posted on December 16, 2000 03:33:45 PM
Do others have problems collecting in-state sales tax? Any suggestions?
We normally charge sales tax on in-state sales. Lots of customers pay but others don't. We go from taking a hard line and require it before shipping to shipping first and asking for it later. I might add later never comes for most buyers so we don't get paid.
One high bidder refused up front to pay and cancelled the sale so we negged him.
Resellers say they are excluded and sometimes provide a tax number. However in our state that doesn't really apply as the buyer needs a special state form that must be kept on file by the seller. Merely supplying a tax number doesn't work.
BTW our terms clearly state sales tax must be paid on in-state sales.
Oh the other thing, our state requires that you display your license to collect sales tax in your place of business.
[ edited by surrrfurtom on Dec 16, 2000 03:36 PM ]
posted on December 16, 2000 04:24:40 PM
why do you go through the hassle of collecting a small sales tax? Dont you make enough profit on your items to cover any little extra cost, I usually do.
The headache of trying to collect the tax just doesnt seem worth it to me. I can see why a customer wouldnt want to pay sales tax. A majority of e tailers do not charge sales tax. If ever asked, i just say tax is included. Many of my in state clients like that simplified approach.
just my 2 cents.
cgl
I suggest to you to check with your dept of revenue to see what paperwork your re-seller buyer needs to give to you. In my state we need to get a "certificate of resell" to prove the purchaser's status.
I do require my buyers pay sales tax and I do report it. Don't want to get into trouble with the taxperson. One time I went around and around about the total due from an alleged re-seller buyer and finally he sent full payment after he found out I called the revenue for the information. After two weeks of email tag I received his payment the next day! Mmmmmm I wonder?
Do they do this to the big stores like WalMart, Target or Walgreens? Do they think we eBay sellers are dumb or will cave in to their whinning?
Other than that I don't recall any problems. Recently I sold two items with sales tax added and the buyers didn't argue. It is stated in my tos. Plain and simple.
Most of my items are sold outside of the state, though. It is only when I have local interest items up for sale.
I do sell items face to face but not too often and I charge sales tax. Even today when I sold a couple of items to my brother he paid sales tax! And he receive a receipt.
As for posting I used to have a link to my license but it was not a close up and really didn't want people to have access to a copy of my license.
I do state in my tos that I am a registered business. Then people think I have time to do their sell like that is all I do! There has been a few times that I had to explain this is a registered business but it is part-time! -with a sincere smile!-
The buyers seem to back off then.
posted on December 16, 2000 05:42:09 PM
Believe it or not, in many states, it is illegal include sales tax in the price of an item. You actually are required to charge the extra amount.
It is my understanding that these requirements in the law were put in place by conservatives who wanted people to realize exactly how much they are really paying in taxes.
Anyway, I don't know how often this is enforced, and I'm sure it varies by state.
I have a great solution for sales tax though -- I live in Washington, DC, and I have yet to have ONE SINGLE customer (out of 500+) who lived in DC. Many, many who lived in the suburbs, but none in the district with me. How convenient.
posted on December 16, 2000 05:55:23 PM
ummm These are person to person sale inless you are selling retail there is no need to collect sales tax.
Income tax in cases where you actually make a visable $400 profit or more yes sales tax no.
Technically if you were going to collect state tax on these sales they would only be collected from CA residences since The server your auction are sold on is in california.
Ebay is not Retail business sales they are Person to person No sales tax just like going to your local garage sale.
You may own the local deli in your town and charge your friend a custumer sales tax on there perpard food Items but when you go home if you sell one of your friend some shoes you no longer want you dont charge them sales tax this is person to person sale.
posted on December 16, 2000 07:06:34 PM
Sales tax is a sore subject with me, not because I have to pay it but, because of the paper work envolved.
I do flea markets in different cities so I have to pay not only state sales tax, but counties different little taxes. I have to keep really good records.
I'm in CA and the info I get with my forms say that because my business is in CA I have to pay on out of state sales. There is a special section that also deals with internet sales. I don't have the notice right here but it says that people are under the wrong assumption that state sales tax should not be charged on internet sales.
posted on December 16, 2000 07:52:19 PM
Ebay Yahoo and other auction sites like then are person to person auction sales These are not Retail or business related .
NO matter where you live if you come to my House and by my liveing room set you wouldnt pay no sales tax nor would I collect it I sold you a liveing room set personally or person to person.
If I placed an ad in the news paper to sell my old computer you call to buy it no sales tax.
Person to person Auction is the same thing I sell on ebay I am no business you bid on Ebay or come in to my home Via telephone to buy my computer there is no sales tax .
