posted on October 2, 2000 07:53:37 PM
If you are selling as a business on ebay and you have the tax number buyer from the same state has to pay the sales tax.
But here is what to tell those who complain or ask about it, the fact is you are not chargeing tax the your state is chargeing the tax you are charged with collecting it.
Retailers or sellers on these Online auctions are not chargeing sales tax we are not the tax man we simply collect what the state government requires.
on the other hand if you are not selling as a bussiness on Ebay and you have no tax number then and ask for tax you are Chargeing taxes and not collecting them and if you dont file and send these taxes in this can be concidered fraud.
by the way by no means just take tax from the bid price, this is Not ment for the venders to pay or to hurt there returns or profits its to Help support the state if everyone dont do there part then the rest of us just have a heavery load.
A seller can choose to lower their profits by not collecting the sales tax directly from the customer but instead build it into the sales price
Where's the lower profit if the price covers the tax?
I list in the auction that California residents MUST pay sales tax...and repeat it in the end of auction notice. But the typical in state buyer conveniently ignores that part of the TOS. I would estimate 90% of my in state buyers do not include sales tax. The $400+ I sent to Sacramento last year could have been in my pocket if the buyers had only paid the taxes they know they are supposed to.
So you are saying that requiring a tax be paid DOES lower your profit?
Also..I don't think stating in the auction that tax is charged in any way reduces the number of bids from in-state buyers.
Apparently not, since they aren't going to pay the tax anyway, why would they be detered from placing bids?
posted on October 3, 2000 01:16:05 AM
First things first. Let's discard the notion that all ebay powersellers are legitimate tax ID having commercial enterprises.
With that said let's proceed to the discussion at hand.
In most States of The United States. You are required to display your tax ID Certificate in plain site at your place of business. Since this is the Internet Technically that is not possible. However since some ebay sellers are GUILTY of being inflate everything to turn a buck artists. One cannot get upset at a buyer being aware of the possibility of a Sales Tax Scam.
Take a look at your EOA for those charging taxes sellers. Do you have the payment sent in your name or do you have the payments made to the business name on that tax ID Certificate. Does that Tax Certificate list John/Jane Doe DBA Doe's ebay Junk? If your certificate does not have your business registered in that manner. And your EOA says make the Check to you as an individual you can't blame the buyer for not paying the tax. Because since they didn't send the money to a business they are not viewing the transaction as a commercial transaction. By the way neither is the State.
In short if you have a TAX ID number for your State. All your ebay payments have to be made out to the name on that Tax ID Certificate. If they are not the State isn't legally entitled to the sales tax on the funds because they were collected as an individual and not as a business. So take a look at your EOA. Technically according to ebay's attorney's ebay doesn't recognize businesses as seperate entities. Because all registered users have to be individuals. Only individuals can have ebay accounts under ebay's user agreement which everyone Technically is bound by. There are no businesses on ebay only individuals. With that said technically no ebay buyer has to pay sales tax. Because technically no ebay transaction is between a commercial entity and an individual. All ebay transactions are person to person as such unless the person has a tax ID number there are no sales taxable transactions on ebay.
All of this is technical of course which is why it is time for some State government intervention into the venue. Heck might cloud somethings at first but it will definitely clear up a lot of the current gray areas of the venues.
posted on October 3, 2000 01:35:32 AM
And with that, the pompous claim of a powerseller that because of any indicator available to a buyer in ebay, such as feedback or a powerseller emblem of being a business MUST be set aside as having no substance whatsoever, and could be ignored by a buyer in ebay.
The factual claim of being a business can only be supported in the case of a duly licensed and permitted business meeting all requirements of local and state law, as well as zoning stipulations where they exist and are applicable.
