For fund-raisers in which sales tax must be collected, the
Booster Club can sell items at a certain price plus sales
tax or sales tax may be included in the price. Including sales
tax in the price and having the price an even amount such
as $10.00 or $10.50 is an easy method to use; however, you
need to be careful to avoid paying sales tax on sales tax.
If sales tax is included in the price of the items:
If your sales price included sales tax, you need to do the
following calculation to determine your correct amount of
sales and sales tax:
TOTAL FUNDS RECEIVED DIVIDED BY (1.0 + TAX RATE) = SALES
AMOUNT EXCLUDING TAX
If total receipts are $1,000 including tax and the tax
rate is 8 ¼ % or .0825.
$1,000 : 1.0825 = $923.79 Taxable Sales
$923.79 x .0825 = $76.21 Sales Tax
Your customer must be informed that sales tax is included
in the sales price. A posted sign or a statement on a receipt
indicating that tax is included may be used.
If sales tax is charged in addition to the price of the items:
If sales tax is not included in the sales price, then taxable
sales equals the no. of items sold multiplied by the sales
price. For example, if you sold 100 T-shirts for $10 each,
the taxable sales is $1,000.
100 T-shirts sold X $10 = $1,000 Taxable Sales
Sales tax would then be calculated as Sales price multiplied
by the tax rate. If you sold 100 T-shirts for $10 each, you
would collect at least $82.50 in tax. There may be a little
difference due to rounding.
$1,000 X .0825 = $82.50 Sales Tax