In Ga Do You Pay Sales Tax on a Car Given by a Family Member

Tax paid to a governing body for the sales of sure appurtenances and services

A sales tax is a taxation paid to a governing body for the sales of certain appurtenances and services. Usually laws permit the seller to collect funds for the tax from the consumer at the point of buy. When a tax on appurtenances or services is paid to a governing body straight past a consumer, it is usually called a utilize revenue enhancement. Ofttimes laws provide for the exemption of certain goods or services from sales and apply tax, such every bit food, didactics, and medicines. A value-added revenue enhancement (VAT) nerveless on goods and services is related to a sales tax. See Comparison with sales revenue enhancement for key differences.

Types [edit]

Greenbacks register receipt showing sales tax of 8.5%

Conventional or retail sales tax is levied on the sale of a good to its terminal finish-user and is charged every time that detail is sold retail. Sales to businesses that later resell the goods are not charged the taxation. A purchaser who is not an end-user is usually issued a "resale document" past the taxing authority and required to provide the certificate (or its ID number) to a seller at the signal of purchase, along with a statement that the item is for resale. The tax is otherwise charged on each item sold to purchasers without such a certificate and who are under the jurisdiction of the taxing say-so.^{[1] [2]}

Other types of sales taxes, or similar taxes:

• Manufacturers' sales tax, a tax on sales of tangible personal property by manufacturers and producers
• Wholesale sales revenue enhancement, a taxation on sales of wholesale of tangible personal property when in a form packaged and labeled gear up for shipment or delivery to final users and consumers
• Retail sales tax, a tax on sales of retail of tangible personal property to final consumers and industrial users^[three]
• Gross receipts taxes, levied on all sales of a business. They take been criticized for their "cascading" or "pyramiding" effect, in which an item is taxed more than once equally it makes its way from production to last retail sale.^[4]
• Excise taxes, applied to a narrow range of products, such as gasoline or booze, normally imposed on the producer or wholesaler rather than on the retail seller.^[5]
• Utilize revenue enhancement, imposed straight on the consumer of goods purchased without sales tax, generally items purchased from a vendor not under the jurisdiction of the taxing authority (such as a vendor in some other state). Utilize taxes are usually imposed by states with a sales tax but are usually enforced only for large items such as automobiles and boats.^[6]
• Securities turnover excise taxation, a revenue enhancement on the trade of securities.^[7]
• Value added tax (VAT), in which tax is charged on all sales, thus avoiding the need for a organisation of resale certificates. Tax cascading is avoided past applying the tax just to the difference ("value added") between the price paid by the first purchaser and the price paid by each subsequent purchaser of the same detail.^[8]
• FairTax, a proposed federal sales tax, intended to replace the U.s.a. federal income tax.^[9]
• Turnover revenue enhancement, like to a sales tax, but applied to intermediate and possibly capital goods as an indirect revenue enhancement.^[ten]

Virtually countries in the world have sales taxes or value-added taxes at all or several of the national, land, county, or city government levels.^[11] Countries in Western Europe, especially in Scandinavia, accept some of the earth's highest valued-added taxes. Norway, Denmark and Sweden have higher VATs at 25%, Republic of hungary has the highest at 27%^{[12] [13]} although reduced rates are used in some cases, as for groceries, art, books and newspapers.^[14]

In some jurisdictions of the United States, there are multiple levels of government which each impose a sales tax. For instance, sales tax in Chicago (Cook County), IL is 10.25%, consisting of 6.25% state, one.25% metropolis, 1.75% county and 1% regional transportation authority. Chicago as well has the Metropolitan Pier and Exposition Say-so tax on food and drink of 1% (which means eating out is taxed at eleven.25%).^[15]

For Baton Rouge, Louisiana, the tax is 9.45%, which is iv.45% state & 5% local.^[16] In Los Angeles it is 9.5%, which is 7.25% country & 2.25% county.

In California, sales taxes are made upwardly of various land, canton and city taxes. The state tax is "imposed upon all retailers" for the "privilege of selling tangible personal property at retail".^[17] Strictly speaking, only the retailer is responsible for the payment of the tax; when a retailer adds this revenue enhancement to the purchase toll, the consumer is merely reimbursing the retailer by contractual agreement. When consumers buy appurtenances from out-of-state (in which instance the seller owes no tax to California) the consumer is required to pay a "utilise revenue enhancement" identical to the sales tax. Use tax is levied upon the "storage, use, or other consumption in this state of tangible personal belongings".^[18] Consumers are responsible for declaring these purchases in the same filing as their annual state income revenue enhancement, but it is rare for them to exercise so. An exception is out-of-land buy of automobiles. Then, utilize tax is collected past the country every bit part of registering the vehicle in California.