In most cases an individual cannot be licensed as a business, though an incorporated individual can be, in which case a payment could be made to the individual with the incorporated business name, such as krs,Inc. or krs Enterprises as the payee.
posted on October 3, 2000 04:24:15 AM
I agree that if tax is not mentioned in the ad then a buyer shouldn't pay it. For .89 a buyer just may assume that the tax is included.
posted on October 3, 2000 08:51:49 AM
"In short if you have a TAX ID number for your State. All your ebay payments have to be made out to the name on that Tax ID Certificate. If they are not the State isn't legally entitled to the sales tax on the funds because they were collected as an individual and not as a business."
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Huh???
So what you are saying is that if you ask buyers to pay you with checks written to John Doe, you're not a business...but if you have them pay Doe Antiques, you ARE a business? Sorry, but it doesn't work that way.
The state of CA states in its tax handbook, "Generally, if you sell taxable merchandise or provide a taxable service...YOU MUST HAVE A SELLER'S PERMIT." The regulations don't make any distinction between John Doe, Doe Antiques, or any other form of doing business. If you sell taxable merchandise, you must collect and remit state sales tax. Period.
If buyers are wary of a "sale tax scam" (which, IMO, is very unlikely), they can ask to see a copy of your resale certificate. Any legitimate seller who has one, should be happy to comply. And any seller who does sell taxable items in a state that collects sales tax should have a tax ID number.
==========
"The factual claim of being a business can only be supported in the case of a duly licensed and permitted business meeting all requirements of local and state law, as well as zoning stipulations where they exist and are applicable.
In most cases an individual cannot be licensed as a business, though an incorporated individual can be, in which case a payment could be made to the individual with the incorporated business name, such as krs,Inc. or krs Enterprises as the payee."
==========
This is another mistaken claim. I've been in business as a sole proprietor, NOT incorporated, fully licensed, with all permits, for nearly 30 years.
What you seem to be saying is that an individual can't be a business (not true) and that you have some kind of "choice" about whether or not you are a business. Also not true. The IRS doesn't look at it that way, and neither does the state sales tax bureaucracy. Neither of these entities require any sort of business license or evidence of incorporation or anything else to establish you as a business. In the case of the IRS, it depends entirely on certain income and profit rules, and for CA sales tax the only criterion is that you sell taxable items or services.
All the fancy verbiage withstanding, the fact is that if you sell taxable stuff on eBay, you should be collecting and remitting state sales tax if your state has a sales tax to begin with. And ditto for income tax. You may be able to justify NOT paying, in your own mind, with these "technical" arguments, but it won't wash with the taxing entities. And you may not get tracked down right away, but eventually you will be...and you'll be hit with a rather large fine, assessment of back taxes, and so on.
posted on October 3, 2000 10:12:44 AM
Krs..maybe my choice of words was bad.
A seller can just pay the taxes out of his pocket and not ask the buyer to remit it. If the tax is 10% and the sale $100 the buyer would owe $10 in tax and $100 for the item. The seller collects $110 and gives $10 to the state.
But if the seller chooses not to ask the buyer for the tax but instead chooses to see the full purchase price to be including the tax then the buyer pays $100 to the seller. The seller gets to keep $90.90 and gives the state $9.09.
The seller has $9.09 less than he would have if he had charged the buyer the tax on top of the sales price.
Since we sell at an auction the final price is an unknown so the seller cannot set a price that includes the tax. A brick and morter store can do that. They can decide what profit they need and set the price of an item accordingly and then figure the tax and add it on to the sticker price. I have seen "no sales tax" advertisements and this is how they work...the tax is in the sticker price and the customer only sees the sticker price. It's hard to do this in an auction.
I'm also saying that most California buyers ignore the sales tax part of my TOS. So therefore I have to refigure what the sales price of an item was so I can account for the tax I have to pay the state. If the buyers had included the sales tax with their payments the $400 I paid to the state would have come from them, over and above the amounts they paid for the item itself.
The $400 I paid represents 8% of $5000. I collected $5000 from the buyers but after giving the state it's money I had $4600 left. If the customers had paid the tax on top of their purchases I would have had the full $5000 (the figures are simplified... the actual amount differs slightly).
