FAQ - Sales Tax Collection

How does Chalk Couture™ collect sales tax?
Chalk Couture collects sales tax when a Designer places an order in their Designer Office OR when a customer places an order on a Designer’s Chalk Site. On Designer orders, sales tax is collected on the retail value of products when the items are for resale to customers. Sales tax is collected on the Designer price (typically 40% off retail) for orders the Designer selects as “personal use” in checkout. Personal-use products are not to be resold to customers.

What address will be used to calculate sales tax?
Sales tax will be determined by shipping address. As a Designer, the shipping address you have on file, which is where your inventory and personal-use orders are shipped, will be used. Whatever the local appropriate sales tax rate for your address will govern.

The same is true for customers placing orders on your Chalk Site—whatever address they ship their order to will be used as the location to calculate the correct sales tax rate.

What’s the difference in sales tax between “personal use” products and “inventory” products?
“Inventory” products are items that you buy at Designer pricing (typically 40% off retail) with the intent to sell to a customer. Because of that, when you order the product, sales tax will be collected off the retail value. When you sell that product to a customer, you will collect sales tax from them and keep it—it is effectively a reimbursement to you from what you paid when you ordered the product from Chalk Couture.

“Personal use” products are items that you buy at Designer pricing (typically 40% off retail) with the intent to consume them personally. When you order product and check the “personal use” box at checkout, sales tax will be collected on the price YOU paid—Designer price. You may not resell these items to customers.

Note that the default in checkout in Designer Office is “inventory” order (which will collect tax based on retail value). To change the order to “personal use” for sales tax collection on the Designer price, simply check the box labeled “personal use” and agree to those terms at checkout.

How will I know which products I purchased to resell versus those I purchased for personal use?
Only items purchased as “inventory” to resell will appear in your Chalk Shop by Square app to resell. Because you cannot resell items you ordered as “personal use,” they will not show in your inventory and you will want to keep track of those personally and separately.

Can I mix products (personal use and inventory) in a single order?
No. The system requires all items in an order to be one or the other—marked for personal use or inventory for resale to a customer. You’ll want to plan and prepare the products you need to give you the best shipping pricing and efficacy.

What if I’ve ordered a product as “personal use” but now want to change it to “inventory” so I can resell it to a customer? Can I do that?
No, there is not a way to change the product’s designation after it has been ordered from Chalk Couture™. We hope this is a rare case and that Designers wisely use the privilege of ordering personal-use products (and paying lower sales tax on them). We will watch the use of the personal-use option and if it is abused or not used correctly, we may have to discontinue it

If I am ordering products to create finished goods with, do I order them as “inventory” or as “personal use” products? What about products I’m using in workshops or Create & Takes?
If you are creating finished goods or hosting workshops, these are considered “value added” goods and services. You will order the items as “personal use.” You are responsible to use the products, price workshops and finished goods at your discretion, and collect and remit to the state tax authority any associated sales tax with your “value added” goods and services. This tax should not be remitted to Chalk Couture for payment. Chalk Couture does not have visibility nor responsibility for sale of your finished goods/services or sales tax associated with these items, should you choose to offer them to customers.

How does the Chalk Shop by Square app work, regarding sales tax?
Think of the Chalk Shop by Square app as your “point of sale” partner. It will show you all the products you have in inventory (products you have purchased at Designer price and prepaid the retail sales tax for). When you use the app to sell the product to a customer and you enter in the address of the sale, the app will correctly calculate the selling price of the product(s) + sales tax the customer owes you. Process that transaction using their credit card, cash, or other form of payment, and you keep the sales tax, which is essentially a reimbursement to you.

Note that your payment will include the price you sell the product for and reimbursement of sales tax, less any transaction and credit card fees.

What if the sales tax rate used on an item I’m selling to my customer is different than the sales tax rate I paid when I ordered the item?
Much of the time, Designers will sell products in the same state they live in, so varying tax rates do not affect all. Some Designers do travel to expositions to sell products, including to states that may have slightly higher or lower sales tax rates. Chalk Couture will not require Designers to remit to us a difference when they collect more tax than they paid at order; conversely, Chalk Couture will not reimburse Designers when the sales tax paid at order is higher than what is collected when resold to a customer. These small differences (which may be pennies per transaction) are part of doing business and the over/under increments even out with time.

The same is true of instances where you choose to offer a different price than suggested retail to a customer—when you offer discounts to customers, you will still collect sales tax based on the price you charge (although the amount collected from you at time of order will be based on retail value, which Chalk Couture™ must do for consistency).

Does Chalk Couture accept sales tax exemption certificates?
Yes.

How do I file a sales tax exemption certificate with Chalk Couture?
If you have a tax exemption certificate, you can submit to the Chalk Couture compliance department at compliance@chalkcouture.com.

Please note it can take up to 10 business days for the exemption certificate to be added to your account. Additionally, no sales tax previously paid on orders is refunded. 

What are my responsibilities if I have a sales tax exemption certificate on file?
Once your certificate has been processed, you will be able to order both “inventory” and “personal use” orders with no tax charged at the time of purchase. If you are unfamiliar with tax exemption certificates, note that there is no true “exemption” from remitting sales tax; a certificate allows you to defer collecting taxes until you sell to a customer and then you are responsible for correct bookkeeping and remittance directly to the appropriate state(s). If you choose to submit a tax exemption certificate to Chalk Couture, you are then liable to pay all applicable sales tax to the proper state(s) for any business and/or sales activity.

If I know I am going to be doing an event in another state or city that charges a different sales tax rate then what my shipping address would reflect, can I ship my order there?
Yes! This option applies only to products you have not yet ordered; Chalk Couture does not offer a shipping service to events for products already in your inventory. This option may NOT be used for shipping products to customers or any individual (customer, host, Team member, etc.) for any other purpose than a large inventory-selling event.

What do I need to do to have my order shipped to the event address?
Send an email to compliance@chalkcouture.com with “Large Event Shipping” in the subject. Let us know you would like to ship an order to an address different than your own for the purpose of the event. Please include the event name, date, and city/state for verification; note that all requests for “event shipping” must be approved by Chalk Couture and violation of existing policies and procedures with regard to either shipping or using an alternate address for the purpose of reduced sales tax only may be grounds for suspension/termination.

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