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A number of news reports have indicated that merchants who collect state sales taxes delay paying them for an indefinite amount of time and often pay them out of the following months' revenues. This in itself seems shady. They collect these taxes on behalf of the state.

And while I do understand that they act as reluctant agents of the state when they do that, they don't seem to act as good-faith agents when they delay paying those taxes.

Is there a process in practice, rather than in theory, to (1) record each transaction formally and formally inform each merchant that I will be paying those taxes to the state directly and (2) formally make a payment for each such transaction directly?

Are there forms one has to fill out for each such occurrence? Or this process unorthodox enough that it would require a lawyer-drafted template both for recording and for making such payments?

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    In which state? – Nate Eldredge Jul 4 '20 at 11:31
  • @NateEldredge an example of any state where this is possible would be a good start. – grovkin Jul 4 '20 at 23:29
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    I've never heard of such a procedure that consumers can adopt by choice. However, a business that buys goods to resell usually doesn't have to pay sales tax on their purchases; there is typically a process for such businesses to register and report their purchases, and of course collect the tax when they sell it to the eventual consumer. That is a little bit like what you're asking about, perhaps. – Nate Eldredge Jul 4 '20 at 23:52
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    There is also a concept of use tax, where if for whatever reason the consumer didn't pay the sales tax when she bought the item, she can pay it later (often together with her personal income taxes). But that's mostly meant for purchases from out of state sellers, such as mail order; if you buy goods at a store in-state, you can't elect this option in place of paying sales tax at point of purchase. – Nate Eldredge Jul 4 '20 at 23:55
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I think you may be misinformed on how businesses report/pay sales taxes. For sales tax, depending on the type of business you are and your expected taxable sales, you may be required to report your taxable sales quarterly, biannually, or annually. Tax is due when the report is due much like income tax, but these cannot be delayed like income tax filings.

If you fail to make a report, the State will estimate your taxes and send you a bill. This bill will include late fees and charges. There is no incentive for business owners to delay these filings and payments. In fact, not filing and not paying may result in your sales and use tax certificate being revoked, effectively putting you out of business.

A business is also not required to set aside any certain amount from a single transaction and pay that to the State. They don't have to take $5 of your $100 transaction and put it in a "sales tax" envelope to send to the State. At the end of the period they have to calculate, $X in taxable sales * Y% tax rate = Total Tax bill, and pay that amount. They could pay it all from the last sale, or set aside a separate account, or a sub-account, etc.

So businesses don't have to pay immediately, they pay on a set schedule. The funds that they collect will most likely be deposited into a general account and the taxes paid out of that account at a later date. Yes, this may include revenue from the following month, but who cares? The point is that the tax is paid on time and in the amount required.

But to the question at hand... No, you cannot file a form or inform the business that you will pay tax directly. The business is required by law to collect those taxes at the time of the sale (unless you have a reseller certificate and they make those kinds of sales). They are not allowed to say "sure, take the X% off the price and pay the state, we trust you". They have to report taxable sales and pay the tax on those sales. Since your sale is "taxable", they are required to pay the tax on that, regardless of them collecting it from you or not.

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  • Not everyone is required to pay sales taxes. I have heard (1st hand from a merchant in NY) that there are classes of institutions (most notably religious establishments) which are exempt. And they may forgo paying sales taxes, at the time of the sale, by presenting appropriate credentials. – grovkin Jul 4 '20 at 23:29
  • The whole "we trust you" part of you answer explicitly ignores my question. I asked if there is a formal procedure for doing this. If there is a form I can fill out and leave with the merchant (at the time of the sale), then it's not based on "trust" but on an alternative procedure for paying the tax. – grovkin Jul 4 '20 at 23:31
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    Yes, there are some organizations that are exempt. These must file with the state for a "use tax" certificate and file it with the merchant. The merchant is not always required to do that though, they can say "well you pay the tax, and you can claim the rebate from the state". This is not available to individuals. The merchant must keep that documentation and report "exempt sales", along with the certificate and amount if requested. These have to be kept for some period (like 3 years), so not all merchants want that type of overhead and don't do it. – Ron Beyer Jul 5 '20 at 0:25
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    BTW, I know this because I own a business with a sales tax certificate in the State of Wisconsin... – Ron Beyer Jul 5 '20 at 0:25

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