As for requiring tax to be paid lowering my profit...whether the buyer pays the tax or not doesn't change my legal obligation to give the state the sales tax due on the sales. But when the buyer doesn't pay the tax in addition to the sales price my profits are lowered. My point about requiring the tax was that even when it is stated the buyer ignores it and my profits suffer.
And yes, the fact that the in state buyers normally ignore the tax requirement is the reason why I don't think it affects the number of bids one iota.
posted on October 4, 2000 03:47:37 AM
Krs, you may feel I'm being pompous, but I wouldn't want to be in your shoes when the IRS catches up with you. Same for Networker. Those were some of the most inventive excuses for not paying tax that I have heard.
As for the unreasonable customer I described, there was actually a bit more to the story. First she claimed that my ad didn't say which state I was in. Wrong. Then she claimed that it was not necessary to pay sales tax on items purchased at auction. I don't know where she got that idea. Perhaps she was a graduate of the Krs School of Creative Bookkeeping.
Sonsie is absolutely right and I hope all sellers read her post. At the very least, read your tax form and fill it out honestly. The idea that checks made out to Joe Blow and not Joe Blow, Inc. somehow "don't count" is ridiculous.
posted on October 4, 2000 12:37:18 PM
twinsoft - you obviously missed the message of the post. I won't hold that against you. However the message is the same. If you are selling on ebay/Brick and mortar/out of a van on the corner wherever. You have to first subscribe to the first rule of Business. Which in case you don't know is: The Business is a seperate entity of the person running the business. As such the business should have its own bank account,doesn't matter if it is a seperate personal checking account for those small timers out there. However it must be seperate, as such when you do business on ebay if you are a business your payments go to a seperate from your personal finances entity.
If you do not subscribe to that rule you open yourself to the prospect of the State/IRS tearing your finances apart at audit to show the business made more money than it did. My technical situation above is just that technical under the current laws. It was to show sellers why some buyers don't include the sales tax. You choose to use your imagination into what it meant.
I am looking at the 25 Tax ID Certificates for 25 sole-proprietorships. Not a single last one them s registered under a personal name. Why because EVERY Book on starting a business tells you to give the business a distinct name not your own. That is so that you from the get go establish the mindset that the business is seperate. Now you you go ahead and collect taxes if you have a tax id number you are supposed to to collect those taxes. But don't get mad because you have payments made out to yourself and buyer refuses to pay the taxes. How are they supposed to know you are a business? I am sure you know by now that 3000 feedback certainly doesn't mean that. At least I hope you at last got that part of the reply.
posted on October 4, 2000 12:47:45 PMAs such the business should have its own bank account,doesn't matter if it is a seperate personal checking account for those small timers out there.
Correct.
Why because EVERY Book on starting a business tells you to give the business a distinct name not your own.
Incorrect. I have several books that mention no such thing.
Having a seperate "business" account is plenty good enough to avoid the tax man from
looking at your personal account under a
sole-proprietorship. My business name, is my RL name, and always has been.
posted on October 4, 2000 01:48:23 PM
Networker, I took exception to the suggestion that checks made out to "Joe Blow" and not "Joe Blow, Inc." are somehow not business income. That particular comment was not addressed to you. Whether or not a seller has a separate bank account has nothing to do with it. I guess in this country where everyone is trying to rip off the government, it's possible to assume that a seller running 100 current auctions is not a business. I'm going to reserve comment on that right now.
posted on October 5, 2000 07:07:02 PM
While we're on taxes! What is the internet tax moratorium that the news media is always talking about? What taxes are covered under this moratorium? I think that it goes until 2002 and they are trying to extend it. Is anyone familiar with the moratorium? Thanks!
posted on October 5, 2000 07:14:45 PMWhat is the internet tax moratorium that the news media is always talking about?
Let me start by saying that I am not a tax expert. My understanding is that by moratorium, what is meant is that there will be no new taxes enacted on internet commerce, but any existing taxes that would otherwise be applicable would most certainly need to be collected.
