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Old 12-09-2017, 03:27 PM
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Sales Tax deduction

I'm a kitchen and bath contractor and I have a very good client that is building a new vacation home. I use a Marriott Rewards VISA during the normal course of business but he has told me that I need to set up accounts with my vendors and then let him go and pay the bill. Of course, I don't want to do that because of the hotel points but he says he needs to do this so he can claim the Sales Tax deduction. I'll do whatever a client asks but I had already ordered and paid for, $16,000 worth of plumbing fixtures so I offered to write him a separate invoice and itemize it like the supplier did and show the tax. I also forwarded him the original invoice emails. He said that wouldn't work... that HE had to be the one to pay the supplier otherwise the "tax credit" goes to me.

I didn't try to explain to him that I don't get a "tax credit" for materials on things I buy. I just add them to my normal cost of business and the sales tax (in regards to my business) is treated the exact same as a piece of plywood. It's just a cost of doing business, not a "Tax deduction."

Is he right? Does HE have to physically pay, let's say, Ferguson's (plumbing fixtures) himself, or can I just send him a copy of the invoice that I paid in my name with his job name?

Question #2
I am also a cabinet maker. On this job I have a full set of kitchen cabinets as well as five vanities and laundry room cabinets... probably about $30k. I'm a soul proprietor and I don't charge tax for the cabinets I build. It's just included in the total quote of the job. Should I, or could I, bill him separately for the cabinetry and show sales tax for his benefit? What are the ramifications on me if he gets audited?

Thanks



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