Sales tax US

Foreign Trade University

September, 2014
Groups members
L Th Ngc Mai 1113340148
Ngc Thanh 1113340202
Nguyn Th Phng Tho 1111340197
Nguyn Th Anh Th 1117340101
Outline
Overview of Sales tax in US
Types of Sales tax
Tax payer
Tax exclusions and exemptions
Tax base
Tax calculation
Tax rate
Comparison between Sales tax (US) & VAT (VN)
Tax example

Overview of Sales tax in US
DEFINITION
Sales taxes in the United States are
taxes placed on the sale or lease of
goods and services in the US.
Sales tax is paid by the purchaser
at the time of sale and collected
and remitted by the seller/retailer.
Overview of Sales tax in US
Sales taxes are imposed by individual U.S. states, not by the federal
government.

Local governments (cities, towns, and counties) in the U.S. may
impose additional sales taxes.

The same merchandise may have a different tax and thus different
total cost in one city over another.
As some cities and towns are in different counties, it is also possible
that the local tax rate may differ in different parts of the same city or
town.
Overview of Sales tax
in US
Therere five states that do not have a statewide sales tax:
Alaska, Delaware, Montana, New Hampshire, and Oregon.
Alaska and Montana, however, do allow localities to charge local sales taxes.

Unlike value added tax, sales tax is imposed only once, at the retail level, on
any particular goods.

A large portion of a state's sales tax revenue goes towards education, the
running of the state government, and public welfare. Because of this, many
states consider sales tax to be the most important tax they impose
Types of Sales tax
States differ in whether the tax is imposed upon the seller, the
purchaser or on the transaction itself.

There are the three general types of sales taxes; each type will require
different entity to be obliged to pay the tax:
Seller (vendor)
privilege
taxes
Consumer
excise (sales)
taxes
Retail
transaction
taxes
Tax payer
Seller (vendor) privilege taxes.

These taxes are imposed on retailers for the privilege of making
retail sales in the state. Retailers usually have the option of
absorbing the tax (that is, paying the tax out of their own pockets)
or passing it along to their purchasers.

Consumer excise (sales) taxes.

A consumer sales tax is imposed on the person who makes
retail purchases in the state. Sellers don't have the option of
absorbing the tax.

Tax payer

Retail transaction taxes.

These taxes are imposed on the retail sale transaction itself, with
the primary liability for paying the tax falling upon both the sellers
and the purchasers.
Sellers are responsible for collecting and paying the tax, and
purchasers are responsible for paying the tax that the sellers must
collect and pay
Tax payer
States imposing sales tax require retail sellers to register with
the state, collect tax from customers, file returns, and remit the
tax to the state.

Procedural rules vary widely. Sellers generally must collect tax
from in-state purchasers unless the purchaser provides an
exemption certificate. Most states allow or require electronic
remittance of tax to the state.

States are prohibited from requiring out of state sellers to collect
tax unless the seller has some minimal connection with the
state.
Tax exclusions and exemptions
Nearly all jurisdictions provide numerous categories of goods
and services that are exempt from sales tax, or taxed at a
reduced rate.

Purchase of goods for further manufacture or for resale
Most jurisdictions exempt food sold in grocery stores,
prescription medications, and many agricultural supplies.
Generally cash discounts, including coupons, are not included
in the price used in computing tax.


Tax exclusions and exemptions
To help those groups that are adversely affected by a regressive
sales tax, exclusions are often used by the states that levy a
sales tax. Exclusions in sales tax often include food, clothing,
medicine, newspapers, and utilities.
For example, since food is a necessity, some states do not tax
food.

Charitable, religious, and educational groups are often excused
from paying sales tax under certain circumstances.
Tax base
The sales tax is measured by the gross sales price of
the tangible personal property or services.

Sales price is generally defined as the total amount of
consideration, including cash, credit, property and
services, for which personal property or services are
sold, leased, or rented.

As a practical matter, the consideration does not
necessarily have to be in the form of cash or other
property.
Tax base
For example:
An assumption of liabilities in conjunction with the transfer of assets
in a corporate transaction commonly represents taxable consideration
in California. Finance, interest, or carrying charges may be excluded
from the tax base.

Likewise, most states exclude transportation charges.

However, some states require charges such as finance and
transportation charges to be separately stated to be excluded from
the tax base. Other commonly allowed deductions include trade-ins,
discounts, coupons, rebates, and returns and allowances.
Tax calculation
Sales tax = Purchase price * Appropriate tax
rate

If there is a "sales tax" on purchased items, it is not marked as
such on the label or menu. The tax normally will be added to the
price at the cash register or added on the bill.
Alcohol, medicines, jewelry, cigarettes, restaurant meals, clothing,
electronics, services, and many other things except gasoline can
have a tax tacked on to it at the end.

For example :
A bottle of wine will retail for $50. The local tax on alcohol is 20%.
20% of $50 is $10. This means that $10 will be added to the
price of the bottle of wine, $50, to cover the tax and the
total sum that must be paid is actually $60.

Tax calculation

Sales taxes are applied to items purchased and not to separately-
listed charges for labor or services.

For example, a repair bill might list the price of parts used, with a
sales tax applied to their purchase, but if the cost of the
installation labor used is listed separately, the sales tax is not
applied to that portion of the bill. No sales tax is imposed on any
gratuity or "tip" that you may choose to add to your bill, because it
is considered a payment for labor or services.
Tax calculation
All states that apply a sales tax have an established rate. This
established rate can pose problems. All people, no matter how much
money they earn, pay the same percentage of tax. Such a tax is
called a regressive tax because the people with smaller incomes pay
a larger percentage of their money into the sales tax system than
people with higher incomes.

