We need some opinions from you folks regarding the State of California attempting to charge Sales Tax on the rental of and regeneration charges for Portable Exchange DI service. We believe they should not be charging sales tax on that "service". What are your opinions?
Explaining soft water service and deionized water service to tax auditors is difficult at best. It would be useful to get as many opinions as possible on this issue to help educate them. All opinions posted will be saved and made available to anyone who may need them in the future.
As I understand it , PE tanks are a service. The taxes have already been paid on the intitial purchases of the goods to maufacture. Since ownership is not given to the end user, it would then be a service and not a tangible good. If at anytime the end user buys the goods, used or not then taxes would be payable.
If taxes were charged for PE service it would make sense that also a deduction could be declared for the taxes paid on a repetitive basis on a single item purchase.
If the STate of California wanted to assess a user fee or fee for regeneration plant services, it may be able to go that route potentially.
Sales tax is routinely charged on all kinds of things that are not "hard goods", including services, labor and rental in states that charge tax. This is nothing new or unusal.
To buy and resell Activated Carbon and Ion Exchange Resins in CA you need to have a reseller's permit otherwise the sales tax is 8.25%. The sales tax in CA varies from county to county. Contact your supplier to get the sales tax % or apply for a resellers permit. They will ask for your tax returns.
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