Internet Tax Question

[Gusturd]

I recently decided to make some space in the man cave and sell a few items on ebay. I was surprised when one of my items sold (to a buyer in Washington state) and 10% state tax was automatically added to the invoice. It was hard coded and could not be removed. I'm used to paying sales tax, but not sure what to do with it when it's being paid to me. What am I supposed to do with the ten bucks? Does it even come to me or straight to the Govt? The odds of me selling any more items in the state of Washington are pretty slim as I'm only selling about a dozen items. Can anyone clear this up for me?

[Gusturd]

And not for nothing but 10% sales tax! WOW.

[swarmee]

You didn't say, but I'm guessing you were selling on eBay? If so, eBay handles getting the sales tax to the state the buyer lives in. You don't have to do anything.

[Yastrzemski Sports]

http://www.net54baseball.com/showthread.php?t=264176

[vintagetoppsguy]

You didn't say, but I'm guessing you were selling on eBay?

I recently decided to make some space in the man cave and sell a few items on ebay.

:D

[swarmee]

Ah, so he did say. Point stands.

[Gusturd]

Thank you for the responses and the link. Read the other thread in it's entirety. Sounds pretty convoluted at this point with more questions than answers but good to know, Ebay is handling.

One question I didn't see answered. At one point does a guy selling off some of his junk (like me) become a dealer responsible for collecting and submitting sales tax?

[frankbmd]

Thank you for the responses and the link. Read the other thread in it's entirety. Sounds pretty convoluted at this point with more questions than answers but good to know, Ebay is handling.

One question I didn't see answered. At one point does a guy selling off some of his junk (like me) become a dealer responsible for collecting and submitting sales tax?

I believe you would just be responsible for junk tax.:eek:

[commishbob]

i believe you would just be responsible for junk tax.:eek:
353535

[conor912]

And not for nothing but 10% sales tax! WOW.

Yeah, I live in WA. We have no state income tax, but they find plenty of other ways to make it up :)

[Yastrzemski Sports]

Thank you for the responses and the link. Read the other thread in it's entirety. Sounds pretty convoluted at this point with more questions than answers but good to know, Ebay is handling.

One question I didn't see answered. At one point does a guy selling off some of his junk (like me) become a dealer responsible for collecting and submitting sales tax?

That’s a great question for an accountant. I am not one and therefore would not offer an opinion.

[BobC]

[QUOTE=
That’s a great question for an accountant. I am not one and therefore would not offer an opinion.

Yesterday 12:24 PM
One question I didn't see answered. At one point does a guy selling off some of his junk (like me) become a dealer responsible for collecting and submitting sales tax?[/QUOTE]

Well I am an accountant and I can tell you that it is not always an easy, straight forward question to answer. First off, each state that has sales and use tax laws has their own specific set of rules and definitions, so what may cause you to be considered a dealer subject to collecting sales tax in one state, may not cause that to be the case if you're in a different state.

The new Supreme Court case ruling from last Summer pretty much set the standard for what is considered the threshold to cause you to be considered a dealer if you sell online to customers in any other state ($100,000 in sales to customers in that state OR 200 more transactions/sales to customers in that state). However, that is when talking about online sales to other states. I doubt if you're selling something at a show or flea market/garage sale in your home state, or even online to customers in the same state where you reside, that you need to have that much in sales volume or activity to be deemed a dealer subject to the sales tax rules in your home state. For instances where you are simply deciding to sell off some things you've collected over time and aren't planning on doing it in an ongoing, consistent manner, those sales would potentially come under the umbrella of being considered as 'Casual Sales', and would not necessarily cause the seller to be considered a dealer and therefore subject to having to collect and remit sales tax an items being sold. The exact definition of what is considered as a 'Casual Sale' is one that you'd have to look up for your particular home state though to actually determine if you are considered a dealer or not.

For example, I reside in Ohio and the definition of a 'Casual Sale' right from the Ohio Revised Code - section 5739.01(L) is as follows:

(L) "Casual sale" means a sale of an item of tangible personal property that was obtained by the person making the sale, through purchase or otherwise, for the person's own use and was previously subject to any state's taxing jurisdiction on its sale or use, and includes such items acquired for the seller's use that are sold by an auctioneer employed directly by the person for such purpose, provided the location of such sales is not the auctioneer's permanent place of business. As used in this division, "permanent place of business" includes any location where such auctioneer has conducted more than two auctions during the year.