However, since all people use state services, such as state highways,
state public schools, and state medical institutions, all should pay a
tax for using these services.
State and Local Sales Tax Rates as of
January 1, 2014
State
State Tax
Rate
Rank
Avg.
Local Tax
Rate (a)
Combined
Tax Rate
Rank Max Local
Alabama 4.00% 38 4.51% 8.51% 6 7.00%
Alaska None 46 1.69% 1.69% 46 7.50%
Arizona 5.60% 28 2.57% 8.17% 9 7.125%
Arkansas 6.50% 9 2.69% 9.19% 2 5.50%
California (b) 7.50% 1 0.91% 8.41% 8 2.50%
Colorado 2.90% 45 4.49% 7.39% 15 7.10%
Connecticut 6.35% 11 None 6.35% 31
Delaware None 46 None None 47
Florida 6.00% 16 0.62% 6.62% 29 1.50%
Georgia 4.00% 38 2.97% 6.97% 23 4.00%
Hawaii (c) 4.00% 38 0.35% 4.35% 45 0.50%
Idaho 6.00% 16 0.03% 6.03% 36 2.50%
State
State Tax
Rate
Rank
Avg.
Local Tax
Rate (a)
Combined
Tax Rate
Rank Max Local
Illinois 6.25% 12 1.91% 8.16% 10 3.75%
Indiana 7.00% 2 None 7.00% 21
Iowa 6.00% 16 0.78% 6.78% 27 1.00%
Kansas 6.15% 15 2.00% 8.15% 12 3.50%
Kentucky 6.00% 16 None 6.00% 37
Louisiana 4.00% 38 4.89% 8.89% 3 7.00%
Maine 5.50% 29 None 5.50% 42
Maryland 6.00% 16 None 6.00% 37
Massachusetts 6.25% 12 None 6.25% 33
Michigan 6.00% 16 None 6.00% 37
Minnesota 6.875% 7 0.31% 7.19% 18 1.00%
Mississippi 7.00% 2 0.004% 7.00% 20 0.25%
Missouri 4.225% 37 3.36% 7.58% 14 5.45%
Montana (d) None 46 None None 47
State
State Tax
Rate
Rank
Avg.
Local Tax
Rate (a)
Combined
Tax Rate
Rank Max Local
Nebraska 5.50% 29 1.29% 6.79% 26 2.00%
Nevada 6.85% 8 1.08% 7.93% 13 1.25%
New Hampshire None 46 None None 47
New Jersey (e) 7.00% 2 -0.03% 6.97% 24
New Mexico (c) 5.125% 32 2.14% 7.26% 16 3.5625%
New York 4.00% 38 4.47% 8.47% 7 4.875%
North Carolina 4.75% 35 2.15% 6.90% 25 2.75%
North Dakota 5.00% 33 1.55% 6.55% 30 3.00%
Ohio 5.75% 27 1.36% 7.11% 19 2.25%
Oklahoma 4.50% 36 4.22% 8.72% 5 6.50%
Oregon None 46 None None 47
Pennsylvania 6.00% 16 0.34% 6.34% 32 2.00%
Rhode Island 7.00% 2 None 7.00% 21
South Carolina 6.00% 16 1.19% 7.19% 17 3.00%
South Dakota (c) 4.00% 38 1.83% 5.83% 40 2.00%
Tennessee 7.00% 2 2.45% 9.45% 1 2.75%
Texas 6.25% 12 1.90% 8.15% 11 2.00%
State
State Tax
Rate
Rank
Avg.
Local Tax
Rate (a)
Combined
Tax Rate
Rank Max Local
Utah (b) 5.95% 26 0.73% 6.68% 28 2.00%
Vermont 6.00% 16 0.14% 6.14% 34 1.00%
Virginia (b) 5.30% 31 0.33% 5.63% 41 0.70%
Washington 6.50% 9 2.38% 8.88% 4 3.10%
West Virginia 6.00% 16 0.07% 6.07% 35 1.00%
Wisconsin 5.00% 33 0.43% 5.43% 44 1.50%
Wyoming 4.00% 38 1.49% 5.49% 43 2.00%
D.C. 5.75% (27) None 5.75% (41)
Comparison between Sales tax (US)
& VAT (VN)
Similarity

Both are consumption tax
Both are imposed on transfers of property and
on rendition of services
Ultimately charged in full to the final purchaser
(the end consumer bears the tax)


Comparison between Sales tax (US)
& VAT (VN)
Sales tax VAT
Transfers of tangible personal property

Imposed on transfers of goods in
general(applies to virtually all kinds of
property.)

Collected on retail sales at the time of
the sale to the final consumer, and
only the final sale in the supply chain
is subject to tax.
Imposed on each stage of the supply
chain
Difference
Tax example
A shirt costs $20. Subtract all coupons and discounts. Assuming you
buy it in each state as follows:
States State sales tax rate Average Local sales tax rate

Alaska 0%

1.69%
California 7.5%

8.41%
Delaware 0%

0%
Tax example
If its bought in Alaska:
The amount of state sales tax you must pay is:
$20 * 0% = $0
Average local sales tax you must pay in case you buy it in the area that
impose additional local rate is:
$20 * 1.69% = $0.338
As a result, the total amount is
$20 + $0 + $0.338 = $20.338
This amount may fluctuate with regard to the local place you buy the
shirt in Alaska State.

Its the same to two remaining states:
In California, you possibly pay around:
$20 + $20 * 7.5% + $20 * 8.41% = $23,182

In Delaware, they dont impose state sales tax as well as
local sales tax. Thats why you only need to pay $20
without any additional amount.