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Sales Tax

  • 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

    EXAMPLE:

    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

Last Modified on September 25, 2018