The trend has been for conventional sales taxes to be replaced by more than broadly based value-added taxes. Value-added taxes provide an estimated 20% of worldwide tax revenue and take been adopted by more than 140 countries. The United States is now one of the few countries to retain conventional sales taxes.^[xix]

Electronic Commerce [edit]

Sales tax on online purchasers operates in a different manner. Generally, there are four types of electronic commerce: intermediaries, retail, business to business and media, all of which are affected by consumer response to sales tax. Nonetheless, while consumers are technically supposed to pay a sales taxation when it comes to cantankerous state border transactions, the practicality of enforcing it is impossible. As a result, online retail stores have had a distinct advantage in that they practise not have to charge a sales tax. This has led many economists to examine consumer sensitivity when it comes to sales taxes. While some researchers have concluded a high elasticity of online buy probability with respect to sales tax, around 2.3, while others have found smaller figures of around 0.5 significant enforcing an online sales tax would accept negligible effects on aggregate sales.

Effects [edit]

Economists at the Organisation for Economic Co-operation and Development studied the effects of various types of taxes on the economical growth of developed nations within the OECD and found that sales taxes are one of the to the lowest degree harmful taxes for growth.^[twenty]

Considering the charge per unit of a sales tax does non modify based on a person's income or wealth, sales taxes are by and large considered regressive. Nevertheless, it has been suggested that any regressive effect of a sales tax could exist mitigated, east.yard., past excluding rent, or past exempting "necessary" items, such equally food, clothing and medicines.^[21] Investopedia defines a regressive tax as "[a] taxation that takes a larger percent from low-income people than from high-income people. A regressive taxation is mostly a revenue enhancement that is applied uniformly. This ways that it hits lower-income individuals harder".

Effects on local economies [edit]

Higher sales taxes have been shown to accept many different effects on local economies. With higher taxes, more consumers are starting to reconsider where they shop,^[22] according to a study conducted in Minnesota and Wisconsin,^[23] where the sales tax was raised on cigarettes. Furnishings of higher sales tax were not shown immediately in sales, but about vi months after the taxes were raised.^[23] High sales taxes tin can be used to salve property taxes just only when holding taxes are lowered later on.^[24] Studies that have shown this correlation were conducted in Georgia by cities raising sales tax and lowering property taxes. To combat sales loss, a city must be able to import consumers to buy appurtenances locally.^[23] If local sales taxes are too high, consumers will travel to other areas to purchase goods.

Enforcement of tax on remote sales [edit]

In the United States, every state with a sales tax constabulary has a use taxation component in that police force applying to purchases from out-of-country mail service gild, catalog and east-commerce vendors, a category besides known every bit "remote sales".^[25] Equally due east-commerce sales have grown in recent years, noncompliance with employ tax has had a growing bear upon on state revenues. The Congressional Budget Part estimated that uncollected apply taxes on remote sales in 2003 could be every bit high every bit $20.four billion. Uncollected use revenue enhancement on remote sales was projected to run equally high every bit $54.8 billion for 2011.^[26]

Enforcement of the tax on remote sales, however, is difficult. Unless the vendor has a physical location, or nexus, within a country, the vendor cannot be required to collect tax for that state.^[25] This limitation was defined equally part of the Dormant Commerce Clause by the Supreme Court in the 1967 decision on National Bellas Hess five. Illinois. An attempt to crave a Delaware e-commerce vendor to collect North Dakota tax was overturned by the courtroom in the 1992 decision on Quill Corp. v. North Dakota.^[26] A number of observers and commentators have argued, then far unsuccessfully, for a Congressional adoption of this physical presence nexus test.^[27]

The Internet Tax Freedom Act of 1998 established a commission to study the possibility of internet taxation, but the committee did not brand any formal recommendations. In a report issued in 2003, the Congressional Budget Part warned of the economical burden of a "multiplicity of tax systems, particularly for smaller firms".^[26]

In an effort to reduce the burden of compliance with the tax laws of multiple jurisdictions, the Streamlined Sales Revenue enhancement Project was organized in March 2000. Cooperative efforts in this project by 44 country governments and the Commune of Columbia eventually produced the Streamlined Sales and Use Tax Agreement in 2010.^[28] This agreement establishes standards necessary for simplified and uniform sales tax laws. As of December 2010, 24 states had passed legislation conforming with the agreement. Whether the Streamlined Sales Tax tin really exist applied to remote sales ultimately depends upon Congressional back up, considering the 1992 Quill v. North Dakota decision determined that only the U.S. Congress has the potency to enact interstate taxes.^[29]