What was being said was this Only individuals can have an account to sell on ebay all sales are Person to Person SO far as ebay is concerned there is no business accounts.
and yes there is a difference who sells if you are a business person who owns the local sandwhich shop sales taxes must be paid on your perpared food and snack items.
but when your home you list Items on ebay or have a garage sales or what ever you dont collect sales tax on these personal situations.
even if you sold your car the buyer pays the sales tax at the time they register it you do not collect it.
Jane doe can run auctions on ebay with no need of collecting sales tax, Jane doe inc.would need to collect the tax but shouldnt even be registered there to sell acording to there TOS
How ever not all auction sites work this way such as yahoo which has individaul and merchant auctions lumped togeather or a business to business auction site.
posted on October 5, 2000 08:43:39 PM
Twinsoft,
To make it as simple as I possibly can, the point I make is that the fact of several auctions and a number of feedbacks is not sufficient reason for a buyer to know that you are a business as you have stated that they should do.
Anybody selling trinkets and other small items could easily do both without being a formalized business and such sellers probably would need to have as many auctions going in order to just pay for their dinner each day.
posted on October 6, 2000 08:24:02 AM
[/b]dman,[/b] I'm registered as an individual on eBay, AND I am a legitimate business in the eyes of every state and federal taxing and regulatory agency. You don't have to be incorporated to be a business, you know.
Technically, you SHOULD be paying sales tax on garage sales you may hold, but the state has no capability of enforcing this rule. But that doesn't mean it's not there. If you're in CA, reread your sales tax manual. If you sell taxable items, you must collect and remit sales tax. And garage sales involve taxable items.
Regarding selling a used car, the state is still collecting sales tax from the buyer...just as it does via eBay sales. Instead of relying on the seller to do the collecting, it relies on the DMV. The DMV is an agent of the tax collector...CA could just as easily require that the seller collect the tax and send it in. They think the DMV is a better conduit, and so do I.
The fact that the state chooses not to (or doesn't have the manpower to) collect sales tax on each and every eligible transaction doesn't mean it isn't legally able to. Try having a garage sale every weekend for awhile, and see what government entities show up on your doorstep or in your mailbox with their hands out. You might be surprised. Ditto for all these "I'm just a hobbyist" sellers on eBay.
posted on October 6, 2000 10:16:24 AM
sonsie Actually you are wrong about garage sales. First off we have to understand why the seller collects the taxes for the State.
1. When you are a issued a State Tax ID number that certificate entitles you to purchase at cost and not pay sales tax o your purchases of merchandise to sell.
2. Since you pay no sales tax on the merchandise you charge the tax and collect it for the state when you sell it.
3. This process is done because it allows the State to collect more tax dollars. If your wholesaler charged you taxes. The State wouldn't be entitled to any tax after you sold the items at your markup. So they get more money if you complete your wholesale invenory purchases tax free and then collect sales tax on those individual units with your mark-up.
4. As such the Garage sale of personal items entails no tax because the tax has been paid when the merchandise was purchased by you. Now should some of the items at your garage sale been given to you to sale those items would be subject to sales tax because there is no evidence of tax collected when the item changed from the donor to you.
5. Any purchase for resale where tax was paid to the State before the resale cannot be retaxed when sold at the retail operation. In short, you only collect sales tax on inventory that you procured tax free. You don't collect sales on inventory that you paid taxes on when you procured it.
In Illinois a lot of Business have been slammed for collecting taxes on sales that they should not have been collected on and then pocketing the money. Tuff one to catch but they catch them every now and then. The only reason the tax is collected a the retail level is because the state gets more money. I'll give you an example to remove any doubt.
You buy a box of 100 widgets for $100.00 wholesale. If you paid tax on them at 5% the state sees $5.00.
The same box of widgets bought tax free but sold at $3.00 each with the same 5% tax on the individual sales allows the State to collect $15.00 in taxes on the same box of widgets.