Real clear definition, right? It basically states that to be considered a 'Casual Sale' the item(s) being sold had to have been originally acquired by the seller for their personal use (not originally acquired for resale), had to have been subject to sales tax being charged to the seller when they originally acquired it/them (unless you got it from someone else in a Casual Sale as well), and the part where you have to sort of read between the lines is that you aren't now selling so much on a continuous ongoing basis that you would otherwise be considered a dealer subject to sales tax laws. That is the part, at least in Ohio, where they don't spell out and tell you how many sales you have to actually make to be considered a dealer, or how much sales volume you have to have to be considered a dealer. They give no specific bright line test that you can say yes or no to if you cross it like they do with the $100,000 or sales or 200 transactions specified in the Supreme Court ruling of the South Dakota case last year. In those cases the states I believe don't want to specify specific thresholds so they have some latitude on what they may or may not consider to make someone a dealer.

And the latter part of that definition mentioning auctioneers has to do if instead of you personally selling something in what would otherwise be considered as a Casual Sale, if you take it to an auctioneer and they sell it at their establishment or place of business for you, then it would be considered as a dealer type sale potentially subject to Ohio sales tax. But if you're doing say a one time estate sale at your house and the auctioneer comes there to help you sell off the items, and is only there that one time, then the sales could still be considered as Casual Sales under Ohio law and would therefore not automatically be considered as being made by a dealer and would not be subject to Ohio sales tax.

This part of sales tax law is not always easy to interpret. For example, how many times have you heard a collector say they occasionally also buy and then resell things to fund their collecting activity, and claim they are not a dealer and therefore ignore the sales tax laws because they don't do it all the time, or don't do it for a profit, etc.? Well, if they keep doing such sales year after year, even if it is only a few sales here and there, doesn't that kind of fit the definition of being an ongoing seller? (You know, if it looks like a duck, flies like duck, quacks like a duck, etc., etc......) So even if the sales are somewhat infrequent or small, they are still ongoing and continuous and on the surface could be construed to cause the seller to end up being considered as a bonafide dealer subject to a particular home state's sales tax laws.

So the bottom line is that if you are involved with such ongoing, casual type sales, you definitely want to keep the transactions private and not leave paper trails and such. Most states won't bother such small time sellers anyway, isn't worth their time and effort. But just remember that because they don't, doesn't mean that they can't. Heck, if some state thought it was worthwhile, i could see them come knocking on Leon's door requesting info from the BST section of the forum to look into and go after people selling things on there that may be subject to sales tax in their respective state(s). There's not enough sales tax money there to make it worthwhile though so I doubt he'd need to worry about that. But how do you think Ebay most likley got sucked into now starting to collect sales tax for certain states? States starting to look at them as a facilitator to a large volume of sales transactions and they have and handle all the information. At the simplest and most basic level, Ebay and the BST are really pretty much the same thing, an online forum allowing independent buyers and sellers to meet and complete transactions amongst themselves.

To really check into something like this in more detail, if someone is truly worried, go online and check into the sales tax laws of your particular home state you reside in and see what the definition of a 'Casual Sale' is in your state for sales tax purposes. At least it will give you an idea of how what you are doing may be viewed by your state. Good luck!

[Buythatcard]

You didn't say, but I'm guessing you were selling on eBay? If so, eBay handles getting the sales tax to the state the buyer lives in. You don't have to do anything.

I have been collecting NJ Sales tax since I started selling on eBay 15 years ago. I then have to pay those taxes to NJ every 3 months.
I haven't heard anything about eBay handling the sales tax for you. Is that something they do for some states because they are certainly not doing it in NJ? Atleast, not yet.

[swarmee]

It seems like you're talking about in-state sales tax. I think the OP was talking about the new out-of-state use tax. So my points were about that.

[Gusturd]

Well I am an accountant and I can tell you that it is not always an easy, straight forward question to answer. First off, each state that has sales and use tax laws has their own specific set of rules and definitions, so what may cause you to be considered a dealer subject to collecting sales tax in one state, may not cause that to be the case if you're in a different state.

The new Supreme Court case ruling from last Summer pretty much set the standard for what is considered the threshold to cause you to be considered a dealer if you sell online to customers in any other state ($100,000 in sales to customers in that state OR 200 more transactions/sales to customers in that state). However, that is when talking about online sales to other states. I doubt if you're selling something at a show or flea market/garage sale in your home state, or even online to customers in the same state where you reside, that you need to have that much in sales volume or activity to be deemed a dealer subject to the sales tax rules in your home state. For instances where you are simply deciding to sell off some things you've collected over time and aren't planning on doing it in an ongoing, consistent manner, those sales would potentially come under the umbrella of being considered as 'Casual Sales', and would not necessarily cause the seller to be considered a dealer and therefore subject to having to collect and remit sales tax an items being sold. The exact definition of what is considered as a 'Casual Sale' is one that you'd have to look up for your particular home state though to actually determine if you are considered a dealer or not.

