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Thread: Taxing of Warranty Parts??

  1. #1
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    Taxing of Warranty Parts??

    Hey folks, not sure how many of you carry Oakley, but I ran into an odd situation with them yesterday and I'm wondering if anyone's had experiance with this. I recieved a warranty replacement for an Oakley opthalmic frame and noticed it had tax on it. I assumed it was just a mistake and called them. I was told by their customer service folks that it was not a mistake, and that they are now considering warranties a 'service' instead of a product, so they're able to tax said product. Any credit that is issued for warranties from them will NOT include said tax, however I was so helpfully told that we could claim it on our taxes and get the money back... I honestly don't understand this. I've always been under the impression that Opthalmic frames fall under the same taxing regulations as prescription drugs... aka, none. The fact that we're able to be refunded that money from the government shows that there really shouldn't be tax there in the first place... why else would we get it back? We're just a little stumped as how we should be handling this. One of the owners is pretty adiment that we keep Oakley, so getting rid of them is really not an option here.. other than contacting a lawyer, does anyone know anything different/dealt with this situation before?

  2. #2
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    Sometimes I charge for the to and fro shipping charges for warranty frame replacements, especially if I am going "above and beyoned" to do them the service. That helps cover the tax, too.
    BTW, of course it's wrong on Oakley's part but how do you stop the machine?

  3. #3
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    As do we when it's appropriate, but when it comes to Opthalmic frames, we almost never get charged shipping, definitely not on warranty products. There's a couple suppliers who charge $5 here and there, but even that's rare. If they told me they were charging a $15 service fee for warranty usage I wouldn't have as much of an issue with it. I still wouldn't like it, but they're free to charge for whatever they want for their services. This is tax though... you can't just arbitarily charge tax on whatever you want and call it a service fee. We're going to have a sit down with the owners tomorrow, and I was just hoping someone else had seen this and addressed it already lol!

  4. #4
    Bad address email on file Randle Tibbs, ABOM's Avatar
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    frames are taxable in most states if not all. in some states they are taxed on the wholesale end, if not the seller has to charge the sales tax on the retail end to the patient and remit that back to the state.

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    I don't claim to be a tax expert, but that's not how it works in Canada. There's never tax on our wholesale invoices (unless it's for sunglasses/accessories etc, never opthalmic frames). The manufacturers might be doing something in the background, but I don't think that's the case.

  6. #6
    Master OptiBoarder mike.elmes's Avatar
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    We ran into this 4 months ago and we are in Canada. Oakley is charging GST on certain frame warranties and or parts. I called them on it and was told the same thing as the thread starter.
    Quote Originally Posted by AdmiralKnight View Post
    I don't claim to be a tax expert, but that's not how it works in Canada. There's never tax on our wholesale invoices (unless it's for sunglasses/accessories etc, never opthalmic frames). The manufacturers might be doing something in the background, but I don't think that's the case.

  7. #7
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    You get your money back from the tax anyhow , as an input tax credit, so from your point of view it doesn't really matter except that you are having to cash flow out your own dollars and then spend time and effort to retrieve your own dollars and not get paid for your labor or recieve interest on the money you can't use inthe business anymore.

    It seems fair to me:

    (a) you are doing the warranty work free for the customer and free for the manufacturer of the defective parts anyhow

    (b) you were always financing the government with free labor and providing no interest loans to them anyhow and doing the paperwork chase free

    (c) you are an optician , this is what you do , what's changed , this is just a little more of the same .

    (d) systematically you take your money and give it to the government then they give it back to you so they can take it again. This creates employment. You hire someone to look after it on your end and likewise they hire someone on their end too and then in between you both hire accountants. The accountants and the other hires all buy Oakleys from you and the money/paper shuffle continues.

    Why would you want to change this ? This is what an economy is.


    The real problem is that you are developing a sense of worth and wonderment.
    Last edited by idispense; 01-10-2013 at 08:31 AM.

  8. #8
    Master OptiBoarder
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    BEST BUY , FUTURE SHOP they sell warranties . They value their services . BANKS, BANks and Banks they service charge for every little thing and they make optica$billions .


    Opticians typically give their services, labor and warranties away , for nothing. We are leaders in our field or are we left in the field by the leaders ?

  9. #9
    Master OptiBoarder Cindy K's Avatar
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    I LOVE this!

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