Heritage & PWCC and the PSA 9 Mays

[BobC]

Originally Posted by Leon

I get that.
However, what kind of true collector doesn't want to have their cards in hand or close by? As a collector it makes no sense to me. And I get the ole, "a collector can collect any way that want to" adage. I collect with cards not pictures online from a vault. I check out my physical cards very frequently. To each their own..
.

Leon,

If this buyer lived in a state with say a 7% sales tax rate, using PWCC's vault just saved him about $6,500 he'd otherwise have to pay as sales tax. That savings could allow someone to pick up a few really nice additional cards as well for one's collection. And it has been discussed before about how we don't know the specific policy of each of these "vaults" currently out there on how they'll treat sales tax on items removed from them after they've been left in one for an extended period of time. Chances are that after enough time has passed, you could remove items from the vault and not owe any sales tax.

So granted, a real collector would likely want such a great card in hand. But how many real collectors may be willing and happy to wait an extra six months, a year, or maybe even longer, and leave the card in the vault before asking it be sent to them, knowing that by doing do so they may have saved enough in sales tax to buy a decent T206 Cobb as well? And in this case the card is slabbed, so it's not like the owner would be able to truly hold, feel, or even smell the actual card anyway.

Now this may not be acceptable to you, but I wouldn't be shocked to find out that quite a few true collectors wouldn't hesitate to take advantage of something like this, if presented with the proper situation. Just saying.....

[Rhotchkiss]

Originally Posted by BobC

Leon,

If this buyer lived in a state with say a 7% sales tax rate, using PWCC's vault just saved him about $6,500 he'd otherwise have to pay as sales tax. That savings could allow someone to pick up a few really nice additional cards as well for one's collection. And it has been discussed before about how we don't know the specific policy of each of these "vaults" currently out there on how they'll treat sales tax on items removed from them after they've been left in one for an extended period of time. Chances are that after enough time has passed, you could remove items from the vault and not owe any sales tax.

So granted, a real collector would likely want such a great card in hand. But how many real collectors may be willing and happy to wait an extra six months, a year, or maybe even longer, and leave the card in the vault before asking it be sent to them, knowing that by doing do so they may have saved enough in sales tax to buy a decent T206 Cobb as well? And in this case the card is slabbed, so it's not like the owner would be able to truly hold, feel, or even smell the actual card anyway.

Now this may not be acceptable to you, but I wouldn't be shocked to find out that quite a few true collectors wouldn't hesitate to take advantage of something like this, if presented with the proper situation. Just saying.....

Well said Bob. +1

And I would add to that: While all of my cards reside near me, I rarely look at them person. I much more often look at pictures of them on my phone, which I could just as easily do if my cards were in a vault instead of in safe deposit box nearby.

[BobC]

Originally Posted by Rhotchkiss

Well said Bob. +1

And I would add to that: While all of my cards reside near me, I rarely look at them person. I much more often look at pictures of them on my phone, which I could just as easily do if my cards were in a vault instead of in safe deposit box nearby.

Great point as well Ryan. Many people opt to keep their more valuable cards in a safe deposit box, so like a vault, they're not handling and looking at their actual cards on an ongoing basis. Couple that with some potentially serious money to be saved on sales taxes, and you're likely to start getting more and more people to ask why wouldn't a true collector take advantage of someone's vault.

[Peter_Spaeth]

Just a guess that people dropping 100K type world record money on a card aren't THAT concerned about sales tax. And storing cards close to home with a heavily regulated bank just isn't the same as storing them remotely with a private company with a world of legal problems. You couldn't pay me to put my cards in Brent's custody.

[BobC]

Originally Posted by Peter_Spaeth

Just a guess that people dropping 100K type world record money on a card aren't THAT concerned about sales tax. And storing cards close to home with a heavily regulated bank just isn't the same as storing them remotely with a private company with a world of legal problems. You couldn't pay me to put my cards in Brent's custody.

Don't disagree with anything you're saying Peter, but very often I would think that someone who has that kind of money to spend on a card was able to accumulate it from taking advantage of smart, frugal measures at some point in their life. Like using a vault to save on sales taxes. And once someone has developed such thinking and habits, especially in regards to money and finances, I would think they tend to stay with them.

