Larry Hess CPA
CALCULATING GROSS RECEIPTS
Calculating gross receipts
When you file your gross receipts tax report your goal is to know how much tax you have to pay. First, you must determine the amount of taxable gross receipts. You must also determine your total gross receipts. These amounts may not be the same if you have non-taxable gross receipts - known as deductions. The example below shows how to determine these 3 amounts.
It's important to know the gross receipts tax law makes the seller responsible for gross receipts tax (GRT) regardless of whether the tax is added to sales invoices, bills or other sales documents. That means the money you receive from sales actually consists of 2 amounts: the sale and the GRT. To avoid paying tax on the GRT, you should report only the sales amounts. You do this by using the arithmetic formula shown. After backing out the tax from total gross receipts, you get taxable gross receipts.
Back out the tax
The gross receipts tax law deems the tax to be included in all amounts you collect from customers, including, for example, shipping and handling charges and reimbursable expenses.The example shows you how to determine taxable gross receipts by separating out the taxable gross receipts. That's called "backing out the tax." If you don't do this calculation, you will pay tax on the tax.
Important: Notice that there are 3 different types of deductions in the example. When you file your report, you will need to input each type of deduction separately using a unique deduction code.