Factoring the Tax
Collection of Tax
You may choose to charge the tax separately on each sale, or include transaction
privilege tax in your
price. If you over charge any tax to your customers, you must remit the excess tax to the
city.
If you include tax in your price, you can use factoring to "back into" the tax
included in your gross sales.
For example, if you make a sale for $100, tax included, and the tax is 8.05% (the combined
City, State, and County tax rate), your tax calculation is:
| Price excluding Transaction Privilege Tax |
$100/1.0805 = |
$ |
92. |
55 |
| Mesa City Tax |
$92.55 x .0175 = |
$ |
1. |
62 |
| State & County Tax |
$92.55 x .063* = |
$ |
5. |
83 |
|
|
|
| Total City, State & County Tax |
Deduction |
$ |
7. |
45 |
| |
|
|
|
|
| |
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|
| * |
For some categories of tax, the state and county tax rates may differ
from the 6.3% rate used above. The computation must be adjusted accordingly.
|
Construction Contracting If you have income from construction contracting, the
computation of the factored tax is different. This is due to the
standard 35% deduction that is allowed against construction contracting
income. Also a land deduction is allowed for state and county purposes
but not for city purposes.
Factors to apply to Gross Income (GI) and Land (L):
| 1. |
No sale of land is included in the gross
income: |
|
|
Total Transaction Privilege Tax = (.04972323 X GI) |
| 2. |
The gross income includes the sale of land: |
|
|
Total Transaction Privilege Tax = (04972323 X GI) - (.03891383 X L) |
| 3. |
The sale involves only the sale of land: |
|
|
Total Transaction Privilege Tax = (.01124706 X GI) |
|
