Today we hear from Cliff in New York who is irked. “I believe it’s usual that, in addition to payment for time, designers charge 25% commission on supplied items such as furniture. A designer I approached is suggesting a contract that includes 25% commission also on the sales tax on these items. Is such an arrangement legal?”
I really hope that your designer is only mistaken – not doing this deliberately.
You’re absolutely right. That’s definitely an overcharge.
There’s nothing illegal about it. It’s simply a business contract. Those that want to work with her pay it. Those that don’t, don’t.
In general business practices, no one pays commissions on sales taxes.
Even employers don’t pay their sales staff’s commission on sales taxes.
But no – don’t pay commissions on sales taxes – unless this designer is so special and skilled that you absolutely must work with her. If not, there are thousands of other designers in New York working with all the same vendors. Find someone else.
And encourage your designer contact to stop this practice before word of mouth spreads about her. People get annoyed when they’re getting ripped off.
And remember, you can find answers to all kinds of questions about commissions and all kinds of other tax issues, free. Where? Where else? At TaxMama.com[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the subscribe link and join us.]
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