OT - Watch out ND residents

[Archive]

Posted By: Bryan

Generally ebay sales will be exempted from sales tax thanks to the Commerce Clause which states a seller must have a physical presence in the state to collect sales tax. Oddly enough, the landmark case in deciding mimimal physical presence (called nexus) was Quill Corp v ND.

The only way sales tax can ever apply to ebay is if the seller has a physical presence (in most cases a physical location) in that state. In order to expand that base the Quill case would have to be overruled and by doing that a firestorm would be set across the business world. Don't look for that to happen any time soon.

In many states the end user tax (use tax) exists and individuals should remit it on their out of state, non-taxed purchases. Depending on the state you live in there should be a line item for it on your state income tax return. However, some states do allow a threshold to be met (amount purchased) before you are required to remit the use tax.

It is not out of the posibility to be audited for use tax by your individual state but the chances of that happening are slim to none. You usually have to be a high profile individual with a known high dollar collection or habit of purchasing out state before you would ever be considered for a use tax audit.