New Heritage State Sales Tax
 

Sorry if this was already discussed...but I just noticed this on their site:

For Sports Collectibles: Effective September 1st, Heritage Auctions is required by state law to charge applicable sales tax on any items in this category delivered to addresses in the following states: Colorado, Massachusetts, Michigan, Oklahoma, Rhode Island, Washington. Exemptions include dealers with valid sales tax numbers who are purchasing for resale and who furnish us with a properly completed resale certificate, for the states listed above. See paragraph #25 in our Terms and Conditions for more information.

NOTE: Please visit our other categories regarding other states with applicable sales tax.

Thanks for sharing, I missed that.

I will lower my bids accordingly.

As a resident of Washington, I will also be lowering my bid amounts by 10%.

It is already tough to win anything in Heritage. This will make it quite a bit more difficult. :mad:

Are other AHs following suit on this?

Im in MI and no new laws have passed on this issue since a couple years ago, so is REA, LOTG and others doing this as well? HA just kind of slipped it in there on some lots, not all though.

There have been other threads that touched upon this sales tax issue in the past. It probably doesn't have anything to do with new taxes being passed in any of these states. What likely occurred is that Heritage opened an office or started paying someone in those states, giving them nexus in those states now to have to start billing and collecting sales tax.

Or, those states are modifying their sales tax nexus rules to more or less copy those of South Dakota from the recent Supreme Court ruling in the South Dakota case against Wayfair. This just came out a few months ago., back in June I believe. In fact, I know for certain that Michigan already went ahead and modified their sales tax nexus requirement to more or less agree with the South Dakota rules, effective 10/1/18. Not sure of the reason for the other states listed, but for someone as big as Heritage, it will most likely end up being subject to collecting sales tax is pretty much every state that has a sales tax, sooner than later.

My guess is that in the next 5'ish years there might be sales tax collected by all auction houses shipping everywhere.

Leon, That may depend on how big the auction houses are and what volume of business they are doing. In that South Dakota Supreme Court case, the threshold was set at $100,000 of sales activity in a single year before someone would have to start collecting sales tax on sales to SD residents, along with over 200 transactions. And that activity has to be for sales to residents of that particular state, not sales to all people everywhere.

The bigger auction houses will of course be hit. There could be some smaller AHs that don't meet such thresholds in some of the less populous states.

Yep, good time to consign to the smaller guys, save ~10%. :)

That WA sales tax for Heritage hurts.

Bob,

I have read your posts on this topic and you seem to know a good deal about this. Really appreciate your insights. Sounds like they are not quite there to being able to implement this national tax due to the administrative requirements. Seems really complicated to have to now track sales by state, especially for the sellers who have only one place of business.

Thanks,
Chase

I've been a CPA for about 40 years in Ohio, and have butted heads and been involved in sales tax audits in both Ohio and New York over the years, as well as advising people and businesses about it over the years. Some of the rules and nuances you run into regarding sales taxes are absolutely ridiculous. Sales taxes aren't going away either, and with all the technology and connectivity and internet access everyone now has, it is only going to get worse. Everyone is slowly being forced to do everything online and over the internet, making it so much easier for the various government tax authorities to watch and follow what everybody is doing.

You know, I've seen and heard all the complaining by people about sales tax in various posts and threads on this site over the years and how it isn't fair when it gets taxed to people in one state and not another, and so on. There is actually a pretty reasonable way collectors could get around it and end up possibly being exempt from sales tax altogether. It would involve a little leg work and some ongoing activity and action, but wouldn't be impossible to overcome.

I'm a firm believer in the old saying - "Tax evasion is a crime...tax avoidance is your God given and constitutional right!"

I'm buried right now trying to get returns done for businesses by the 9/17/18 extended due date, otherwise I could get into it some more. I've thought about starting a thread to explain how people who complain and don't like the sales taxes can possibly get around them entirely. Maybe after I get through the filing deadline and have some more time.............we'll see.

Very valid point about how some bidders, depending on where they live, will pay sales tax while others won't, placing those who pay it at a disadvantage. I suppose one way around sales tax (national or local) would be for collectors/buyers to apply for resale licenses. Most of us don't just buy so maybe some of us could justify what we do as a side business? Downside is that you save the sales tax but if you do well selling, the income tax will be several times higher.

Again, appreciate your input on this topic from an accountant's point of view and thanks for sharing thoughts again during a busy time. I am sure once this national sales tax rolls out it will be more clear.

I know most of the material going through these larger auction houses are higher end items but Does anyone think this may bring about a resurgence of the local/regional card show where Cash is King?

Bob

Only if those shows start selling whats in the auctions...

As someone who's been paying sales tax to Heritage for several years, it'll be nice to someday have all the bidders back on an even playing field -- or nearly even I should say. I guess the tax rates still differ from state to state.

Yeah this pretty much cements my non-participation. Another 10% just to be able to compete is hard to justify on my end when there are (for now anyways) so many other tax free options.

It does pique my interest in researching a resellers licence, since there are surely more taxes in more states for more AHs to come.

Actually it is a even playing field, just most people are a little dishonest and are not paying their states use tax and applicable municipal tax.:)

As someone who has had a sales tax license(resellers) it is way easier to just pay the taxes on your hobby purchases. If you do your own taxes and your time means nothing then maybe it would be worth it.

Yes, they do. Regarding an 'even playing' field. What is your state income tax rate in FLA again? Care to 'even that out' as well?