For example, I reside in Ohio and the definition of a 'Casual Sale' right from the Ohio Revised Code - section 5739.01(L) is as follows:

(L) "Casual sale" means a sale of an item of tangible personal property that was obtained by the person making the sale, through purchase or otherwise, for the person's own use and was previously subject to any state's taxing jurisdiction on its sale or use, and includes such items acquired for the seller's use that are sold by an auctioneer employed directly by the person for such purpose, provided the location of such sales is not the auctioneer's permanent place of business. As used in this division, "permanent place of business" includes any location where such auctioneer has conducted more than two auctions during the year.

Real clear definition, right? It basically states that to be considered a 'Casual Sale' the item(s) being sold had to have been originally acquired by the seller for their personal use (not originally acquired for resale), had to have been subject to sales tax being charged to the seller when they originally acquired it/them (unless you got it from someone else in a Casual Sale as well), and the part where you have to sort of read between the lines is that you aren't now selling so much on a continuous ongoing basis that you would otherwise be considered a dealer subject to sales tax laws. That is the part, at least in Ohio, where they don't spell out and tell you how many sales you have to actually make to be considered a dealer, or how much sales volume you have to have to be considered a dealer. They give no specific bright line test that you can say yes or no to if you cross it like they do with the $100,000 or sales or 200 transactions specified in the Supreme Court ruling of the South Dakota case last year. In those cases the states I believe don't want to specify specific thresholds so they have some latitude on what they may or may not consider to make someone a dealer.

And the latter part of that definition mentioning auctioneers has to do if instead of you personally selling something in what would otherwise be considered as a Casual Sale, if you take it to an auctioneer and they sell it at their establishment or place of business for you, then it would be considered as a dealer type sale potentially subject to Ohio sales tax. But if you're doing say a one time estate sale at your house and the auctioneer comes there to help you sell off the items, and is only there that one time, then the sales could still be considered as Casual Sales under Ohio law and would therefore not automatically be considered as being made by a dealer and would not be subject to Ohio sales tax.

This part of sales tax law is not always easy to interpret. For example, how many times have you heard a collector say they occasionally also buy and then resell things to fund their collecting activity, and claim they are not a dealer and therefore ignore the sales tax laws because they don't do it all the time, or don't do it for a profit, etc.? Well, if they keep doing such sales year after year, even if it is only a few sales here and there, doesn't that kind of fit the definition of being an ongoing seller? (You know, if it looks like a duck, flies like duck, quacks like a duck, etc., etc......) So even if the sales are somewhat infrequent or small, they are still ongoing and continuous and on the surface could be construed to cause the seller to end up being considered as a bonafide dealer subject to a particular home state's sales tax laws.

So the bottom line is that if you are involved with such ongoing, casual type sales, you definitely want to keep the transactions private and not leave paper trails and such. Most states won't bother such small time sellers anyway, isn't worth their time and effort. But just remember that because they don't, doesn't mean that they can't. Heck, if some state thought it was worthwhile, i could see them come knocking on Leon's door requesting info from the BST section of the forum to look into and go after people selling things on there that may be subject to sales tax in their respective state(s). There's not enough sales tax money there to make it worthwhile though so I doubt he'd need to worry about that. But how do you think Ebay most likley got sucked into now starting to collect sales tax for certain states? States starting to look at them as a facilitator to a large volume of sales transactions and they have and handle all the information. At the simplest and most basic level, Ebay and the BST are really pretty much the same thing, an online forum allowing independent buyers and sellers to meet and complete transactions amongst themselves.

To really check into something like this in more detail, if someone is truly worried, go online and check into the sales tax laws of your particular home state you reside in and see what the definition of a 'Casual Sale' is in your state for sales tax purposes. At least it will give you an idea of how what you are doing may be viewed by your state. Good luck!

Great information. Thank you for sharing.

