Hertiage Auction Net Effective Rate

[edjs]

Ed,

I swear, I was sitting with that card open, debating back and forth in my mind "should I bid, no, maybe, should I?" I watched the timer count down to zero, that was how much I liked that card. Congrat's.

Ed

[Edwolf1963]

Ed, thanks – yeah, great card/great price (even with the net effective buyer rate) I was really surprised, I threw that bid in some time ago and didn't expect it to last without being bumped. I was even prepared to take it higher within the range I thought it probably should go for. Perhaps it was lost on the radar of other very nice cards they had close over the last couple days? No complaints on that front – just hard to be competitive usually with Heritage given the net rate it will end up coming back on me.

Thanks for your note/feedback!

[frankbmd]

Ed, your HANER* is my EBP**

*Heritage Auction Net Effective Rate

**Effective Buyer's Premium

http://www.net54baseball.com/showthread.php?t=188256

[BobC]

In regards to one of the OP's comments in his opening post, Heritage didn't necessarily have to build a physical location in Illinois, or any other state, to suddenly become liable for collecting and remitting sales tax on sales within that particular state. Every state that imposes sales tax has their own unique rules that can cause that company to have what is known as "nexus" for the imposition of sales tax liability on sales within their state.

Physical presence in any state, under current law, is pretty much a mortal lock that the company is subject to sales tax laws but, not the sole factor. Depending on the state, having representatives/employees in-state, use of agents, simply having activity above a certain level, making deliveries in company vehicles or attending trade shows, amongst other things, can cause a company to have "nexus" for sales tax purposes in a particular state.

In Illinois in particular, there's actually a definition by which an out-of-state seller doing telemarketing into the state may be deemed to be a "retailer" for Illinois sales tax purposes and thereby subject to Illinois sales tax.

Sales tax liability and collection laws has been in a flux for years now as more states keep trying to increase their tax revenues in any way possible, especially if they can increase taxes on out-of-state companies. There's even a group known as the Multi-State Tax Compact which is working to make the sales/use tax laws more universal across all the states in the U.S. A good number of the states already belong to and agree with the Compact and it is ultimately thought that one day, all the states will be buy-in and be party to some form of this universal agreement. This would possibly include having all companies be liable for collecting and remitting sales tax in all states, even if there is no physical or other presence in these other states.

I know a lot of people look upon the sales tax as an extra cost and try to not pay it but, it is mandated and part of the laws in pretty much every state that if you don't get charged sales tax by the seller, you are required to voluntarily remit and file a use tax return in some form with the state you're in. As states become more and more aggressive in tax collection efforts in the future, don't be surprised when large, highly visible companies like Heritage end up charging sales tax to pretty much everybody. I think it is more a question of when, not if, we're all going to have to pay sales tax on major auction house winnings.

BobC

[bobbyw8469]

I know a lot of people look upon the sales tax as an extra cost and try to not pay it but, it is mandated and part of the laws in pretty much every state that if you don't get charged sales tax by the seller, you are required to voluntarily remit and file a use tax return in some form with the state you're in. As states become more and more aggressive in tax collection efforts in the future, don't be surprised when large, highly visible companies like Heritage end up charging sales tax to pretty much everybody. I think it is more a question of when, not if, we're all going to have to pay sales tax on major auction house winnings.

These are used items though. Technically, wasn't the sales tax paid when the items were purchased? Can the government tax something indefinitely?

[Griffins]

Originally Posted by bobbyw8469

These are used items though. Technically, wasn't the sales tax paid when the items were purchased? Can the government tax something indefinitely?

yup, every time a sale is made.


In California, at least, it's sales and USE tax. I've got a lot of photographer friends that have bought equipment via mail order in order to save the tax, only to be audited and have to remit the tax on that purchase, plus penalties and interest. An auditor told me they often look for insurance payouts on stolen gear and then audit the insured. I don't think CA is unique in this way.

In regards to Heritage, they have an office about 10 blocks from me, but I can't remit payment or pick up items there. Still, the mere presence means that I effectively have to pay about 30% above my bid. I just factor that in, and consequently don't win much from them.

Another local auction house just told me to give them a friends address out of state. I was shocked they would advocate blatant fraud (probably shouldn't have been) but there is no way it's worth it. Better to just suck it up and figure it into the bid.

