Sales Tax Exemption Certificates ~ Frequently Asked Questions

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Sales Tax Exemption Certificates ~ Frequently Asked Questions

How do I submit tax-exempt documentation?

Dell customers’ tax information should be submitted via fax to: 1-800-433-9023.
- Always make sure you reference the Company customer #.
- Format the subject line as follows: COMPANY NAME: XYZ - Certificate #123456

Valid Documentation

We cannot accept IRS letters and W-9 forms. They do not pertain to state sales tax exemptions.

Approximately 60% of the exemption certificates received by the Tax Department are invalid. This means that there is something about the certificate that does not allow us to legally remove the tax.

Certificates must be filled out in their entirety to be valid.

Why am I charged tax on shipping and handling?

Dell combines shipping and handling on its quotes and invoices as a single line item. A handling charge is a taxable item in all states except Florida, Idaho, Iowa, New Jersey, Wyoming, Oklahoma and Utah; whereas these states differ on whether or not shipping is a taxable item.

When a taxable item and a non-taxable item are combined in a single line item, i.e. not separately stated, the entire charge is taxable. Therefore, “shipping and handling” is taxed in all ship to states except Florida, New Jersey, Oklahoma, Wyoming, Iowa, Utah and Idaho.

Which states recognize downloadable software as non-taxable?

Currently there are 14 states that recognize downloadable software as being non-taxable.
States that recognize Electronically Downloaded Software as Non–Taxable include:

ARKANSAS
CALIFORNIA
COLORADO (STATE TAXES)
FLORIDA
GEORGIA
IOWA
MARYLAND
MISSOURI
NEW JERSEY (BUSINESS ONLY)
NEVADA
OKLAHOMA
RHODE ISLAND
SOUTH CAROLINA
VIRGINIA

Why am I charged tax on an internet purchase?

The Internet Tax Freedom Act does not state that the Internet will be tax exempt. That seems to be a popular misconception. The Internet Tax Freedom Act does state the following:

Internet access such as America Online and CompuServe will be tax exempt. There will be no tariffs placed on the Internet to encourage global free trade. No NEW taxes will be applied to the Internet which might hinder its growth. Dell collects Sales and Use taxes on Internet sales. What the new law established is protection for consumers for three years on a "special" tax that states could incur on transactions made over the Internet. The items purchased over the Internet are still considered taxable whether we collect the tax or not. If we don't collect it, the customer is responsible for remitting it directly to their ship-to state.

For your convenience, we included the web site by the creator of the law, Rep. Christopher Cox (CA). http://www.house.gov/chriscox/nettax

Required Sales Tax Forms

Generally, Dell requires a copy of the "Bill To" customer's State Sales Tax Exemption certificate or Resale Certificate for the "Ship To" state. Some states provide blank forms that must be presented to a vendor, while others have state-issued letters or certificates.

Note:
It will depend on the type of exemption being claimed and the state in question what form is needed, or whether a certificate is required at all.

Please check the respective state's website for sales tax forms:
http://www.taxadmin.org/fta/link/forms.html

Note:
• Please note that business permits, business licenses, certificates of authority, sales tax returns, sales   tax numbers, or IRS income-tax exemption letters are not state sales tax exemption certificates.
• Sales/use tax is regularly a destination charge, determined by the ship-to state. (Exceptions do apply.)
• Exemptions to the tax are based on the ship-to address/state.
• There may be additional requirements, depending on the exemption/state in question that the purchaser should take into consideration.

Claiming Tax Exemptions

Not all points mentioned below may apply to your state's certificate, nor is the list all-inclusive. Please make sure to complete all entries on the form, which helps to ensure that your exemption is claimed.

1. Reference your customer number and e-mail address on your coversheet.
2. Seller Information: Dell Marketing L.P.
3. Describe PROPERTY PURCHASED as COMPUTER EQUIPMENT AND/OR SOFTWARE.
4. Indicate the PURCHASER'S NAME as your COMPANY/ORGANIZATION'S NAME. (The bill-to name on your order/invoice must be the same name of the purchaser on the exemption documentation. When applicable, indicate you have a "doing business as" company name.)
5. Sign and date the form.

Keep in mind the following information if you are filling out the form for these types of exemptions:
• Resale: Include RESELL OF COMPUTER EQUIPMENT AND/OR SOFTWARE or INTEGRATE COMPUTER EQUIPMENT AND/OR SOFTWARE as part of your nature of business.

Note:
• Drop-shipments: Some states only exempt a reseller if they register in their state and/or provide specific documentation to the vendor; otherwise, the resale exemption is considered invalid.
• There should be a correlation between the items purchased from Dell and the nature of business of the purchaser as stated on the certificate.
• Resellers must fill out a resale certificate. Each state has a state form or a multi-state certificate to complete.
• Exempt Organizations: Non-profits are not necessarily exempt from state sales tax, although they may be exempt from federal income tax. States have specific requirements on what documentation is needed when claiming such an exemption.

Note:
• Include supporting documentation regarding your exemption from state sales tax, such as state issued letters.
• Simply providing a copy of your sales tax permit, certificate of authority, sales tax return, sales tax number, or IRS exemption letter is not sufficient documentation of exemption.
• Manufacturing: Indicate how the computer equipment is used in your manufacturing process.

Note:
Some states exempt from tax, or tax at a reduced rate, equipment used in certain manufacturing processes. In many instances, the machinery must be used directly in manufacturing. States have specific forms for this type of exemption. A multi-jurisdiction form is not valid documentation for this type of exemption.

• OH Teachers: Please provide a copy of the following documentation:

1. Verification of your teaching license or certification signed and dated by your building principal on school letterhead.
2. Form STEC U - Sales and Use Tax Unit Exemption Certificate. You can print the certificate from the website: http://www.tax.ohio.gov/

Note:
• The purchase must be made in the name of the certified teacher to qualify.
• The certificate should indicate the nature of the exemption. For example, CERTIFIED TEACHER, COMPUTER EQUIPMENT USED PREPARATION OF TEACHING ELEMENTARY OR SECONDARY SCHOOL STUDENTS.
• Diplomats and Missions: Exemptions are allowed, according to the U.S. Department of State, to certain foreign government personnel and offices under the authority of the Foreign Missions Act (22 USC 4301 et seq.)

1. Please fax a copy of the card, front and back, to the number listed above.
2. Additional information may be obtained on the website: Diplomatic Tax Exemption Program http://www.state.gov/ofm/resource/ihv/20287.htm

Note:
• Some cards have restrictions on tax-free purchases and are not transferable. Only the person whose photograph appears on the front side of the card may use it.

• Mission tax exemption cards are issued to embassies, consulates, and international organizations for official purchases only and for the sole benefit of the mission identified on the face of the card. All purchases must be made in the name of the mission and paid for by mission check or credit card (not cash or personal check).

* Dell's tax department will make every effort to remove tax before the order is shipped. However, if the order is shipped before the tax was removed; the tax department will process a credit back to the original form of payment within 3-4 weeks.

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