How ever if I was setup On the web selling computer new used rebuilt "Dman Computers are me" Then I am a business if you are in my state I have to collect sales tax and pay it.
Interesting side here I Have several eletronic type E stores set up on the web the Internet mall type stores the company sets me up a webstores with a shopping cart takes orders processes credit cards for me and drop ship the goods to the buyer.
I get 25% to 40% of sales I do Not collect sales tax how ever the company that set up the E Stores for me collects the sales tax from buyer in the state where they are.
all I do is provide them with my SS# so they can send me tax statement for any profits over $400 I make so I can claim the Income on my taxes.
sales taxes are paid to the state where the server my web site is on not to the state I live in.
posted on December 16, 2000 09:09:22 PM
Dman
Are you selling your own personal items on eBay and Yahoo? Or are you buying items to resell in online auctions?
Not all online auction sales are person-to-person. There are tons of business-to-consumer sales on eBay and Yahoo. That number is increasing all the time. And yes, these businesses are required to collect and remit sales tax under the laws of the states where their operations are located.
You need to check with your state taxing authority for regulations in your state.
Here in Texas, even people selling their used goods in a garage sale are SUPPOSED to get a temporary sales tax permit, charge tax on their sales, and turn the tax in to the state comptroller's office at the end of the year. Very few people DO, but the law states that they are to do it.
Those buying for resale, whether locally or out-of-state, are considered to be a BUSINESS and are required to get a resale permit, collect tax on in-state sales, and turn it in to the state. It also doesn't matter whether I'm selling my used clothing or new merchandise I bought at a wholesale house---if I sell it in-state, I'm supposed to turn in sales tax for the sale.
Personally, I think all used merchandise should be exempted from sales tax, since sales tax was almost always collected on it when it was new (excluding the "true" antiques that were made before the start of sales taxes). When I buy a 5-year-old used car, I have to pay sales tax on my purchase price, even though the original owner paid sales tax just 5 years earlier when HE purchased the car new.
But our governing bodies don't see it that way. They demand taxes every single time something sells in-state (unless it's to a reseller or exempt organization like a church or school, or exempted goods like prescriptions or food).
And I fully expect that out-of-state internet sales will soon be required to carry the burden of sales tax, too---it's just a matter of time.
posted on December 17, 2000 02:23:36 AM
As soon as I realized that I had sold over $1000 worth of items (my cost not what I sold them for) on Ebay I applied for a Sales tax Permit in my state. (THINK LIKE THIS.. if u buy $10,000 worth of merchandise here then I would be paying $650.00 to the state for nothing.) With my sales tax permit I save that $650 as I am tax exempt because everything I buy is for Re-Sale. And because of that nifty little line in the consitution about the states being unable to regulate interstate commerce.... Anything I ship outside of my State I dont have to collect sales tax on. Sure I have to fill out a form every six months w/ the Sales Tax DEPT here, it's a pain, but it saves me around $1000 or more a year. OH and yes I do pay INCOME & SALES tax too (I've sold a whopping $20 worth of items in my HOME STATE).
Just my 10 cents...
All that & a Bag of Chips Too!!
posted on December 17, 2000 04:54:10 AM
Hi jhf: I think I'm finally getting a grip on the whole issue of registering as a business and collecting and paying sales tax, since I do buy for resale.
When they handed me the paperwork for getting exempted from paying sales tax when I buy items to sell, then I started scratching my head again.
I'm wondering how it will apply to me.
I buy from library book sales: no sales tax there.
I buy from thrift shops from time to time, but usually less than $5. Any point of giving them paperwork to avoid a few pennies. Naah.
I guess this is most useful if I end up buying a large lot of something to re-sell. But can you do that only when buying from a wholesaler, or from any retail place?
posted on December 17, 2000 08:20:25 AM
Actually having a sales tax license saves me money.
We do charge sales tax and that is noted in all my auctions. In CA the correct rate is 7.25% Soon too go down to 7%. Most Ebay sellers who collect CA sales tak incorrectly charge thier higher local rate.
But since I have a permit that means I pay NO TAX on things I buy. Since the vasy majority is resold out of state, sles tax is avoided altogether.
People frequenly don't want to pay but if they don't pay the we don't ship. About 1/2 pay up front, the other half wait and see if you ship anyway, but when they don't get it they pay. We also charge a $1 fee for paying the tax seperately.