[BobC]

As another poster said, it doesn't matter if this is simply the re-sale of a used item or not. Sales tax is basically collected on the sales of all tangible, personal property, which is exactly what a baseball card is, tangible, personal property. And as another poster added in, there are some states that have not yet cracked down on companies like Heritage to force them to collect sales tax on sales to customers within their respective states but, as I alluded to, those days may be ending sometime in the not too distant future. The poster who mentioned Use Tax in Californian is correct, there is a Use Tax provision in California, and that pretty much goes hand-in-hand with every state that has a sales tax provision. The idea is that if for whatever reason you buy something where the seller doesn't charge you sales tax, you are pretty much covered by the Use Tax part of that state's laws and supposed to voluntarily remit the use tax and file some kind of return yourself to report it.

This Use Tax and the actual rules and how they collect it can vary from state to state. In Ohio, where I'm from, they actually have a line on the Ohio individual income tax return where you are supposed to report and remit the Use Tax on items you purchased during the tax year, and pay it in with your income taxes. Nobody ever does it but, when you sign that return and send it in, or e-file it, you are saying, under threat of perjury, that you have nothing due. Illinois, where the OP is from, also has a somewhat similar Use Tax provision in their tax laws. In Illinois they have a 6.25% sales/use tax rate that the OP should calculate and pay in to the state on his Heritage winnings, if they didn't charge him sales tax themselves. There is a separate form he could do this with or, he could also calculate and remit the Use Tax as part of his individual Illinois income tax return, and that is just if he only incurs nominal use taxes owed for the entire year. In Illinois, once your Use Tax liability in a year hits $600, you're supposed to start remitting the Use Tax monthly.

Make no mistake, with all the electronic records and files that are now kept by auction houses and even Ebay, if the states want to start cracking down on Use Taxes, they easily can. Anyone who sells a lot on Ebay already knows that they will receive a 1099 showing their sales proceeds for the year once they reach $20,000 in sales, and 200 or more transactions, in a calendar year. Ebay has all of the seller's and buyer's addresses and data on hand and I imagine can pretty easily come up with how much any one of us bought off Ebay, and what, if any, sales tax we paid on those items we got. That 1099 info also goes right to the IRS so they know to look for that seller to include internet sales on their next tax return. There are a lot of people on here that sell on Ebay that don't meet those $20,000/200 transaction limits, and thus don't report their Ebay sales on their tax returns. But that could change tomorrow if the IRS just comes out and says something like make the 1099 reporting threshold $600 or more in annual sales and 1 or more transactions. Same thing in regard to sales/use taxes. The IRS doesn't need to wait for a new law to pass, they just need to change the threshold for reporting requirements and force Ebay and auction houses to turn over the information they need to come after more people. The only real reason they probably haven't done anything like that yet is because all the companies that would then have to report this and send out forms to the buyers and sellers have been telling Congress it is too much work and data for them to go through. And of course there is the added burden on the IRS and state taxing authorities themselves then to gather this information and then use it for income and sales/use tax purposes. That only works for so long though and eventually the government sees that the technology has gotten to the point where it isn't a burden anymore, and then we're all stuck with it.

BobC

[bcornell]

[REMOVED] This forum is done.

[sreader3]

Originally Posted by bcornell

I think this is probably true. In the meantime, however, Heritage is still not charging sales tax to buyers in some states while they collect taxes from buyers in TX, NY, CA, IL and everywhere else they have a place of business. If I'm in Wyoming, for example, I'm not getting socked with a 7-10% additional fee for the same item. Not so fair, is it?

I'm loathe to comment, but there are always two remedies to "unfairness": Make EVERYONE do X or make NO ONE do X. One could just as easily eradicate this particular perceived injustice by insisting that NY, CA and IL change their laws rather than insisting that the remaining states change theirs.

[glchen]

Is this true for any auction house, not just Heritage? REA charges residents sales tax if you live in New Jersey. Memory Lane charges sales tax for California residents. Huggins and Scott does the same if you live in Maryland. This "net effective rate" isn't specific to Heritage. All auction houses abide by the same rules. The only difference for Heritage is that they have offices in more states, and therefore have to charge tax to all of these states where they have a physical presence.