are not eating them as a single serving and the sale is tax exempt.
- In New York State, potato chips, pretzels, and other snack items are generally exempt from sales tax unless they are sugar coated, chocolate-coated, or candy-coated.
- Maine produces 99 percent of wild blueberries in the country, so may not be surprising that Maine's official state berry is the same tasty fruit. The state enforces a blueberry tax for anyone who grows, handles, sells, purchases, or processes wild blueberries.
How can weird tax laws affect your business?
If your business conducts commerce in multiple states it can be challenging to calculate sales and use taxes on product categories, keep up with changing tax rates, and pay state sales tax on time.
Even if you only operate in one location, keeping track of sales tax laws is not something the typical business owner may have time to worry about. However, failure to do so could mean having to pay back taxes and possibly additional fines.
Ensure your business stays compliant when remitting sales tax by considering these tips:
- Prepare accurate tax calculations and maintain systematic record keeping
- Stay current on tax rules and rates
- Set up sales tax collection through your POS
- Review your state requirements and register as a sales tax vendor with the state
- Partner with a trusted company that specializes in sales tax compliance services
Contact Paychex today to learn more about how your business could benefit from sales tax payment service.