It's important to know that the gross receipts tax law makes the seller responsible for gross receipts tax regardless of whether the tax is added to invoices or bills. If you choose not to add tax to your invoices or you receive deposits or partial payments, that means the money you receive from sales actually consists of 2 amounts: the sale and the gross receipts tax.
To avoid paying tax on the gross receipts tax, you should report only the sales amounts. You do this by using this arithmetic formula to back out the tax.
The illustrates a hypothetical scenario in which there are taxable gross receipts as well as different types of non-taxable ones. It shows you how to determine taxable gross receipts by backing out the tax. If you don't do this calculation, the tax will be included in gross receipts you report which means you will pay tax on the tax.
Important: A separate calculation is required for each location because each has a tax different tax rate.