Having said that, a vault is not my optimal idea of collecting either. And can definitely understand people's hesitancy to maybe use one vault provider option over another, for various reasons. LOL

[Peter_Spaeth]

Originally Posted by BobC

Don't disagree with anything you're saying Peter, but very often I would think that someone who has that kind of money to spend on a card was able to accumulate it from taking advantage of smart, frugal measures at some point in their life. Like using a vault to save on sales taxes. And once someone has developed such thinking and habits, especially in regards to money and finances, I would think they tend to stay with them.

Having said that, a vault is not my optimal idea of collecting either. And can definitely understand people's hesitancy to maybe use one vault provider option over another, for various reasons. LOL

People shattering world records for cards do not, in my judgment and experience, tend to be frugal types.

[BobC]

Originally Posted by Peter_Spaeth

People shattering world records for cards do not, in my judgment and experience, tend to be frugal types.

I'm just following the info in that article. The guy buying the card does not sound like a billionaire with money to burn.

So let me ask you. If you went to buy this card and found using a vault could potentially save you thousands of dollars in sales taxes, would you ever consider using a vault to do so, or not?

[Leon]

Originally Posted by BobC

Leon,

If this buyer lived in a state with say a 7% sales tax rate, using PWCC's vault just saved him about $6,500 he'd otherwise have to pay as sales tax. That savings could allow someone to pick up a few really nice additional cards as well for one's collection. And it has been discussed before about how we don't know the specific policy of each of these "vaults" currently out there on how they'll treat sales tax on items removed from them after they've been left in one for an extended period of time. Chances are that after enough time has passed, you could remove items from the vault and not owe any sales tax.

So granted, a real collector would likely want such a great card in hand. But how many real collectors may be willing and happy to wait an extra six months, a year, or maybe even longer, and leave the card in the vault before asking it be sent to them, knowing that by doing do so they may have saved enough in sales tax to buy a decent T206 Cobb as well? And in this case the card is slabbed, so it's not like the owner would be able to truly hold, feel, or even smell the actual card anyway.

Now this may not be acceptable to you, but I wouldn't be shocked to find out that quite a few true collectors wouldn't hesitate to take advantage of something like this, if presented with the proper situation. Just saying.....

So in your scenario a person that waits long enough doesn't potentially need to pay sales tax? Sounds like a novel idea..
I might want to verify that lol.
So yeah, if I can buy a 50k card...and save 4500 tax to not have it for a year...or maybe longer, sure I would consider a vault...

[icurnmedic]

Are we certain he is avoiding tax?
It works when bought on eBay but I do not get the option to send to the vault and save from auction houses.
I suppose if you registered using the vault as your address might be different.
And yes, I use the vault.
Thomas

[BobC]

Originally Posted by icurnmedic

Are we certain he is avoiding tax?
It works when bought on eBay but I do not get the option to send to the vault and save from auction houses.
I suppose if you registered using the vault as your address might be different.
And yes, I use the vault.
Thomas

The fact that he had to wait for the PWCC scans to see the issue pretty much guarantees he had Heritage ship the card straight to PWCC. So, he most likely gave that as his shipping address to HA, and therefore paid no sales tax. Put it this way, if he's using their vault, but not bothering to avail himself of the potential sales tax savings, that to me wouldn't be very intelligent.

[Exhibitman]

Originally Posted by Leon

So in your scenario a person that waits long enough doesn't potentially need to pay sales tax? Sounds like a novel idea..
I might want to verify that lol.
So yeah, if I can buy a 50k card...and save 4500 tax to not have it for a year...or maybe longer, sure I would consider a vault...

Each state varies, but I know that in CA that can happen, per the CA Dept. of Fee and Tax Administration:

"Purchases for use outside of California. Your purchase of property (other than vehicles, vessels, or aircraft) outside of California is generally not considered to have been purchased for use in California and use tax does not apply if the property is:
delivered outside of California,
first functionally used outside of California, and
used, stored, or both used and stored outside of California for more than 90 days from the date of purchase to the date of entry into California.*

*This is exclusive of any time the property was being shipped or stored for shipment to California.

However, in general, if you purchase property outside of California and first functionally use the property in California, your purchase is subject to use tax. "Functional use" means the use for which the property was designed. You should retain documentation to show that the property was purchased for use outside of California. "

I guess the issue is whether it was put to functional use in the OR vault.

There's also an offset for sales tax paid in another state.