Effect of electronic commerce [edit]

Electronic commerce business can also exist afflicted by consumption taxes.^[30] It tin be separated into iv categories: retail. intermediaries, business organization-to-business and media (Goldfarb 2008). These categories were afflicted varying degrees. The intermediaries was affected past the retail sales tax since it provide platforms for transitions between different parties (such as the Amazon market). Concern-to-Business concern transactions volition be placed in different circumstances by whether the case will be taxed in the U.s.a.. Electronic commerce goods are commonly not taxed the same especially across the stats in the US. Different states has their own sales tax regulation, for example, some states use their standard sales taxes police for the digital goods, and some of u.s. have specific laws for them. Information technology is difficult to enforce the taxes on electronic commerce especially for digital goods that trade across different countries.

The event that a sales tax has on consumer and producer behavior is rather big. The price elasticity of demand for online products is high, meaning that consumers are toll sensitive and their demand will significantly change with small-scale changes in price. This means that the tax brunt lies primarily with the producer. To avoid altering demand, the producer will either avoid the tax if possible by relocating their fulfillment centers to areas without a high sales tax or they volition internalize the cost of the sales revenue enhancement by charging consumers the same cost but paying for the tax from their profits.^[31]

History [edit]

Early examples [edit]

A tax imposed on the auction of appurtenances is depicted on the walls of ancient Egyptian tombs, which take been dated as far back every bit 2000 BC. These paintings describe the collection of tax for specific commodities, such as cooking oil.^[32]

Sales tax amounts, measured in drachmas at a rate of 1 percentage, were recorded in a carve up column of a record prepared for the sale of xvi slaves in Piraeus, Greece in 415 BC.^[33] Nearby Athens collected duties on the import and consign of commodities, recorded at a rate of ii percent in 399 BC. At that flow of time, Athens did non rely on regime agencies to collect its taxes; the responsibility was delegated to the highest applicant, a practice known as tax farming.^[34]

The Roman emperor Augustus collected funds for his military aerarium in AD 6 with a one percent full general sales tax, known as the centesima rerum venalium (hundredth of the value of everything sold).^[35] The Roman sales tax was later reduced to a one-half percent (ducentesima) by Tiberius, then abolished completely by Caligula.^[36]

In the United states of america [edit]

Although the United States regime has never used a general sales revenue enhancement, an excise taxation on whiskey enacted in 1791 was one of its first fund raising efforts. The unpopularity of this tax with farmers on the western frontier led to the Whiskey Rebellion in 1794.

Federal and country sales taxes in the United states remained selective, rather than full general, through the 19th century. However, excise taxes were applied to so many specific bolt during the Civil War that they functioned collectively as a full general sales tax.^[32]

The get-go broad-based, general sales taxes in the United States were enacted by Kentucky and Mississippi in 1930, although Kentucky repealed its sales taxation in 1936.

The federal authorities's per-gallon tax of gasoline (beginning at .01 cent per gallon in 1932) and per-package taxation of cigarettes ($1.01 per package since 2009) are the well-nigh well-known electric current sales taxes administered by the federal government.

Twenty-two other states began imposing general sales taxes subsequently in the 1930s, followed past 6 in the 1940s and five in the 1950s. Kentucky re-enacted its sales taxation law in 1960. Eleven more states enacted sales tax laws during the 1960s, with Vermont as the last in 1969. Only v states currently do not accept general sales taxes: Alaska, Delaware, Montana, New Hampshire, and Oregon.^[32]

The 2010 wellness care reform law imposed a 10 pct federal sales tax on indoor tanning services, effective July 1, 2010. Dissimilar previous federal excise taxes, this tax is collected directly from the consumer by the seller and based on the sale cost rather than a quantity. However, the new taxation is selective rather than general, applying only to a specific service.^{[37] [38]}

In Canada

Canada uses a value-added federal Appurtenances and Services Tax with a rate of five percentage, effective since January 1, 2008.^{[ citation needed ]} Every province in Canada except Alberta has either a Provincial Sales Tax (PST) or the Harmonized Sales Tax (HST), which is a unmarried, blended combination of the GST and PST.^{[ citation needed ]}

Sales taxation mitigation [edit]

Businesses can reduce the impact of sales tax for themselves and their customers by planning for the revenue enhancement consequences of all activities. Sales tax reduction or mitigation strategies tin include the following:

• Designing invoices to reduce the taxable portion of a auction transaction. In Maryland, for example, a commitment accuse is exempt if it is stated separately from handling and other taxable charges.^[39]
• New facilities. Jurisdictions with no sales revenue enhancement or broad exemptions for certain types of business concern operations would be an obvious consideration in selecting a site for a new manufacturing plant, warehouse, or authoritative office.^[40]
• Delivery location. For a businesses operating in several jurisdictions, choosing the best location in which to take commitment tin can reduce or eliminate the sales taxation liability. That is particularly important for an detail to be sold or used in another jurisdiction with a lower taxation rate or an exemption for that detail. Businesses should consider whether a temporary storage exemption applies to merchandise initially accepted in a jurisdiction with a college tax rate.
• Periodic review of record-keeping procedures related to sales and utilise taxation. Proper supporting detail, including exemption and resale certificates, invoices and other records must be available to defend the company in the event of a sales and use tax audit. Without proper documentation, a seller may be held liable for revenue enhancement not nerveless from a buyer.^[1]

In the Us, online retailers without concrete presence in a given state may ship appurtenances to customers at that place without collecting that land'southward sales taxation because as of 2011, in that location is no federal sales revenue enhancement. Amazon.com has been criticized for non collecting sales tax and has intentionally disaffiliated itself from businesses in certain states to continue doing so legally.

See also [edit]

• Consumption tax
• Excise revenue enhancement
• Goods and Services Tax (Australia)
• Sales Tax Audit
• Sales and use taxes in California
• Sales taxes in Canada
• Sales taxes in the United States
• Streamlined Sales Tax Projection
• Value-added revenue enhancement

References [edit]