Art

[gzman]

I have been collecting NJ Sales tax since I started selling on eBay 15 years ago. I then have to pay those taxes to NJ every 3 months.
I haven't heard anything about eBay handling the sales tax for you. Is that something they do for some states because they are certainly not doing it in NJ? Atleast, not yet.
eBay started collecting tax in NJ on May 1-but, they roll out this new policy without certain critical details...Apparel is not taxed in NJ...I sell MLB game jerseys...I have a customer in NJ who is being charged tax by eBay for their purchase of game jerseys...these items are not taxable in the state..I don't have them set up to collect tax for in state buyers..yet, the eBay system does it..if I buy a jersey from an out of state seller, eBay adds tax to the sale..since I boy for resale, I did file for and was awarded tax exempt status..but, sure seems like eBay doesn't have the details all together and may be setting themselves up for a nice class action lawsuit..

[Gusturd]

Update: I got notification of payment received and went about the task of shipping the item. When I went to print out the shipping label, I see the buyer no longer lives in Washington. His address is now in California.

However, he included a note asking me to ship the item to an address in Washington. I informed him I'd only ship to the registered address in Ebay. We'll see what happens.

Anyone else think this is suspicious?

[Leon]

Sales tax in the BST area? Yuck.

Well I am an accountant and I can tell you that it is not always an easy, straight forward question to answer. First off, each state that has sales and use tax laws has their own specific set of rules and definitions, so what may cause you to be considered a dealer subject to collecting sales tax in one state, may not cause that to be the case if you're in a different state.

The new Supreme Court case ruling from last Summer pretty much set the standard for what is considered the threshold to cause you to be considered a dealer if you sell online to customers in any other state ($100,000 in sales to customers in that state OR 200 more transactions/sales to customers in that state). However, that is when talking about online sales to other states. I doubt if you're selling something at a show or flea market/garage sale in your home state, or even online to customers in the same state where you reside, that you need to have that much in sales volume or activity to be deemed a dealer subject to the sales tax rules in your home state. For instances where you are simply deciding to sell off some things you've collected over time and aren't planning on doing it in an ongoing, consistent manner, those sales would potentially come under the umbrella of being considered as 'Casual Sales', and would not necessarily cause the seller to be considered a dealer and therefore subject to having to collect and remit sales tax an items being sold. The exact definition of what is considered as a 'Casual Sale' is one that you'd have to look up for your particular home state though to actually determine if you are considered a dealer or not.

For example, I reside in Ohio and the definition of a 'Casual Sale' right from the Ohio Revised Code - section 5739.01(L) is as follows:

(L) "Casual sale" means a sale of an item of tangible personal property that was obtained by the person making the sale, through purchase or otherwise, for the person's own use and was previously subject to any state's taxing jurisdiction on its sale or use, and includes such items acquired for the seller's use that are sold by an auctioneer employed directly by the person for such purpose, provided the location of such sales is not the auctioneer's permanent place of business. As used in this division, "permanent place of business" includes any location where such auctioneer has conducted more than two auctions during the year.

Real clear definition, right? It basically states that to be considered a 'Casual Sale' the item(s) being sold had to have been originally acquired by the seller for their personal use (not originally acquired for resale), had to have been subject to sales tax being charged to the seller when they originally acquired it/them (unless you got it from someone else in a Casual Sale as well), and the part where you have to sort of read between the lines is that you aren't now selling so much on a continuous ongoing basis that you would otherwise be considered a dealer subject to sales tax laws. That is the part, at least in Ohio, where they don't spell out and tell you how many sales you have to actually make to be considered a dealer, or how much sales volume you have to have to be considered a dealer. They give no specific bright line test that you can say yes or no to if you cross it like they do with the $100,000 or sales or 200 transactions specified in the Supreme Court ruling of the South Dakota case last year. In those cases the states I believe don't want to specify specific thresholds so they have some latitude on what they may or may not consider to make someone a dealer.

And the latter part of that definition mentioning auctioneers has to do if instead of you personally selling something in what would otherwise be considered as a Casual Sale, if you take it to an auctioneer and they sell it at their establishment or place of business for you, then it would be considered as a dealer type sale potentially subject to Ohio sales tax. But if you're doing say a one time estate sale at your house and the auctioneer comes there to help you sell off the items, and is only there that one time, then the sales could still be considered as Casual Sales under Ohio law and would therefore not automatically be considered as being made by a dealer and would not be subject to Ohio sales tax.