The rules on exempting tax for resellers are not as cut and dry as most think. There is a form the you are supposed to use for each exemption but no one uses it. Of my CA suppliers only 1 out of 5 or so actually asked me to send one. But the fine print rules state that if you "believe" that it is a legitimate reseller, and they provide you with a resale number it's OK.
posted on December 17, 2000 11:10:39 AM
In CA, sales tax varies by county (and sometimes in a specific city, if it is charging an override). In my county, it happens to be 7.25%. In the Bay Area, many cities and counties are up to 8.25% or more. In January 2001, the overall STATE tax will drop by .25%.
I don't think Internet auctions are person-to-person sales, and I'm not about to take a chance on not being legal. I charge and collect sales tax on every purchase made from within CA...which, for some reason, is a very low number. In 1999, I think I paid about $10 total to the state.
The tax forms took me about 15 minutes to fill out last year, and I doubt that it will be much more than that this year. I keep a copy of the EOA for every in-state sale I make, with the sales tax figured. I'll total that up and write it in the appropriate box on the form, write my check, and I'm done.
I've had a few people "forget" to pay me the tax. If it's small, I just forget about it. If it amounts to more than a couple of dollars (hasn't happened yet), I suppose I will be a pill and write to remind them.
My resale license has saved me a bunch over the years. Not only do I avoid paying sales tax on items I buy for resale, but it frequently serves as an "in" to businesses that only sell wholesale and aren't open to the public. This can be very cool!
posted on December 17, 2000 11:37:40 AM
SONSIE - Read the fine print.
Sales tax does vary from area to area, but ONLY if both the buyer and seller are in the same district.
For exapmple if the seller is in LA (8.25%) and the buyer is in SF(8.00%) what rate do you charge? 8.25 or 8.00 ? answer NEITHER! You charge the statewide rate of 7.25
We just charge the statewide rate and eat it on the few within our distict.
NOTE: if you call you local office on this you WILL get the WRONG answer. You must read the tax return form carefully.
See Page 6 of the instructions to the tax return you just received in the Mail
Quoting
Who Must pay Distirct Taxes? If you are a retailer located in the district and your merchandise is sold and delivered in the distric.
[ edited by unknown on Dec 17, 2000 11:39 AM ]
posted on December 17, 2000 12:17:33 PM
twelvepole-
As for #1 -- Doesn't this often explain why one item will have a much higher ending price than an identical item on auction at the same time?
#2 --My auction item sells for $6.00. Buyer pays $1.50 shipping and $0.42 sales tax. Same item bought locally at a store: $9.99 + $0.70 sales tax.
#4 -- I have a number of co-workers who subscribe to this philosophy. They really don't want Wal-Mart taking over the world.
#5 -- $100 item, weight 11 pounds. Parcel Post postage from California to Columbus, Georgia $18.65. Parcel Post postage from Atlanta to Columbus, Georgia $4.12 + $7.00 sales tax for a shipping/tax total of $11.12. Buyer comes out ahead by $7.43.
posted on December 17, 2000 02:09:28 PM
Vargas,
As for #1 -- Doesn't this often explain why one item will have a much higher ending price than an identical item on auction at the same time? Possibly, so ok let you have this one too.
#2 --My auction item sells for $6.00. Buyer pays $1.50 shipping and $0.42 sales tax. Same item bought locally at a store: $9.99 + $0.70 sales tax.
Disagree, to save $2.69, I will have spend the cost of a stamp and/or the cost of a money order. Plus if not happy have to return the item and hope to get a refund. Easier to buy at the local store.
#4 -- I have a number of co-workers who subscribe to this philosophy. They really don't want Wal-Mart taking over the world. Personal choice, I don't think Walmart will take over the world.
#5 -- $100 item, weight 11 pounds. Parcel Post postage from California to Columbus, Georgia $18.65. Parcel Post postage from Atlanta to Columbus, Georgia $4.12 + $7.00 sales tax for a shipping/tax total of $11.12. Buyer comes out ahead by $7.43.
How many buyers see past the "tax" and would bid? Shipping is a given, but taxes turn most people off and that includes me.
posted on December 17, 2000 04:55:03 PM
twelvepole-
I didn't realize [b]you[/] were the only intelligent bidder that could be used as an example. The majority of my buyers pay by credit card, so the money order/stamp argument doesn't apply.
I honestly don't have any problem attracting in-state bidders, even charging sales tax.
I shipped an item to an in-state bidder yesterday and I just wrapped another item that's going less than six miles in the mail.
As for me, I find shipping charges to be the determining factor. I did almost $2,000 worth of Christmas shopping online this year and I paid shipping on one item -- a PS2. I really wanted that sucker.
I did pay sales tax on six items. It worked out to be cheaper than buying locally or from an outfit that charged shipping.
I'll bet I saved a whole lot more money than the people who think they need to quibble over sales tax.
