Welding Gas Taxation Question

Here in KY we are being taxed on all our gasses used
for welding due to the fact that the "gasses are not
part of the final product."
Are any parts of the gases used chemically combined
with the metals and thus DO become part of the final
product? Or, are the gasses just used (like electricity)
to bring the materials up to temp?
thanks
-Fitz
Reply to
DharmaOne
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"DharmaOne" wrote: Here in KY we are being taxed on all our gasses used for welding due to the fact that the "gasses are not part of the final product." (clip) ^^^^^^^^^^^^ That's the law in CA also. I'm still trying to figure out how coated stick welding rod should be taxed. The steel goes into the product, and the flux does not. And if you are a poor welder, and have to do a lot of grinding (like me,) shouldn't that affect the taxation?
Reply to
Leo Lichtman
What happened ? Did we export you a bunch of Europe's VAT inspectors or something ? That has to be one of the most unworkably fuckwitted rules I've yet heard !
"That's not an inclusion, it's a tax deduction"
Reply to
Andy Dingley
How do you figure it to be an unworkable rule? It makes sense if you have a grasp of the sales tax and how it works. It's not just Kentucky, it's everywhere. Everything you buy in the course of running a welding business is taxed at some point (with very few exceptions). Because you have a tax resale license, by whatever name your state uses, doesn't mean you get to not pay sales tax. Everything you buy, without paying tax at the point you purchase it, you have to charge tax for at the point you sell it, and report and send in that tax to the government(s). They aren't letting you buy things, and just giving you break by not charging you tax, they are deferring the collection of the tax until after you have marked the product up, therefore not just taxing your raw materials but instead taxing the total of everything you add to the raw material cost between the time you purchase material to the time you sell a finished product. And, making you do both the paperwork and the tax collection on your final product. If you look at consumables, they fit into the scheme of things as an item you should rightfully pay the tax on at the point you purchase them.
JTMcC.
Reply to
JTMcC
Because two people have already posted to say that they can't work it.
All reclaimable sales taxes are a bad idea. They generate a fixed amount of revenue per item, but the amount of administrative effort increases with every business transaction. Of course it's not the government who has to pay for this, it's the businesses.
Here in Europe we have a system that's bad enough. If I buy fnords, I pay VAT on them. If they're for my business, I can reclaim this VAT. If I sell something to another, then I must charge them VAT and pass it to the tax office. However no-one cares what my business _does_ with these fnords. I can sell them on at retail. I can melt them down and cast them into statues of Gordon Brown. I can even balance them on my head to help me concentrate while I'm doing the casting. No-one cares - they count the values, and they don't want me sneaking them home for my personal use.
Now Europe's VAT rules are crazy. The rates change for "essentials" and "luxuries". Apparently children's clothes are essential but adult's aren't. Biscuits are one thing, cakes another. Years ago I had a tax office communication informing me that for the purposes of VAT, edible snails were now to be regarded as "land-based fish". At that point I realised these people were clearly insane and I just shouldn't worry about them.
But this law is even worse. It's not just based on dipping every businesses' pockets. It's not just imposing arbitrary categories of high and low tax. This law appears to be based on the _usage_ of the item. Now mollusc taxonomy clearly over-stretched the minds of these tax gnomes, so how are they expected to understand welding? If I buy paint, does that change for tax depending on whether I use it to paint my products, or to paint my workshop door ? What happens if I buy 10 cans of paint, use 9 of them for a production run and then get left with the last one ? If I use it to brighten the workshop instead, did I just commit heinous tax fraud ?
Reply to
Andy Dingley
No they didn't, they are looking for a way around it.
I skipped that part as I have no interest in understanding european tax policy.
You don't have the grasp of the concept, so your comments are about as pertinent as mine would be on the VAT. Usage is beside the point in the end.
JTMcC.
Reply to
JTMcC
It seems welding gases fall under this guideline for what is exempt at least in Minnesota for a company doing manufacturing. I know repair shops pay tax upfront on allot of their purchases even if they are for resale.
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Materials and supplies that are a component or ingredient or are consumed, destroyed, or lose their identity in the manufacture of products you will sell to customers. This exemption allows nontaxable purchases not only of raw materials, but also any other materials consumed during manufacturing that do not actually become a part of the finished product, including acids, bleaching agents, oils, greases, sandpaper, etc. This exemption does not include apparel or safety equipment worn by employees, chemicals and cleaning agents used to clean the plant or production equipment (except food processing), and tools.
Steve
Reply to
Steve Peterson
"Steve Peterson" wrote: (clip) It makes sense if you have a grasp of the sales tax and how it works. (clip) ^^^^^^^^^^^^^ This is true. But rules which are simple and obvious in 99% of the applications can appear ridiculous under some circumstances, and these are the cases people love to cite: I'll give you an example from my paint store. Paint thinner is taxed when it is sold to people use it to clean brushes, or thin paint, except for sign painters. A sign painter charges sales tax on the finished sign, so the thinner he uses in his paint is purchased for resale (no tax at time of purchase.) But the thinner he uses to clean his brushes is consumed by him--not resold--so the paint store is supposed to tax it when he buys it. I could not decide how to handle this, so I called the California tax people, and they told me I had to estimate what proportion of the thinner was used to clean brushes. How did I handle it? Every once in a while I would charge the signpainter sales tax on his thinner. I can't think of a better way, but it certainly doesn't seem rigorous.
Reply to
Leo Lichtman
Leo The way you snipped the message made it appear I said something that was part of JTMcC's statement. I agree tax exemption laws are quite confusing and I try my best to abide by the law in purchasing materials for my small business. Paying sales tax twice on items really sticks in my craw but sometimes it is easier to pay twice than to try to sort it all out. Steve
Reply to
Sven
"Sven" wrote: The way you snipped the message made it appear I said something that was part of JTMcC's statement. (clip) ^^^^^^^^^^^^ Sorry about that--I'm taking your word for it--I tried to backtrack through the posts to see what I did, and I give up; I can't unscramble it. At least it was not a case of violent disagreement.
I will comment on another part of your answer: how to deal with double taxation. At least in California, and I suspect in most states, if you keep track, there is a place on the tax return to claim credit for this. Probably not worth the trouble unless it is something very large, but I thought I'd mention it.
Reply to
Leo Lichtman
The position of taxes is much clearer if you look at government as a very large corporation with the ability to require every person in its geographic area to uses its services at a cost it determines. Like any corporation that has a monopoly there is no incentive for efficiency or cost control. The more "services" you provide the more taxes you can justify, and more employees. With more government employees you have fewer people to vote to reform the system by reducing government. Taken to the extremes and you have stagnation in the economy, and a reduction in the standard of living. This is essentially what happened to the Soviet Union.
Reply to
Mike Swift

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