This part of sales tax law is not always easy to interpret. For example, how many times have you heard a collector say they occasionally also buy and then resell things to fund their collecting activity, and claim they are not a dealer and therefore ignore the sales tax laws because they don't do it all the time, or don't do it for a profit, etc.? Well, if they keep doing such sales year after year, even if it is only a few sales here and there, doesn't that kind of fit the definition of being an ongoing seller? (You know, if it looks like a duck, flies like duck, quacks like a duck, etc., etc......) So even if the sales are somewhat infrequent or small, they are still ongoing and continuous and on the surface could be construed to cause the seller to end up being considered as a bonafide dealer subject to a particular home state's sales tax laws.

So the bottom line is that if you are involved with such ongoing, casual type sales, you definitely want to keep the transactions private and not leave paper trails and such. Most states won't bother such small time sellers anyway, isn't worth their time and effort. But just remember that because they don't, doesn't mean that they can't. Heck, if some state thought it was worthwhile, i could see them come knocking on Leon's door requesting info from the BST section of the forum to look into and go after people selling things on there that may be subject to sales tax in their respective state(s). There's not enough sales tax money there to make it worthwhile though so I doubt he'd need to worry about that. But how do you think Ebay most likley got sucked into now starting to collect sales tax for certain states? States starting to look at them as a facilitator to a large volume of sales transactions and they have and handle all the information. At the simplest and most basic level, Ebay and the BST are really pretty much the same thing, an online forum allowing independent buyers and sellers to meet and complete transactions amongst themselves.

To really check into something like this in more detail, if someone is truly worried, go online and check into the sales tax laws of your particular home state you reside in and see what the definition of a 'Casual Sale' is in your state for sales tax purposes. At least it will give you an idea of how what you are doing may be viewed by your state. Good luck!

[BobC]

Sales tax in the BST area? Yuck.

Leon, exactly right....YUCK! But as I was pointing out, you're not likely to have any states come knocking, at least not anytime soon. Still, the BST really isn't basically different from Ebay in that it simply provides a platform for buyers and sellers to transact business. Probably the most meaningful difference though is that the BST, the site, and you, all have nothing whatsoever to do with collecting and passing on any of the money from any transactions. Nor does Net54/BST keep track of the details for any sales and sales amounts to calculate and take a piece of the action like Ebay does. I believe those major differences would likely keep Net54 and the BST out of the crosshairs of state sales tax agents for some time to come.

Still, if someone ever really pissed off a particular state, and their sales tax people, that also used the BST to transact business, I could see a state agent contacting you to inquire about parties involved in transactions using the BST. If for nothing else than to get access to the sales info from the threads, and who the parties are, which i believe you have all that information for. You see, by running the BST and having the threads out there and saved for all to see, you have also created an online, open record of sales activity that someone could look at. When people sign up for Net54 I don't think you ask if they are federal, state or local tax officials who may be looking to see what is going on with all the sales online through your site, do you? And assuming not, there's nothing to stop any tax agent from becoming a Net54 member and keep them from simply opening up the BST and looking for large sales and tracking the activity of certain sellers.

Quite frankly, for any board members who like using the BST so they don't have to go through Ebay or an auction house because they don't like their activities being known and want to be discreet about their sales activity and volume, the BST may not be as "hidden" as they may think. And from your standpoint, being in charge of all that accumulated sales data would make you a logical target of tax authorities to come knocking on your door one day to ask about who some of these people are.

Now if the site only ran and kept the BST threads open for a fairly short period, and then completely deleted them after a set amount of time, it would be less likely that some tax authority would come knocking to have you forward historical data to them. And even if they did, you wouldn't really have much to give them then, only info for the past few months or so. But even if you did start deleting the BST threads after a set period of time, tax authorities could simply monitor the BST and copy/print the threads on a current basis to get around that and save and accumulate the info themselves. Again, not likely to happen anytime soon, but, it could happen and is something for you and people using the BST to consider. I know I've heard some members like to keep the sales info on the BST transactions available for reference, but it also means the info is available for the tax authorities to go find it as well. And consider this, there are collectors from all walks of life and professions that can be into cards. What is to stop a tax agent from also being a collector, and by coming on this site they happen to pick up on potential activity they think may not be getting reported properly for tax purposes? Something for you and everyone else using the BST to keep in mind. Just saying.....................................!

[cammb]

I don't recall ever seeing the final amount discussed of any BST transaction. I see the word SOLD but never the final amount. That is between the two parties. So I don't see how this applies to the BST. thread.

[mrmopar]

I am from WA and have to pay the 10%. I was under the impression that the seller might see the amount, but doesn't actually receive it. Supposedly ebay collects for and pays the tax. My PP transactions are split since they started this with separate line items for the tax and the item/shipping.