If you are the State which one do you want to collect. The thing to remember is you can only charge and collect sales tax on inventory procured without paying sales tax. If you buy your items at local garage sales where no tax was paid when you sell the items you collect tax. You buy the same items at a Garage Sale where you were forced to pay sales tax you don't collect sales tax when you sell the items.
posted on October 6, 2000 11:18:47 AM
networker67, I just called the CA State Board of Equalization and spoke to a representative there who told me in words of one syllable that we MUST collect and remit state sales tax on items sold at garage sales, and of course that means we have to have a resale permit. The only exception is that if you have two or fewer sales per year, you do not need a resale license and need not collect tax. I asked him about the idea that once sales tax has been collected and remitted on an item, it no longer is taxable, and he said this theory is incorrect.
So if you're in CA maybe you had better rethink the "no sales tax on garage sales" line of reasoning. I haven't had a garage sale in years, but if I have more than two in a calendar year at some point, you had better believe I'll be sending in the tax. As the fellow said to me, "We have snitches out there who report these things," and I believe him. Better safe than sorry.
posted on October 6, 2000 11:57:57 AM
sonsie - You collect no tax on garage sales unless you hold two or more a year. Whichmeans California doesn't consider you a business until you hold more than two such sales a year. So my premise stands, stop priding yourself on trying to be right and start reading the words.
NO STATE OR JURISIDICTION IN THE UNITED STATES can double collect on taxes. The only exception is Corporate Taxes. And there is darn good peice of business and financial logic behind this. A Corporation is a legal entity to conduct commerce. As such it is an individual. It makes money which are its profits, which are taxable. It inturns pays it profits to its shareholders which are received in the form of dividends which are also taxable. Because they represent a generation of financial gain to that individual.
In short even in California you only collect sales tax on retail sales when no tax was paid on wholesale purchases.
By the way the next time you decide to call the Tax Board in California how's about asking the right questions in the right way in order to get the right answers and not the ones that you are seeking to have something to say. And by the way I do a great deal of retail business in California so I know their tax scheme. Probably better than the person you spoke with.
And garage sales never had one, never shopped at one, so how they are taxed is of no concern to me. I do real business and apply real business principles to everything to include the paying of taxes. My take on taxes is quite simple,"Somebody has to pay for all of this freedom to make this much money" With that my view on taxes is this those who extract the most financial benefit of the freedom should pay the most taxes.
Now back to sales taxes and ebay auctions. If an ebay seller has to collect sales taxes by all means they should be collecting the taxes and turning them over to the appropriate authority. But no ebay seller should be collecting taxes if they are not empowered by the proper taxing board to collect them. I showed you why you have a tax ID permit and what it entitles you to. I even explained to you why you get that benefit because the State gets a bigger benefit from the retail sales as opposed to collecting them on the Wholesale side. You were given the numbers and why it was established that way. Then you run back to harping on Yard/Garage Sales and collecting sales tax. Where did the world get some of you people from I am begining to think the on-line auction world has been invaded by aliens from outerspace.
posted on October 6, 2000 12:26:04 PM
networker67,
Your comment "Where did the world get some of you people from I am begining to think the on-line auction world has been invaded by aliens from outerspace" comes very close to crossing the line. I suggest you acquaint yourself with the AW Community Guidelines, particularly concerning basic etiquette, before posting again. To continue in this manner may jeopardize your posting privileges.
posted on October 6, 2000 12:37:31 PM
I live in NY and am considered a business. I have to collect sales tax from all my customers that the items are being shipped to NY. All of the counties in NY pay a different tax rate. I used to file quarterly but now I am able to file yearly. In NY we also have to collect sales tax on the SHIPPING! Taxes in NY are no picnic!
____________________________________
The only place you'll find success before work is in the dictionary.
posted on October 6, 2000 01:23:23 PM
valerie47 - taxes no where is a picnic. I thought New York had a flat sales tax on mail order sales? Seems to make the collecting process hard on a seller crossing county lines via the postal service to do business.
Which brings me to something else relevant to this thread. A recent look at some TOS's explans why some buyers don't include the taxes. It seems the seller expects them to compute the taxes.
