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
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05-16-2016, 03:46 PM
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