[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!
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