PWCC expands its lending activities

[Snowman]

Originally Posted by Rhotchkiss

That is tax avoidance, and those people could get in trouble. Also, it would make sense if the vault was required to collect and pay over state taxes for items removed from a vault and sent to a tax state within X months of receipt. I don’t know if such a law/requirement exists.

When I tried to have cards from my vault sent to my home address in CA, PWCC told me they would have to charge me sales tax unless I could provide them with a CA state resale permit.

[Peter_Spaeth]

Originally Posted by Snowman

When I tried to have cards from my vault sent to my home address in CA, PWCC told me they would have to charge me sales tax unless I could provide them with a CA state resale permit.

Interesting. PWCC isn't making a sale, so I am surprised they feel obligated to do that. I thought sales tax was only collected in connection with a sale.

[Mark17]

Originally Posted by Peter_Spaeth

Interesting. PWCC isn't making a sale, so I am surprised they feel obligated to do that. I thought sales tax was only collected in connection with a sale.

Suppose Biff, in Portland Oregon, registers an LLC called "The Weigh Station, LLC." The service he provides collectors and investors is, he weighs their collectibles.

So, you live in CA and ask PWCC to send your $100,000 worth of stuff. PWCC says they'll need to collect about $8,000 for the state of CA for sales tax. You say, no, you want it sent to Biff in Oregon, which has no sales tax. Biff receives your stuff, weighs it, charges you $50.00 plus the cost of shipping, and sends you your stuff along with a note saying how much it weighs. He collects no sales tax since he wasn't involved in a sale - he simply rendered a service (just like PSA does when they grade cards.)

If Biff can weigh and ship 20 packages a day, he can make something north of $250k a year. And all he needs is to live near a post office, or Fedex or UPS outlet, and have a bathroom scale.

[raulus]

Originally Posted by Snowman

When I tried to have cards from my vault sent to my home address in CA, PWCC told me they would have to charge me sales tax unless I could provide them with a CA state resale permit.

There you go. Even the good folks at PWCC are above aiding and abetting tax evasion.

And if it also happens to mean that now you're locked into their system, then I guess they won't complain too much about it.

[Mark17]

Originally Posted by Snowman

When I tried to have cards from my vault sent to my home address in CA, PWCC told me they would have to charge me sales tax unless I could provide them with a CA state resale permit.

If that's the case, then people have a substantial disincentive to remove their items from the vault. I can see investors deciding to just leave their inventory there, for PWCC to eventually sell for them, rather than having a major AH sell them, factoring in the hit when removed from PWCC's vault.

As far as borrowing money using inventory in the vault as collateral, I wonder what would (will) happen when the market on a lot of stuff takes a corrective dip. Capital calls to restore the collateral percentage?

[Peter_Spaeth]

Originally Posted by Mark17

If that's the case, then people have a substantial disincentive to remove their items from the vault. I can see investors deciding to just leave their inventory there, for PWCC to eventually sell for them, rather than having a major AH sell them, factoring in the hit when removed from PWCC's vault.

As far as borrowing money using inventory in the vault as collateral, I wonder what would (will) happen when the market on a lot of stuff takes a corrective dip. Capital calls to restore the collateral percentage?

You would think PWCC would not necessarily use current market prices to value collateral, but who knows.

[Peter_Spaeth]

Originally Posted by Snowman

When I tried to have cards from my vault sent to my home address in CA, PWCC told me they would have to charge me sales tax unless I could provide them with a CA state resale permit.

I wonder how many people are using the vault on the assumption they won't have to pay sales tax, ever, unless they volunteer it.

Has this happened to anyone else? As a friend points out to me, wouldn't this be a huge story in the hobby if the vault no longer avoided sales tax?

[Leon]

Originally Posted by Peter_Spaeth

I wonder how many people are using the vault on the assumption they won't have to pay sales tax, ever, unless they volunteer it.

Has this happened to anyone else? As a friend points out to me, wouldn't this be a huge story in the hobby if the vault no longer avoided sales tax?

There would be no more vault.
.

[Peter_Spaeth]

Originally Posted by Leon

There would be no more vault.
.

That's why Travis' comment really surprised me. I mean even if it's only California requiring PWCC to collect taxes on items it ships out of the vault, that is huge.

[Peter_Spaeth]

https://www.youtube.com/watch?v=PSxihhBzCjk

[raulus]

Not sure if the same deal is being offered to everyone, because the website lists one set of terms, and over email they're telling me some different details.

But over the last couple of days, I've exchanged emails with the lending team, and for those interested, these are the details I've received to date:

The original email details:

• Vault Loans – PWCC offers loans on a portfolio's conservative market value, using their trading card assets as collateral. We loan up to 40% of asset value at an interest rate of 1% per month in a 60-day term with optional renewal. A 1% origination fee may apply on these.
• Cash Advances – You can request a cash advance for up to 50% of the conservative market value of items you’re sending to auction. (more possible upon approval)

My queries over email (and their responses):

Q: Quick question for you about the 60-day loan term outlined below. What does optional renewal mean?

A: It means you can re-up the loan with new terms or you can pay it off in full.

Q: Is it a mutual option, or is it at my sole option?

A: Your sole option.

Q: You mentioned “new terms”. Does this mean that the interest rate get re-priced at then-prevailing rates if I re-up the loan?

A: No response yet.

Some commentary from me:

Obviously for a borrower who is borrowing on a 60-day loan, the paranoia is that the lender won't extend your loan, at which point either you need to come up with the cash to pay it off, or else they sell your cards. Or alternatively, if they do extend the loan, they will only extend it at onerous rates and terms. I'm not planning to use this product myself, but for those who do, I'd be interested in your experience, particularly around renewing the loan when the 60-day term is up.