[BobC]

Originally Posted by Exhibitman

Each state varies, but I know that in CA that can happen, per the CA Dept. of Fee and Tax Administration:

"Purchases for use outside of California. Your purchase of property (other than vehicles, vessels, or aircraft) outside of California is generally not considered to have been purchased for use in California and use tax does not apply if the property is:
delivered outside of California,
first functionally used outside of California, and
used, stored, or both used and stored outside of California for more than 90 days from the date of purchase to the date of entry into California.*

*This is exclusive of any time the property was being shipped or stored for shipment to California.

However, in general, if you purchase property outside of California and first functionally use the property in California, your purchase is subject to use tax. "Functional use" means the use for which the property was designed. You should retain documentation to show that the property was purchased for use outside of California. "

I guess the issue is whether it was put to functional use in the OR vault.

There's also an offset for sales tax paid in another state.

Great post. Was typing my own and didn't see yours. And as you said, this varies by state. But it clearly demonstrates that you likely should be able to get around sales/use taxes and possibly still be able to bring things to your home eventually. Just need to check what the vaults may or may not want to do. And just don't assume what they tell you is 100% accurate.

And as for "functional use", I would think that the safeguarding and safekeeping of your valuable assets would be an adequate functional use. And if you ever happened to also have the vault service provider take and sell something from your vault for you, that should clearly demonstrate another functional use of the vault.

[BobC]

Originally Posted by Leon

So in your scenario a person that waits long enough doesn't potentially need to pay sales tax? Sounds like a novel idea..
I might want to verify that lol.
So yeah, if I can buy a 50k card...and save 4500 tax to not have it for a year...or maybe longer, sure I would consider a vault...

Leon,

Sales and Use Taxes are state, not federal laws, so they can really vary from state to state. Also, you won't typically see anything specifically written into such state laws that talks or deals with sales and use taxes being due when someone moves from one state/location to another. Sales and use taxes are typically calculated and due right when you purchase something, not long after you've bought and owned something, and then later on move and take them with you. Have you ever in your life heard of someone moving from one state to another, and then having to figure out if they now have to pay sales/use tax to the new resident state they just moved into? I'm going to guess that will be a huge NO, because no state and their legislature could ever be that stupid (regardless of how hard a lot of them may try).

So, if you bought cards and had them immediately sent straight to, held, and then kept in a vault in a state with no sales taxes, that is where your cards are deemed to be kept/used, and therefore the sales/use taxes of that same state are applicable. The laws are the same for individuals and businesses. Ford Motor is headquartered out of Detroit, but has factories and offices all over the country. But if someone from the main office in Detroit orders something to be delivered and used at a plant in say Ohio, Ohio and not Michigan sales/use tax will be due on what was purchased, even if the invoice gets sent to Detroit, and the check to pay for the purchase comes from there as well. And the same goes for individuals like you and me, it doesn't matter where we live at the time we buy something online or otherwise have delivered to us from an out of state seller that determines sales/use tax on our purchase, it is where the item purchased is to be sent/kept/used. And that is one thing that is pretty much recognized and universally followed by all the states with sales and use taxes. And that is why the vaults work to keep people from paying any sales/use taxes when they're located in states with no sales/use taxes.

Now states are aware that people may try to get around sales taxes on big ticket items like cars. So even if you drive across state lines to buy a car, the sales tax will be charged based on where you end up registering and using the car, not necessarily where your main residence is. Think of someone having a vacation home they stay at a few weeks out of the year that is in another state, and they buy a car just to keep and use at the vacation home. The sales tax is due to the state your car is kept and used in, in that vacation home state, not the state you permanently reside in.

Normally state's sales/use tax laws say nothing about a time frame for how long after you purchased something in one state that you then need to wait before moving it to another state, and be totally free of any concern that the new state you just moved it to might think you now owe them sales/use tax on items just brought into that new state that were previously purchased elsewhere. There are some rare instances though where a time frame may be indicated in a state's sales/use tax laws. For example, California sales/tax laws have a specific provision, just for motor vehicles. If you buy a car in another state, and then move it to and register it in CA within less than one year from the date you originally bought the vehicle, you now owe CA the difference between the sales tax you paid in the state you originally bought it, and what you would have owed had you originally purchased it CA. If you originally paid more than what you would have paid CA, then you owe CA nothing. But if you owned the car a year or more before then moving it to CA, you don't ever owe CA any sales tax on the car you just moved into the state. And I believe they may have something about 90 days for other regular sales well. And CA is a very aggressive taxing state, yet even they realize you can't be subject to sales/use tax forever on items you're just moving from one state/location to another.