If you are required to charge sales taxes why not charge them in your EOA with the total to the buyer.
posted on October 6, 2000 01:25:16 PMnetworker One must charge taxes on the profits of any sale, no matter if it has been previously taxed. The only exception is selling to someone with a resale license, which only delays the collection of the tax.
My sales tax check came to $1,100 this year as I also sell at street fairs, antique shows, etc. My pet peeve is that I have yet to have any state tax employees show up at my booth at 4:00 am to help me set up.
How can we include sales tax in our EOA emails if we don't know beforehand that our customers live in our state? That's impossible for me.
____________________________________
The only place you'll find success before work is in the dictionary.
posted on October 6, 2000 01:42:38 PM
I have a state issued sales tax permit and as NW has said I use to purchase items without paying taxes soley for resale. I am then responsible to collect the taxes if sold within Oklahoma. Out of my 160 auctions I have only had three now within my state. I would agree that as a buyer I would try and find something out of state to avoid paying the taxes. I would take exception to someone thinking I am collecting taxes just to boost profit and would gladly provide a copy of my sales tax permit. On the question of garage sales at least here you are required to get city permit to have a garage sale. When you pay for permit you are given a sales tax remittance form and told that you are required by state law to collect and remit taxes. Personally I have never collected or remitted when having a garage sale but I think a majority of cities probably also require this "double taxation"
And as for calulating prior to receiving ship to address it would be impossible. At least in Oklahoma there are probably at least 100 different tax rates dependant on which city/couty you reside.
RB
Total for Non-Illinois Residents $14.50
Total for Illinois Residents $15.38
Illinois residents please pay the Illinois rate to avoid a delay processing your order. I must collect State Sales Tax on all in state sales.
method two:
Some sellers use a two email process to get the bidders address to compute actual shipping. I guess that method self-explains itself,you know where they live first.
Never had an Illinois resident object to the taxes. Had one ask for the tax ID number for verification and then instructed him to look at the top of his invoice upper right corner below the Business name and address. Bingo tax ID Number clearly printed on top. Had one send me his tax ID number so I didn't collect the tax because he intended to resale the items. So I don't collect the tax.
No complex problems dealing with auctions just solutions to be discovered.
That would not work for me. Every county in NY is a different tax rate. I have to know their complete mailing address & county before I can figure tax.
I have a form at the bottom of my EOA emails for the buyers to fill out and mail in with their payment (if they are paying via snail-mail). There is a line for sales tax.. (example: $______ Sales Tax if you live in NY & County________)
And they have to add it to their total. If they email me their mailing address as I request them to, if I see they are a NY resident I give them the total with sales tax immediately.
____________________________________
The only place you'll find success before work is in the dictionary.
posted on October 6, 2000 02:21:41 PM
I see a lot of people are posting that they live in States with multiple tax rates depending on the county. I suggest you call your taxing authority and clarify what the tax rate is. County taxes in addition to State Taxes are excise taxes for that Jurisdiction. As such you only are requried to collect the excise on sales within your county and everybody else pays the flat State Rate.
Take a look at your form from your Jurisdiction. I am looking at three Illinois, Indiana, and Wisconsin. The Illinois one where I live is at a flat rate of 8.75%. As a Chicago Registered Business I am required to collect an aditional 1% for the City. I have a seperate form from Chicago for that 1% on sales within Chicago. Since most of my sales are mail order the city sees nothing since I have not had to mail stuff to Chicago Residents.
Check with your particular authority to see if you are requried to collect the excises issued by the various counties. If your form isn't broken down to seperate what business came from what county chances are you are only resposible for the flat state rate for your state. Since your business is not in those other counties you don't collect for them. You do however collect the county rate for all sales within your county or additional taxing authority.
Hate to say it but the local governments are going to find a way to get rich when that new tax moritorium on internet commerce is lifted. I can see each state requiring ebay to collect from 1 to 3 cents on each listing. I can see the counties adding their 1 cent strain on infrastructure tax and the list goes on.
