BadBoyOfBeading
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Feb 5, 2005, 7:22 AM
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Craft Shows -- lottery laws on give aways & sales tax issues
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This was deleted from about.com when the host took a hissy fit, and declared "IT's MY FORUM" .... I didn't want this to be lost, so I'm posting it here. The information is very valid, and could save you a world of legal troubles and fines.
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>> You could have a drawing that everyone enters, if they purchase from you they
>> can fill out one entry per $10 that they spend. Or all may enter the drawing. Have
>> the item they will win (or $dollar discount they will receive) near a box with entry|
>> forms. This gives you people to contact.
Before you do that, check your state's laws on "lotteries". If a tax collector who is having a bad day visits the fair to make sure sales tax is collected, and sees that sort of give away, they could make a lot of trouble.
If you allow anyone to enter, and don't charge in anyway, it's not considered a lottery. Sometimes if you ask a question, or "skill" test it's not a lottery. But if it's all based on chance eg: a random drawing, and you have to pay money to enter (eg: buy a ticket, make a purchase, etc) it *can* be considered a lottery depending on your state.
And, make sure you have sales tax license, WITH YOU. That sales event at a church is not protected under their non-profit, religious status. You are a commercial vendor selling to the public.
And, some states have rules against including tax in the purchase price, as it's sometimes considered "deceptive" under states laws. Also, if a person buys multiple items, with tax included, you *might* end up overcharging them the tax by a penny or two, depending on how the item prices add up and the tax tables. That is considered tax fraud, since you are collecting it, unfairly, and *usually* will not report it properly either, so you are not remitting all the tax you actually collected to the state, and you collected some tax "illegally."
You can get around this by having different pre-priced codes for multiples, such as 1 bracelet $10, two bracelets $18. Tax included. But two $10 bracelets with tax included could violate sales tax laws, or be considered fraud if you over charge by a penny.
Also, if you just take your total sales, and remit the tax based on that, you will not get the same number as if you counted items, and remitted actual collected tax per item.
It sounds strange, it sounds unfair or wierd, but it's true. And, one penny will get you the same fine, as $100 -- sometimes for each occurance (eg: SALE!).
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