It's just that to my knowledge, most state currently have no specific language in their sales/use tax laws that spells out how long you'd have to keep a card in one of these vaults before you could then take it out and bring it home with you, and have absolutely no sales/use tax consequence from your state of residence. So, when looking at and maybe selecting which different vault provider you may be thinking of using, you may want to ask and find out up front what their policies are on charging sales/use taxes on something you end up removing from their vault, especially if it is long after you originally bought it and put it in there.

[Yoda]

Originally Posted by BobC

Leon,

Sales and Use Taxes are state, not federal laws, so they can really vary from state to state. Also, you won't typically see anything specifically written into such state laws that talks or deals with sales and use taxes being due when someone moves from one state/location to another. Sales and use taxes are typically calculated and due right when you purchase something, not long after you've bought and owned something, and then later on move and take them with you. Have you ever in your life heard of someone moving from one state to another, and then having to figure out if they now have to pay sales/use tax to the new resident state they just moved into? I'm going to guess that will be a huge NO, because no state and their legislature could ever be that stupid (regardless of how hard a lot of them may try).

So, if you bought cards and had them immediately sent straight to, held, and then kept in a vault in a state with no sales taxes, that is where your cards are deemed to be kept/used, and therefore the sales/use taxes of that same state are applicable. The laws are the same for individuals and businesses. Ford Motor is headquartered out of Detroit, but has factories and offices all over the country. But if someone from the main office in Detroit orders something to be delivered and used at a plant in say Ohio, Ohio and not Michigan sales/use tax will be due on what was purchased, even if the invoice gets sent to Detroit, and the check to pay for the purchase comes from there as well. And the same goes for individuals like you and me, it doesn't matter where we live at the time we buy something online or otherwise have delivered to us from an out of state seller that determines sales/use tax on our purchase, it is where the item purchased is to be sent/kept/used. And that is one thing that is pretty much recognized and universally followed by all the states with sales and use taxes. And that is why the vaults work to keep people from paying any sales/use taxes when they're located in states with no sales/use taxes.

Now states are aware that people may try to get around sales taxes on big ticket items like cars. So even if you drive across state lines to buy a car, the sales tax will be charged based on where you end up registering and using the car, not necessarily where your main residence is. Think of someone having a vacation home they stay at a few weeks out of the year that is in another state, and they buy a car just to keep and use at the vacation home. The sales tax is due to the state your car is kept and used in, in that vacation home state, not the state you permanently reside in.

Normally state's sales/use tax laws say nothing about a time frame for how long after you purchased something in one state that you then need to wait before moving it to another state, and be totally free of any concern that the new state you just moved it to might think you now owe them sales/use tax on items just brought into that new state that were previously purchased elsewhere. There are some rare instances though where a time frame may be indicated in a state's sales/use tax laws. For example, California sales/tax laws have a specific provision, just for motor vehicles. If you buy a car in another state, and then move it to and register it in CA within less than one year from the date you originally bought the vehicle, you now owe CA the difference between the sales tax you paid in the state you originally bought it, and what you would have owed had you originally purchased it CA. If you originally paid more than what you would have paid CA, then you owe CA nothing. But if you owned the car a year or more before then moving it to CA, you don't ever owe CA any sales tax on the car you just moved into the state. And I believe they may have something about 90 days for other regular sales well. And CA is a very aggressive taxing state, yet even they realize you can't be subject to sales/use tax forever on items you're just moving from one state/location to another.

It's just that to my knowledge, most state currently have no specific language in their sales/use tax laws that spells out how long you'd have to keep a card in one of these vaults before you could then take it out and bring it home with you, and have absolutely no sales/use tax consequence from your state of residence. So, when looking at and maybe selecting which different vault provider you may be thinking of using, you may want to ask and find out up front what their policies are on charging sales/use taxes on something you end up removing from their vault, especially if it is long after you originally bought it and put it in there.

Bob, maybe you can help provide accurate advise on a sales tax issue I face with Heritage. Over several years, they have been charging me sales tax on any items successfully won. I live in Palm Beach, FL where Heritage has an office. I have disputed this charge for many years and have never received a clear explanation for their actions. The amount I have paid over the last few years totals $thousands. i have assumed that since the point of sale is in Texas, a Texas resident should have to pay the tax, fair enough, but why me in Florida where there is a 6% sales tax?
As a point of reference, I do not get charged sales tax by REA, LOTG or Scott Brockleman who is of course a Texan holding an auction in Texas.
It has reached a point where I probably will divorce myself from Heritage and focus on other, equally- trusted AH's.
Any light you could shed on this vexing problem much appreciated.

