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I work for myself and at times buy a piece of software or something for someone I am working for. Like my title says, I live and work for people in PA.

If I pass the product on to my customer at exactly the same price I paid for it, do I need to worry about sales tax?

Along the same line, if I mark it up a little will that make a difference?

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I'm unsure of the details, but this is the principle:

You would need to setup as a reseller, buy said item(s) without paying tax (on account that you are going to resell them), then sell to your customer(s) with an appropriate sales tax tacked on to the price you charge. As mbhunter states, the sales tax should only be paid once by the consumer.

I believe that you cannot avoid setting-up as a reseller, as you would be expected to collect sales tax on the items you sell. In the case that you do pay sales tax on an item and simply pass it on to the final consumer you would at least have to keep a record of the fact that the sales tax was already paid. In the case of a markup, I believe that you have to charge a sales tax on the mark-up. This gets you back to setting up as a reseller, as you generally do not want to expose the markup to your customers. Rather, you would want to buy it tax-exempt, add in the markup and charge sales tax on the entire sale.

You may be able to charge them for the service, instead of a markup, though I am very much unsure of this.

  • Getting reseller status is pretty easy too. – Michael Pryor Aug 23 '10 at 19:38
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The tax shouldn't be paid twice on the item. If you paid it, then your customer doesn't.

If you didn't pay it (bought it tax exempt) and re-sold it to your customer, I'd think you'd be responsible for collecting the tax and then passing it on to the PA Dept of Revenue. In that case, you'll probably also need to let them know that you need to collect sales tax so they can send you a certificate that allows you to collect the tax for them.

But another question: Can your customer buy the product directly? If they can, then you don't need to worry about it.

I'd poke around this site.

(By the way, I don't live in PA.)

  • My customer could buy the product directly but that would require I get his credit card number from him. When it comes to purchasing licensing and software, It is a bit difficult for me to tell him to go purchase X and make sure it is version XX.X etc. – Icode4food Aug 23 '10 at 11:34

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