eBay vault

[BobC]

Originally Posted by frankbmd

The answer to all your tax problems is to just keep moving. Catch me if you can.

Might be easier than you think. Was just reading about one Senator proposing to cut the IRS budget in half. LOL

[Deertick]

Originally Posted by BobC

Think of it this way. You live in Delaware where there's no sales tax, and acquire a really nice '52 Topps Mantle online through a big AH. So when it is delivered to your home, no sales tax is due. Oh, and you keep the card in a safe in your home. A couple years later you and the family pick up and move to California, and take all your belongings with you to CA, including the '52 Mantle. There is no CA sales tax agent waiting at the border to ask for CA sales tax on the Mantle. So why would that be different if you kept it in a vault instead of your house?

BobC,
I think you are incorrect on this point. Sales tax is owed by the purchaser to the State of their residence. (if they live in a destination-based State, which is most). A seller who collect and remits sales tax is doing so for the "convenience" of the purchaser. It is the purchasers responsibility to report a purchase and remit the appropriate tax to the State. (nearly impossible to enforce in face-to-face transactions).

I believe there used to be a way to request a refund of sales tax from the non-resident state to transfer to the resident state, but that was a long time ago and may not be the case anymore.

I believe the holding in the vault may just be technically a suspension of the transaction. Completion upon delivery would trigger the taxable event.

[FrankWakefield]

The Vault, to me, seems to be like a massive extension of the idea of putting a card in a slab.

My first thought was that it would be in California, where eBay is. And then I thought about earthquakes... West of the San Adreas would not be a good location.

If they build it, they need virtually no one knowing where it is, it would be a lucrative target for burglary.

The whole idea is a very close cousin to NFTs. You 'own' something you can't experience with any of your five senses. You can't see a ball card that's there, you only get to see a scan or picture that is floating around on the internet.

Next step will be do you want your collectables in The Original eBay Vault here on Earth, or The Lunar eBay Vault. And later, the The Mars eBay Vault. What do you reckon the sales tax is on Mars????

I agree with what's been posted about eBay providing a grading service; they'll be doing it all. And a day might come where they stop accepting cards unless they're graded by eBay Grading... No PSA / SGC / Beckett nor the rest allowed.

So, just when you think you've seen it all, out this comes; and then you won't ever get to see anything again.



For the sales / use tax... I think the sales tax is owed when it is bought, regardless of where it is stored or delivered. The seller charges the buyer, then remits it to the taxing entity.

[FrankWakefield]

A sales tax is collected by the seller. It's added to the cost of the buyer. It's remitted to the state where the sale occurred... And it's collected when something is sold, not delivered.

UNLESS the buyer is out of state. An out of state buyer will most likely owe a use tax on an item that is ineligible for the sales tax. The use tax is owed by the buyer back in his home state.

What eBay does, in an agreement with the states, is to collect a sales tax and pass that on to the correct state. Two things... I think it's wrong that they collect tax on shipping and handling, I don't think that's taxable in my state. Hell, if I buy stamps at my Post Office, Kentucky isn't getting a sales tax on that! Second thing, I bet in the massive agreement among eBay and the states, they send that tax money to the states every 30 days, 60 days, or something like that... probably has language about waiting to make sure the transaction between buyer and seller is completed and there aren't returns or problems. AND the real reason they'd do that is so eBay could have all of that tax money for a month or two or more and draw interest on the money, which eBay keeps. A month of interest on that may not be megabucks, but it would be free money for eBay made on other people's money.

Did cities that have a sales tax get a seat at the table with the states and eBay?

[BobC]

Originally Posted by Deertick

BobC,
I think you are incorrect on this point. Sales tax is owed by the purchaser to the State of their residence. (if they live in a destination-based State, which is most). A seller who collect and remits sales tax is doing so for the "convenience" of the purchaser. It is the purchasers responsibility to report a purchase and remit the appropriate tax to the State. (nearly impossible to enforce in face-to-face transactions).

I believe there used to be a way to request a refund of sales tax from the non-resident state to transfer to the resident state, but that was a long time ago and may not be the case anymore.

I believe the holding in the vault may just be technically a suspension of the transaction. Completion upon delivery would trigger the taxable event.

You obviously did not fully understand what my point is.

If in my example you live in Delaware and buy the Mantle card off Ebay, and have it sent to your house, there is NO sales tax. Delaware doesn't have a sales tax so.........Ebay won't charge you any sales tax because there's nothing due, and you as the purchaser don't have a responsibility to pay anything to your resident state of Delaware because once again, Delaware has NO sales tax! So you're still living in your Delaware home, with your Mantle card you didn't have to pay any sales tax on because none was due, and then say five years after buying it you and your family end up moving to California. You take all your furnishings and belongings with you, including the Mantle card. The state of California is not going to suddenly be charging you sales tax, nor expecting you to voluntarily be reporting and paying sales tax to them, on all your belongings and such that you had purchased while still living in Delaware, and are now bringing with you to California as part of your move. And that should include the Mantle card you brought with you, that you bought years earlier.

Also, you seem to be talking about "use tax", not "sales tax". Use Tax is when you purchase something from a seller outside your state of residence that does not have what is known as "nexus" in your state of residence for sales tax purposes. That basically means the state you live in can't make the seller charge you sales tax, and then send it to them. In which case, if the state you live in has a Use Tax provision in place, that generally means you the purchaser are required to voluntarily report the purchases you did not get charged any sales tax on by out of state sellers, and figure out what they should have charged you for sales tax so you can now send that money in to your state of residence yourself.

