I buy merchandise from a reseller company for full price but i sell it at discounted price because they offer me a rebate from the discounted merchandise. I'm i supposed to pay tax on the full price of the merchandise, or should i be tax on the discounted price that i actually sold it for?? please help … Thank you. (I collected tax only on the discounted price )
are vendor's rebates subject to tax ?
Answers
By tax I'll make the assumption of Sales Tax.
There is Sales Tax, Use Tax and Income Tax.
If you buy an item for $10, and regardless if you get it for $9 or $8, if you sell it, you collect Sales Tax from the Customer based of Sales price.
If you buy it, don't pay sales tax (assuming you needed to pay sales tax), and use it internally, then you owe Use Tax (sale % but on of the purchase price).
Ultimately, you'll have to pay Income tax on the Net Income.
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Tax