[Deertick]

John, you answered your own question. FL has always required a company with a physical location in the state to collect the sales tax, as do many (most?) others.

The bad news is that a lot of states (including FL) are rapidly moving toward taxing all internet sales, regardless of origination, whose destination is within the state.

[Sean]

Originally Posted by Deertick

John, you answered your own question. FL has always required a company with a physical location in the state to collect the sales tax, as do many (most?) others.

California has followed this same practice for more than 10 years.

[BobC]

Originally Posted by Yoda

Bob, maybe you can help provide accurate advise on a sales tax issue I face with Heritage. Over several years, they have been charging me sales tax on any items successfully won. I live in Palm Beach, FL where Heritage has an office. I have disputed this charge for many years and have never received a clear explanation for their actions. The amount I have paid over the last few years totals $thousands. i have assumed that since the point of sale is in Texas, a Texas resident should have to pay the tax, fair enough, but why me in Florida where there is a 6% sales tax?
As a point of reference, I do not get charged sales tax by REA, LOTG or Scott Brockleman who is of course a Texan holding an auction in Texas.
It has reached a point where I probably will divorce myself from Heritage and focus on other, equally- trusted AH's.
Any light you could shed on this vexing problem much appreciated.

John,

What Jim and Sean said in the two previous posts pretty much covers it. But to fully explain.............

It has always been recognized that for a state to be able to legally require a vendor/seller to have to charge, collect, and then remit sales taxes on sales they make to a customer in that same state, the seller/vendor has to have what is known as a sales tax "nexus" in that particular state. Think of "nexus" as a type or level of presence in a particular state. It has always been recognized and considered that having a physical presence in a state automatically gives a seller/vendor sales tax "nexus" in that state, so they can then be required to charge/collect/remit sales tax on any sales to that state they have "nexus" in. And physical presence is having employees, buildings, inventory, leased offices, and so on, in a state. You mentioned that Heritage has an office in Palm Beachy, so there is the physical presence in Florida that requires them to charge/collect/remit sales taxes on sales to all Florida customers, including you. This physical presence "nexus" requirement for all states in the US was then upheld and formalized in a 1992 SCOTUS ruling in the case of Quill Corp. vs. North Dakota.

The fact that Heritage made their sale out of Texas does not determine which state the sales tax is owed to. It is determined by what state they send/deliver the items being sold to. Another way to look at this, you are on vacation in Texas and walk into a store there and buy something, if applicable, you owe Texas sales tax because you completed the sale and took possession of the purchased item in Texas. However, if you instead call that same Texas store to buy and ask them to ship the same item to your home in Florida, if applicable, any sales tax due would be owed to Florida and not Texas, because Florida is now where the sale was completed upon your taking possession of what you purchased. Is that clear and make sense?

There was a further revision to the "nexus" rules as a result of another SCOTUS ruling in the 2018 case of South Dakota vs. Wayfair. This case still maintains that physical presence creates "nexus" for a seller/vendor in a particular state, but went further to recognize that an online or otherwise out-of-state seller can now also have "economic nexus" in a particular state for sales tax purposes by merely having $100,000 or more of sales, or 200 or more sales transactions, to a particular state in a single year. Not every state with a sales tax has adopted these exact same "economic nexus" thresholds as South Dakota, but a majority of them have imposed similar rules since the 2018 SCOTUS case.

Now other AHs may not be charging you sales tax right now because they have no physical presence in Florida, nor have they met Florida's "economic nexus" threshold, at least not yet. Florida set their threshold at simply $100,000 in sales for the previous calendar year, via legislation just recently taking effect on July 1, 2021. So once an outside of Florida AH hits $100,000 in Florida sales in a single calendar year, they are going to have to start charging/collecting/remitting sales tax to Florida on all Florida sales going forward, starting the calendar year after hitting that sales threshold of $100,000.

This should fully explain and answer your question. Bottom line is that Heritage is properly charging you Florida sales tax, whether you like it or not. Sorry, but nothing you can really do about it, unless you want to start using one of these "vault" services out there. Heritage has no choice and has to comply with the laws in place. Good luck!