<prompt> Human: Hey all, so my wife is an independent distributor of senegence, a company that sells lipstick products. Yesterday my wife received several orders and went to place them with the company. The products were on sale, so she paid 300 on 600 worth of merchandise; however, when she went to check out, she was being charged nearly 58 worth of taxes. Sales tax in my area is 8.6 as info. This morning she called their support line to ask how they calculate the taxes, and the representative told her that even though she is only paying 300, she still has to get charged taxes on the 600 value of the products she purchased since theyll get sold for that full value. Thats the first time I have ever heard of something like that and Im having a really hard time reconciling it in my head. What if my wife gives someone a 10 discount on something she sells? Is she supposed to just suck up the extra tax burden as well? This sounds suspicious to me, but my knowledge of tax law is about nil. Thanks in advance for the answers.  <response>: Not a tax expert but does your wife report sales tax when she does her own taxes?Heres what I do know, say you have a kid who wanted to sell candy at school. So you go to walmart and buy the candy 1 a box you pay sales tax of about 9 cents. Then your kid sell it to other hungry kids with no impulse control for 2.50 a box at school. You may think thats a profit of 1.41 per box but youre wrong. Selling that candy is a business not exempt from sales tax. The sale might not say 2.50tax but the tax is still a thing, it is just inclusive. You or your kid will need to report sales tax on every sale at tax time. About 22cents should be going to the government for ever box you sell. Making your profit about a 1.19. Since Walmart didnt know you were a business they charged you for sales tax on the candy and then you charged your customers a sales tax when you sold the candy again. Seems unfair to pay the government twice? Youre right! Since youre selling the item as-is, you may get a resellers permit to show walmart and can buy the candy without sales tax. Meaning instead of paying 1.09 a box you get it at 1 and your correct profit is 1.28. That permit saves you from being taxed twice but there is no permit or licensing that excludes you from tax on a final sale.So unless your wife is reporting sales tax I suspect that what this company is doing is correct. The sales tax is definitely due on the final cost of the item not on the sale to the reseller your wife. The government does get overpaid when youre wife sells an item with a 10 discount but thats the cost of the convenience of not having to do your own sales tax reporting.Edit: That said I agree with the others that MLM is always shady. 