# Trying to help a friend..



## hdavis (Feb 14, 2012)

The worst part is, the guy's actions make him appear guilty. Any time you try to cover up, the cover up is powerful evidence against you.


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## Marven (Jul 15, 2013)

We definetly need her side of the story. It would clear up many questions.


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## Chris Johnson (Apr 19, 2007)

I think everyone of you missed what could become this guys worst nightmare...

Sales Tax

If your state charges sales tax on materials which I believe most do, his adjusted invoice will show sales tax at a higher value then what was paid. 

Someone (like this guys sister) can drop a dime on him to the sales tax people and then look out Irene, I'm coming in dry and this is going to hurt.


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## dom-mas (Nov 26, 2011)

Chris Johnson said:


> , I'm coming in dry and this is going to hurt.


best line in a long time. Can't believe I never heard it before


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## RangoWA (Jun 25, 2014)

Chris Johnson said:


> I think everyone of you missed what could become this guys worst nightmare...
> 
> Sales Tax
> 
> ...


There should be no sales tax on what he paid but she would be paying it based on his price to her. It doesn't matter what he paid.


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## Marven (Jul 15, 2013)

Generally speaking, when you are building a house, you pay tax on all materials when purchased and do not collect sales tax when job is finished.


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## RangoWA (Jun 25, 2014)

If you are custom building one for a customer wouldn't you be purchasing for resale?


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## clydebusa (Apr 27, 2014)

Subscribing to find out the final result, whatever that will be. :whistling


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## Okiecontractor (Oct 15, 2012)

His first court appearance is August 5th. So it'll be a bit. It could also be dropped or dismissed at that point. We didnt get to talk much about it at lunch yesterday. Another guy we know showed up and invited himself to sit with us.


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## A&E Exteriors (Aug 14, 2009)

DMLehmann said:


> Does he have any recourse against the supplier for releasing invoices to unauthorized individuals?


Seems like sharing proprietary information is borderline criminal


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## RangoWA (Jun 25, 2014)

They're probably going to have a hootenanny at the county fair and all is forgiven anyways.


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## CarpenterSFO (Dec 12, 2012)

I'm sympathetic to the sister; the brother sounds stupid, greedy, and dishonest.


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## littlefred811 (Dec 16, 2012)

"Oh, what a tangled web we weave, when we first practice to deceive." Or something like that. 
This thread is a fun one!


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## Chris Johnson (Apr 19, 2007)

RangoWA said:


> There should be no sales tax on what he paid but she would be paying it based on his price to her. It doesn't matter what he paid.





Marven said:


> Generally speaking, when you are building a house, you pay tax on all materials when purchased and do not collect sales tax when job is finished.


Marven got it

When you purchase materials and turn around and sell them to a customer as a supply and install, you became the end user and paid sales tax at point of purchase on materials, you do not install and charge the tax again as you have used the materials in an improvement situation.

Bottom line, your silent partner (the government) wants there money, and sales tax money is considered trust funds, you cannot mess with trust funds, much like payroll deductions, it's not yours, you are the collector and remitter at anytime your partner (the government) wants their money.

So how does this apply here...let's use round numbers, material cost is $ 100.00, sales tax is 10% so in this case $ 10.00, this guy chose to sell the materials only to his sister for $ 200.00, plus tax at 10% = $ 20.00. That $ 10.00 difference is tax, trust funds, your partner (the governments) money, they want it. If he did not show tax then this is not relevant and my posting does not apply

And your partner will spend $ 10,000.00 to get their $ 10.00 out of you. Let's not get into the fact he probably isn't even registered as a reseller with a resellers permit, or that your partner may question why you fabricated an invoice with someone else name on it who is legitimate and pays their trust funds as required, etc. etc.

This guy could end up meeting Bubba if he doesn't clear this up pretty quickly and hope the rest goes away :blink:


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## cwatbay (Mar 16, 2010)

Chris Johnson said:


> Marven got it
> 
> When you purchase materials and turn around and sell them to a customer as a supply and install, you became the end user and paid sales tax at point of purchase on materials, you do not install and charge the tax again as you have used the materials in an improvement situation.
> 
> ...


This is why we prefer paying tax on our wholesale purchases, rather than use our resale certificate. It saves me from hiring an accountant to handle all this. Plus, it makes things a lot simpler when we pay our quarterly taxes to the state....which happen to be due in two weeks. 

Getting back to the OP and his pal. I can only go by what the OP has said and not by my vivid imagination or conjecture. But it does appear that the "pal" really screwed up on some issues: ie--fraud (making up false invoices); not having a clear and concise contract...even with his sister, and from what it appears....a plan for the project that provides him with a profit....whatever amount...at the end. 

