New York state- tax on home heating wood or not???

[jbos333]

I was looking for some of you that currently sell firewood in NY state...I can't seem to get a straight answer on whether I need to collect sales tax on wood sold as home heating fuel (99% of what I sell is).

I am at the point of making the transition from "hobby" to "business" (I think). I have a substantial amount invested in equipment and real estate not to mention expenses such as fuel, etc. that I would like to start writing off. And I'm thinking about buying a processor. So I need to get a tax ID. Just don't know what I will have to collect sales tax on.

Anyone selling in NY that knows the answer?

[thecfarm]

Call whoever you are getting the tax ID from.

[r.man]

Get it in writing from as high up as possible if you don't have to collect the tax. I know someone who sold used farm machinery in Ontario and he was told by 3 different people at Revenue Canada that he did not have to collect sales tax. Fast forward a few years and they demand it from the time he started.

[Corley5]

Call it wholesale.  That's how we do it.

[36 coupe]

You should get the answer from the NY sales tax office.In Maine I did not have to pay sales tax on  5HP electric motor I needed for my planer.As long as I did not install the moulding I was making any machinery I bought was tax free.If I buy a wood processor ,no sales tax.NY may be different but you better get the right answer.At 5 percent the sales tax on a 50 grand machine would be 2500.00.About 1/2 the info on forums is wrong.Get the answer in writing from the tax office.

[jwilly3879]

As soon as you get a sales tax ID number you will be required to file quarterly sales tax reports, whether you collected any tax or not, failure to file the zero report results in a late penalty.

You will save the sales tax on equipment but you will now let the state have access to all your records.

I pay the sales tax on parts and equipment and then deduct it at tax time and don't have to file quarterlies.

[Corley5]

  In NYS you need a sales tax # not to pay tax on purchases?  In Michigan anything for ag doesn't require even an SS #.  You don't pay tax on industrial processing related purchases but that requires an SS or federal tax ID # on a form on file with the seller.  I've got them on file at Car Quest etc.
 

[Brad_S.]

Call it wholesale.  That's how we do it.

Not 100% sure about firewood but generally, everything is taxed in NY, be it goods or services. (I had to charge tax on my portable sawmilling service.) It is the end user who must pay the tax. In order to wholesale something here in NY, I would need to get a form (Certificate of Resale) from the buyer stating that he too will be reselling it whether as is or as a component in a finished product or a production exemption because it is used in the manufacturing of a product (i.e. machinery). I must keep that form on file in case of an audit of either me or them. If my buyer cannot provide that, I must charge sales tax.
Corley, yes, in order to avoid paying sales tax, you must have a number. It sounds like what you describe using your car quest example but pertains to Ag as well. At the time of your first purchase with a vendor (i.e. Tractor Supply), you need to supply them with a form stating you are either reselling it or your are using it in the course of producing something. I had one with TS for oil and grease for the mill. In the case of farming, it is referred to as an Ag exemption because you are indeed producing something....food. After that first transaction, they will have that form on file and you need only provide your number to the cashier for subsequent transactions and they will enter that number into the register. NY taxes EVERYTHING they can!
OP, re-examine whether the write offs you will get are worth the headaches you will get by getting on the state's radar! Note that you will have to keep detailed records of how much you sold in each county you sell in as all that has to go on that quarterly form.

[Pete and Jesse]

New York State does not charge sales tax on firewood used for home heating, however, NYS does allow local municipalities to charge their local share.
Some municipalities do and some do not.
Here is the link to the NYS sale tax information sheet.
http://www.tax.ny.gov/pdf/publications/sales/pub718r.pdf

[jbos333]

Pete and Jesse, thanks for the link! That pretty much spells it out. I hadn't seen that before.