1. ^ ^{a b} Purchases for Resale Archived 2011-07-14 at the Wayback Motorcar Maryland State Comptroller'due south website. Retrieved 2010-05-xix
2. ^ "Business organization taxation tip #four: If Y'all Make Purchases for Resale" (PDF). Maryland Comptroller of the Treasury. Archived from the original (PDF) on Nov 22, 2011. Retrieved April 14, 2011.
3. ^ Manufacturers," wholesale and retail sale taxes
4. ^ Chamberlain, Andrew; Fleenor, Patrick (2006-12-01). "Tax Pyramiding: The Economical Consequences of Gross Receipts Taxes". Taxation Foundation. Retrieved 2007-02-21 .
5. ^ "Excise essentials". Australian Revenue enhancement Role. Archived from the original on May 19, 2011. Retrieved April 14, 2011.
6. ^ Nina Manzi (June 2010). "Use Tax Drove on Income Tax Returns in Other States" (PDF). Policy Brief. Minnesota Firm of Representatives Enquiry Department. p. 4. Retrieved April 14, 2011.
7. ^ Thom Hartmann (September 26, 2008). "How Wall Street Can Bail Itself Out Without Destroying The Dollar". CommonDreams.org. Retrieved Apr 14, 2011.
8. ^ "Value added tax". Government Spokesperson's Office, Principality of liechtenstein. Archived from the original on April xviii, 2005. Retrieved Apr xiv, 2011.
9. ^ Laurence J. Kotlikoff (March 7, 2005). "The Case for the 'FairTax'" (PDF). The Wall Street Journal. p. A18. Retrieved Apr 14, 2011.
10. ^ "What is turnover tax and how does it work?". Turnover Tax for Small Business. South African Revenue Service. Archived from the original on April 29, 2011. Retrieved April 14, 2011.
11. ^ "VATGlobal".
12. ^ VAT Rates Applied in the Member States of the European Community European Commission Revenue enhancement and Customs Matrimony (2009-7-1), retrieved 2009-12-7
13. ^ Guide to Value Added Tax in Norway Skatteetaten (2009-iv-vii), retrieved 2009-12-7
14. ^ Julia Kollewe (June 28, 2010). "How to beat the VAT hike on groceries". Wallet Pop UK . Retrieved April 14, 2011.
15. ^ Revenue enhancement Rate Finder Illinois Revenue official website, retrieved 2009-12-seven
16. ^ Sales and Utilise Revenue enhancement Rates effective 7/1/2009 Archived 2010-02-20 at the Wayback Auto East Baton Rouge Parish, retrieved 2009-12-seven
17. ^ "Chapter two: Imposition and rate of sales tax". Sales and Use Tax Constabulary. California State Lath of Equalization. 2011. Retrieved July nineteen, 2011.
18. ^ "Chapter iii: Imposition and rate of use taxation". Sales and Use Tax Law. California Land Lath of Equalization. 2001. Retrieved July xix, 2011.
19. ^ Kathryn James. "Exploring the Origins and Global Rise of VAT" (PDF). The VAT Reader. Tax Analysts. Retrieved April fourteen, 2011.
20. ^ "America the Uncompetitive". Wall Street Periodical editorial. Baronial xv, 2008. Retrieved 2010-08-05 .
21. ^ Carl Davis; Kelly Davis; Matthew Gardner; Robert S. McIntyre; Jeff McLynch; All Sapozhnikov (November 2009). "Who Pays? A distributed assay of the tax systems in all l states, tertiary edition" (PDF). The Institute on Taxation & Economical Policy. Archived from the original (PDF) on 2010-11-15. Retrieved 2010-08-05 .
22. ^ Luna, L (2004). "Local Sales Tax Contest and the Outcome on County Governments' Tax Rates and Revenue enhancement Bases". The Journal of the American Revenue enhancement Association: 43–61.
23. ^ ^{a b c} Armato, M (2015). College price, fewer packs: Evaluating a tobacco tax increase with cigarette sales information. American Journal of Public Health. p. ii.
24. ^ Jung, Changhoon (2001). "Does the Local-Option Sales Tax Provide Property Taxation Relief? The Georgia Case". Public Budgeting & Finance. 21: 73–83. doi:ten.1111/0275-1100.00037.
25. ^ ^{a b} "Facts on Cyberspace and Mail Order Purchases". Michigan Department of Treasury. Retrieved April 14, 2011.
26. ^ ^{a b c} "Economic Bug in Taxing Cyberspace and Mail service-Order Sales" (PDF). Congressional Upkeep Office. October 2003. Retrieved April 15, 2011.
27. ^ Run into, for example, Sidney S. Silhan, If Information technology Own't Bankrupt Don't Set It: An Statement for the Codification of the Quill Standard for Taxing Internet Commerce 76 Chi. - Kent. L. Rev. 671 (2000), setting along reasons for maintaining the existing standard.
28. ^ "Streamlined Sales and Employ Revenue enhancement Understanding". Streamlined Sales Tax Governing Board, Inc. December 13, 2010. Retrieved April 21, 2011.
29. ^ "Frequently Asked Questions". Streamlined Sales Tax Governing Board, Inc. Retrieved April 21, 2011.
30. ^ Fong, Nathan Thou. (2012). "Sales Taxation and Electronic Commerce". The New Palgrave Dictionary of Economics: ane–10. doi:10.1057/978-ane-349-95121-5_2947-1. ISBN978-1-349-95121-5.
31. ^ Fong, Nathan M. (2012). "Sales Taxation and Electronic Commerce". The New Palgrave Dictionary of Economics: ii–half dozen.
32. ^ ^{a b c} William F. Fox (March 13, 2002). "History and Economic Bear upon: Sales Tax History" (PDF). Academy of Tennessee Knoxville, Center for Business and Economic Research. Retrieved April fifteen, 2011.
33. ^ Dillon, Matthew & Garland, Lynda (2010). Ancient Greece: Social and Historical Documents from Archaic Times to the Death of Alexander the Slap-up, 3rd Edition. Routledge, New York. p. 188. ISBN978-0-203-85455-half dozen . Retrieved April 15, 2011.
34. ^ Dillon and Garland, p. 41
35. ^ Due south. Percy R. Chadwick (Jan–December 1918). "Some Roman Trade Routes Along the Pathway of the Great War". The Historical Outlook: The History Teacher's Magazine. Vol. 9. McKinley Publishing Visitor, New York. p. 193. Retrieved April 14, 2011.
36. ^ Leonhard Schmitz (1875). "Vectigalia". A Dictionary of Greek and Roman Antiquities. John Murray, London. p. 1184. Retrieved April 14, 2011.
37. ^ Revenue enhancement Provisions in the Health Care Act AICPA Periodical of Accountancy, retrieved 2010-04-02
38. ^ H.R. 3590 Sec. 10907 Archived 2010-04-03 at the Wayback Machine HealthReformStat, retrieved 2010-04-02
39. ^ What is included in the taxable toll? Archived 2001-06-18 at the Wayback Car Maryland State Comptroller'due south website. Retrieved 2010-05-19
40. ^ Healy, John C. & Schadewald, Michael S. (2008). Multistate Corporate Tax Guide 2009, Book 2 Sales/Use Tax. CCH Grouping. p. 373. ISBN978-0-8080-9229-2 . Retrieved Apr fourteen, 2011.

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Source: https://en.wikipedia.org/wiki/Sales_tax

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