I can't fault his supplier for giving out the prices....stuff like this happens all the time. I don't know what his sister told the supplier or what the supplier though when the sister called...I don't even know who answered the phone. Maybe the supplier gets calls all day and the just give out prices to everyone that calls ...I don't know. But the "pal" should'a, could'a, would'a had a talk with his sister long before all this and gone over pricing, labor, planning, etc. 

What I can gather from the OP's statements so far, it sounds like the sister didn't trust her brother much to begin with. It also doesn't sound like bro and sis have an amicable relationship anyway. And by the fact that bro forged documents...maybe sis has good reason not to trust him.


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## Joasis (Mar 28, 2006)

All I have to do is read this crap and remind myself why I went to cost plus contracting long ago. While I agree with whatever markup any given contractor needs to make things roll, I prefer to directly expense a job, not worry about sales tax, and take a cost plus percentage....or, in ICF, I give a single bid, materials and labor, and I do not offer a breakdown, ever.


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## realelectrician (Jul 13, 2011)

Did she agree on a price beforehand? If so case closed. Kayne West sold plain white tshirts for $120 and they sold out should he be locked up because they cost $5 to make?

I'll break down my costs when the customer breaks down their personal finances in detail with me:blink:


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## RangoWA (Jun 25, 2014)

Chris Johnson said:


> Marven got it
> 
> When you purchase materials and turn around and sell them to a customer as a supply and install, you became the end user and paid sales tax at point of purchase on materials, you do not install and charge the tax again as you have used the materials in an improvement situation.


That's interesting. Here, if I build a fence (I don't build houses so maybe the law is different) I buy the materials tax exempt and put the sales tax on the invoice. Materials are only taxed once, and no income tax. We have state Business and Occupation tax so essentially every quarter you are turning in the taxes you collected plus a small percentage.


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## Chris Johnson (Apr 19, 2007)

RangoWA said:


> That's interesting. Here, if I build a fence (I don't build houses so maybe the law is different) I buy the materials tax exempt and put the sales tax on the invoice. Materials are only taxed once, and no income tax. We have state Business and Occupation tax so essentially every quarter you are turning in the taxes you collected plus a small percentage.


I've heard some areas do that

Our province now has us pay tax at time of purchase, charge tax to customer on entire supply and install, we remit the difference to our partner.

With the OP, I'll bet he charged his sister for the increased price and the increased tax and does not remit the tax portion, that is his bigger problem, that's fraud right there, misappropriation of funds, etc, etc.


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## Chris Johnson (Apr 19, 2007)

I see your Washington State, I remember when I was in California, had a project to do in Squimm, had to register with your tax board and it looked like a lot of paperwork to me, I think it was 5% tax or something there and you charge it on materials and labor


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## dom-mas (Nov 26, 2011)

realelectrician said:


> Did she agree on a price beforehand? If so case closed. Kayne West sold plain white tshirts for $120 and they sold out should he be locked up because they cost $5 to make?
> 
> I'll break down my costs when the customer breaks down their personal finances in detail with me:blink:


you have totally missed the point and don't understand what the charge is


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## dom-mas (Nov 26, 2011)

Chris Johnson said:


> Marven got it
> 
> When you purchase materials and turn around and sell them to a customer as a supply and install, you became the end user and paid sales tax at point of purchase on materials, you do not install and charge the tax again as you have used the materials in an improvement situation.
> 
> ...


Almost makes you appreciate the HST. Charge tax on all of it and fill out your remmitance each quarter


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## Chris Johnson (Apr 19, 2007)

As much as I hate the HST, the advantage to us contractors/businesses is second to none, not only for ease of accounting, but get it all back for every business purchase compared to the old sales tax, we just paid it and got nothing in return


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## Chris Johnson (Apr 19, 2007)

Bottom line, what this guy did is outright illegal, hopefully he has learned from this, gets it cleared up quickly and the tax guys don't catch wind. And also hope the supplier doesn't sue him for presenting a false invoice under their name, it was misleading and can haunt them.


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## dom-mas (Nov 26, 2011)

Chris Johnson said:


> As much as I hate the HST, the advantage to us contractors/businesses is second to none, not only for ease of accounting, but get it all back for every business purchase compared to the old sales tax, we just paid it and got nothing in return


Agreed. Getting 13% back (or taken off the amount you pay I guess would be more accurate)on your fuel use utilities etc...


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## jaydee (Mar 20, 2014)

Hst ?????


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## Chris Johnson (Apr 19, 2007)

Harmonized Sales Tax

13% here

It's a combination of our provincial sales tax and our federal good and services tax


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## A&E Exteriors (Aug 14, 2009)

Any updates?


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## Okiecontractor (Oct 15, 2012)

No but I've been swamped and haven't seen or talked to him in a week or so. Guess I need to call him. Mainly to check in on him.


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