Also, sales tax isn't necessarily charged on where you live, it is charged based on where the item being purchased is supposed to be sent to and used/kept. Think of someone with a main home in Chicago, and a condo they go on vacation to on Sanibel Island in Florida. If they're buying something online for the Florida condo, they should be paying Florida sales tax on it, not Illinois sales tax. And if you are using a "vault" to hold your cards, for safekeeping like a safe deposit box, to facilitate your card sales and deals because you consign or sell through the party running the "vault" you are using, or whatever your reason for using a "vault", when cards are sent there it is deemed to be where the cards are to be kept/used. And that is why people running these "vaults" usually put them in states with no sales tax, so the people using these "vaults" don't have to pay sales tax on any of their purchases sent directly to the "vault" they're using.

I have never heard of this "suspension of transaction" concept you brought up in regards to sales taxes. I would appreciate knowing what state(s) this is valid in, and would love any references or links you can provide to read more about.

And for the record, each state has their own Sales & Use Tax laws, and they can definitely vary state to state. So my above comments are in general terms, most likely, but not necessarily, applicable in those states that do have a sales (and use) tax.

Thank you, look forward to hearing back with those links and/or specific info.

[Rhotchkiss]

Regarding the vault and sales taxes: rules require vendors to collect sales tax on buyers when (1) the item will be “consumed” (used, kept, stored) in a state that has a sales tax (maybe it’s technically a use tax), and (2) the vendor has done a sufficient level of transactions with the state to mandate sales tax collections. This latter reason is why smaller AHs like Sterling, Collector Connection, and even LOTG collect sales tax on items being sent to some, but not all, tax collecting states they send consignments to.

Delaware, Oregon, and a few others do not have sales/use tax. If a card is sent for permanent storage (consumption) to a no-tax state, the vendor will not collect sales tax. I am positive the card must remain in that state for a certain period (1-2 years maybe) after which tax will never be owed even if moved to another state; however, if moved before that period to another state, tax would be due to that other state. If located in a no-sales-tax state, The vault is the permanent storage that allows owners to avoid state tax. But the card absolutely must stay in the vault for a certain period of time. It is no different than buying a boat in Delaware and keeping it at a marina there - no tax due- and then 3 years later taking it to North Carolina.

Unlike the aforementioned smaller AHs, eBay is gigantic. It certainly must now collect sales tax in every state and a zillion times a day and file many, detailed tax returns often. The increased administrative cost to eBay for this new requirement must be massive. Did eBay increase its fees once it was required to collect sales tax? If not, that “tax” they collect on shipping and taxes, and the time value of money and the use of those huge taxes before having to pay them over (30, 60, 90 days) is likely how they are compensated for all of the increased cost they had to absorb.

One last thought- many folks here do not understand NFTs, but they do understand (although may not approve of) the vault concept. Well, they are kind of the same. While you have the right to own and hold a tangible card, when you use the vault, your ownership is really reduced to pictures on your phone and the knowledge that can go see it if you buy a plane ticket. NFTs are just pictures on your phone without being able to visit your card (bc it does not exist in a form you can touch and feel). Whether you agree with this comparison or not- to me, notions like vault certainly feel like gateway drugs to concepts like fractional ownership and NFTs.

[BobC]

Between Ryan's and my posts you should now have a pretty good idea of how sales tax works with these vaults, and why they put them in states with no sales taxes, if you didn't before already. (Nice post by the way Ryan!)

My original comment about Ebay's vault and sales taxes was because of what their website, that Steve posted the link to, said about how if you chose to take your cards out of the vault you would then be charged applicable sales tax. But as Ryan and I were pointing out, that shouldn't be the case if the cards you had in the vault are going to be kept in there for an extended period of time before you go to remove them. But Ebay's site in that link doesn't say they will ever stop charging you sales tax upon removal of your cards from their vault, regardless of how long you leave your cards in there. So that may be something that anyone thinking of using Ebay's vault might want to double check with Ebay on before signing up. And you can, and probably should, also ask the same questions of PWCC or Goldin if you're ever thinking of using one of their vaults as well, or for comparison purposes if you're trying to decide among them which one to actually use.

It is possible Ebay will stop charging you sales tax on vault removals after a specified period of time, but just didn't spell it out on that linked site. I'm guessing that won't be the case though, and that they will potentially hit you with a sales tax charge whenever you take something from the vault. And the reason I say that is because doing so helps generate more business for Ebay. If you have a card in Ebay's vault, and decide to sell it through an AH, you'll have to now pay the applicable sales tax to get the card out of the vault and over to the AH. But if you sell the card out of the vault through Ebay, you don't get hit with the sales tax, while Ebay gets their fees from the sale.

So if that is the clever/sneaky thing Ebay is doing to boost and retain even more business, keep that in mind if you're ever thinking of using a vault service, and then trying to decide among the different ones available, which would be best for you.

[Michael B]

Originally Posted by Leon

No vault for me for personal cards. I like to fondle and smell my cards!

Yes, Leon. Cards to old guys are like Playboy, Penthouse and Hustler to 14 year old boys. The only difference is you hide it from your spouse rather than your mother!!! And the thing that gives you self gratification from holding in your hand is a piece of cardboard or plastic, not part of your own body!!