Auction Houses and Sales Tax

[Republicaninmass]

Originally Posted by itslarry

Can you imagine how expensive everything would get if resellers had to pay sales tax and pass it on to end consumer?
Life isn't fair, get a permit.

An exemption cert is pretty much a guaranteed audit, so if your book are up to snuff, no reason not to have one. Unless you dont like headaches from hell

[Leon]

Originally Posted by Republicaninmass

An exemption cert is pretty much a guaranteed audit, so if your book are up to snuff, no reason not to have one. Unless you dont like headaches from hell

I had a sales tax certificate exemption for many years and never got audited. I suspect most others are the same way too.

And BobC above hits the nail on the head except for the reality that Sales TAX IS a cost (realized price or not) to everyone without an exemption and part of the equation of buying a card. If it isn't then where can I get my money back? It is a an increment of bidding, in essence. (at least to me)

[Republicaninmass]

Originally Posted by Leon

I had a sales tax certificate exemption for many years and never got audited. I suspect most others are the same way too.

And BobC above hits the nail on the head except for the reality that Sales TAX IS a cost (realized price or not) to everyone without an exemption and part of the equation of buying a card. If it isn't then where can I get my money back? It is a an increment of bidding, in essence. (at least to me)

Good to know

Sent from my SM-N950U using Tapatalk

[ricktmd]

Great information from Bob. I do want to add that having a resale permit is for people running a business selling baseball cards or at least a part time dealer. In California (and likely other states) the last thing you would ever want is an audit from The State Board Of Equalization if you have been buying stuff with a permit for your own collection. The State Board of Equalization is unforgiving and their audits the most comprehensive. They may also share their information with the IRS or Franchise Tax Board. It is better just to pay the tax and the point of sale and factor that into your bidding. While I do agree it gives the dealer with a permit an edge in the bidding process the dealer with the resale permit has to charge/pay tax either at the point of purchase or when they sell the item. So theoretically it evens out in the end if the dealers abide by the sales tax laws

[BobC]

Originally Posted by ricktmd

Great information from Bob. I do want to add that having a resale permit is for people running a business selling baseball cards or at least a part time dealer. In California (and likely other states) the last thing you would ever want is an audit from The State Board Of Equalization if you have been buying stuff with a permit for your own collection. The State Board of Equalization is unforgiving and their audits the most comprehensive. They may also share their information with the IRS or Franchise Tax Board. It is better just to pay the tax and the point of sale and factor that into your bidding. While I do agree it gives the dealer with a permit an edge in the bidding process the dealer with the resale permit has to charge/pay tax either at the point of purchase or when they sell the item. So theoretically it evens out in the end if the dealers abide by the sales tax laws

What Rick said.

Truth is, you don't want any state's sales tax division to come looking at you if possible. Some states can be worse than others, but all states are looking for revenue and if they suspect they can get some from you, they will try.

I have personally handled sales tax audits in both Ohio and New York state over the years, and advise many a client of sales and use tax rules and issues, including the completion of exemption certificates for single and multiple states. Sales tax rules and laws vary from state to state and believe me, an audit for sales tax in any state is not fun!!!

[BobC]

Originally Posted by Leon

I had a sales tax certificate exemption for many years and never got audited. I suspect most others are the same way too.

And BobC above hits the nail on the head except for the reality that Sales TAX IS a cost (realized price or not) to everyone without an exemption and part of the equation of buying a card. If it isn't then where can I get my money back? It is a an increment of bidding, in essence. (at least to me)

Leon, I've heard your thoughts on sales taxes before and don't disagree with you. i wasn't saying and never said sales taxes aren't an actual component cost to be factored into any purchase decision, I was merely stating that from a sales tax perspective they are not technically part of the "realized price" of an item because the final "realized price" is what the sales tax is computed and collected on.

You want to separately list and state the sales tax apart from the "realized price", otherwise a state could try to charge you sales tax on the sales tax. For example, if you went into a store and they simply charged you $1.00 for an item without showing a separate amount for sales tax, which they then reported to the state as a $0.93 sale with the remaining $0.07 for the sales tax, the state could technically come back and say the seller owes sales tax on the entire $1.00 "realized price", not just the $0.93 they reported as the sales amount. Because in that case the seller didn't separately break out the sales tax from the "realized price" of $1.00. That was the distinction I was tying to make for everyone so they don't keep saying the sales tax is part of the "realized price", as that implies that sales tax should be charged and collected on the sales tax they are saying is included in the "realized price".

You also noted that you were eligible for a sales tax exemption for many years and never got audited, which as I said is pretty much the norm. Glad to hear someone else chime in that having given someone a sales tax exemption certificate is not a guarantee they will get audited.

[BobC]

Originally Posted by Republicaninmass

An exemption cert is pretty much a guaranteed audit, so if your book are up to snuff, no reason not to have one. Unless you dont like headaches from hell

Giving a seller you are buying from a tax exemption certificate is not a guarantee that you will be audited. Remember, the exemption certificate is only given by the buyer to the seller. There is no copy of the exemption certificate that is filed or sent to the state(s) by either party. The state has no way of knowing you ever gave someone an exemption certificate, unless they ever have a cause or reason to audit and inspect the records of the party you're buying from. If the seller didn't charge you sales tax on a purchase because you gave them an exemption certificate, a state sales tax agent inspecting the seller's records will likely ask the seller to show proof as to why they didn't charge and collect sales tax from certain customers. They'll simply ask to see all the valid, signed exemption certificates they were given by those purchasers/customers they didn't charge sales tax to. This is the point where a state sales tax agent would see the name of someone who gave a sales tax exemption certificate to that seller. And yes, if they wanted to, the state agents could follow up and contact the various purchases about their exemption certificates as well. Chances are the state agents will not start contacting every purchaser that gave that seller an exemption certificate, especially if the amount of exempt sales is relatively small. State sales tax auditors operate like most everyone in real life and follow a cost-benefit pattern. If there wasn't a large amount of non-taxable sales reported for a particular buyer to begin with, they're not about to expend a large amount of time and resources to question it and actually contact that particular sales tax-exempt buyer or start looking at them as an audit prospect either. Sales tax agents are people also, and they go in to look at the seller they are assigned to review, get their job done and then get out and on to their next assignment as quick as they can. They are not necessarily there to also review and audit the purchasers/customers who claimed exemptions with that seller. Of course, that isn't to say that if they suspect or see something funny or suspicious that they wouldn't consider contacting a particular buyer to follow-up with them. It is just not very likely.