Quote:
Originally Posted by buymycards
I don't know about your state, but in Wisconsin, if you have your items sent to the vault and don't pay sales tax, when the cards are sent to your address in Wisconsin, they become taxable and you will have to pay use tax on the purchase.
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This is most likely the case for someone that lives in any of the 45 states that have a sales AND use tax. So people thinking they can buy through PWCC and initially have their purchases go to PWCC's Oregon vault where no sales tax is charged, and then subsequently requesting their items be sent to them at their home address, need to remember that they then owe the use tax on those purchased items to the state/county they subsequently have their items sent to. I would advise anyone thinking of doing something like this to maybe first check with their accountant or other tax professionals, and to also review the sales and use tax laws for their respective state of residency. I am fairly confident though that regardless of which of the 45 states that have sales and use taxes, if you live in one of them and try to use a vault to get out of paying sales tax and then right away have the vault company just forward to you the items you had just purchased, you have most likely technically triggered a use tax liability equal to what the sales tax would have been on the original purchase.
There are always going to be people that view a vault like PWCC's or Goldin's, that were intentionally set up in states that do not have sales taxes, as a way to get around having to pay sales tax on their purchases, especially since Ebay and more and more AHs are now collecting sales taxes due to changes in the sales tax laws following a Supreme Court ruling from a few years back. PWCC and Goldin use this as a marketing technique to attract more customers, since they offer buyers a way around sales taxes. And it is also a way to assure and increase future consignments for both companies should people leaving items in their vaults subsequently decide to sell something. If a person decides to sell an item and asks PWCC or Goldin for it back to do so, or that it be sent to another AH or consignment seller to be sold on their behalf, then I believe technically they may have triggered the use tax on the original purchase of the item now being sold. If the person wishing to sell an item in a vault just consigns it back over to PWCC or Goldin, it never leaves the non-sales taxing states those two companies are operating out of, and the seller doesn't trigger use tax on the sale of the item. And the subsequent sale by PWCC or Goldin of this consigned item to a new owner affords both sellers the chance to entice/persuade/coerce the new owner to avail themselves of the respective vaults they both operate. Which in turn gives PWCC and Goldin an inside track to gain future consignments from this new seller as well, and on and on. It is a somewhat ingenious way both PWCC and Goldin can take advantage of the inherent greed in many people by having devised a way for them to get out of paying sales taxes on purchases, but also kind of locks those people in to staying only with PWCC or Goldin if they want to maintain that sales/use tax-free status going forward then.
Obviously a vault isn't for everyone, especially the old guard hobby collectors and purists who want to actually be able to hold and look at their cards and collectibles in hand, not just look at scans. But with a vault, an owner doesn't have to worry about where or how to store items, probably helps for insurance and record keeping purposes also since everything will be catalogued and supposedly maintained in a safe and secure environment. And if they do want to share what they own with others, I'm assuming they either have or can get a digital record of what they do have residing in a vault. And as already noted, if an owner does decide to let something go, they can easily and simply just have it consigned to the brother/sister company of the vault that handles sales.
And a vault obviously isn't needed (or wanted probably) by a dealer who already is registered as such and can supply a resale sales tax exemption certificate to whomever they are buying something from, as a vault doesn't save them any sales taxes.
However, there is a potential grey area in regards to triggering use tax when it comes to taking things out of a vault and having them sent to a state that does have a sales and use tax. If you buy something, have it put into into a sales tax-free vault, and then right away take it back out of the vault and have it sent to your home, that should most definitely trigger a use tax liability if you reside in a state with a sales tax. But what if you wait 6 months before taking an item out of a vault, or a year, or 5 years? To my knowledge, individual states do not have general or specific time threshholds on how long you may have owned something like baseball cards before it is exempt from use tax when bringing it into a new state. Think of this. What if you lived in a sales tax free state your entire life, and had all your furniture, clothing, and belongings purchased in that same state, so you never paid sales tax on anything. And then you move and take all your belongings, furniture, and clothes with you to your new home, in a state that does have sales tax. Do you now have to suddenly pay use tax on everything you had acquired over your entire lifetime to the state you just moved to? Most likely not. But what about on a new living room set you purchased in your old state with no sales taxes the week before you moved to your new home state? See how complicated this can get? This is again a reason to review your own particular case with your accountant or tax professional if you are planning on removing items from a vault, and to also review the sales and use tax laws for the applicable state you're going to move those items to.
What I don't know is what, if anything, PWCC and Goldin tell their vault customers in regards to sales and use tax issues, and if they even try to forewarn them of any potential sales/use tax liabilities if they remove items from a vault. Maybe some people that do use their vaults can fill us in and share what they know. I would also not be surprised if down the road, companies that set up sales tax-free vaults like this don't start to attract the attention of other states that do charge sales and use taxes, and potentially try to force the vaults to report/share information with them.