posted on December 24, 2000 09:45:30 AM
I have a question for sellers of used or personal items who reside in California and pay sales tax. I'm looking over my sales tax form, prior to getting it filled out, and trying to figure out if I have to pay sales tax on in-state sales of personal items re-sold on Ebay at below the cost I paid for them (such as secondhand clothing of mine, books I bought for college, etc.) Is there any difference between this type of merchandise and new merchandise sold for a profit in the eyes of the Board of Equalization? It would be most helpful if anyone could point me toward a website with a rule or guideline. I've checked the boe. ca.gov. website and haven't been able to find anything regarding used item sales at all. Everything there seems primarily geared to the bigger seller of new or handmade items. If you have any experience in this in previous years, please tell me how you did it.
(and *please* folks, I already KNOW I should contact an accountant, in fact I have an appointment with my cousin who is a tax consultant/CPA, but not until near the end of January, and I'd really like to get a jump on taxes this year--sales tax forms are due Jan 31. And the tax office round these parts is closed until next week so I can't ask. So you don't have to remind me about the consult an accountant thing, I'm just looking for lay people's past experience, I'm not going to sign anyone's AW nickname on my tax form as a co-preparer....)
posted on December 24, 2000 09:59:33 AM
Don't confuse sales tax with income tax.
You owe income tax if you make a profit.
You owe sales taxes if you sell something, the tax is based on the sales price; profit, or lack thereof, is irrelevant. It doesn't matter if the stuff is used.
posted on December 24, 2000 10:28:17 AM
I don't know the answer, but try:
[url'http://www.boe.ca.gov/saletax.htm[/url]
You will probably have to call the BOE on this one. And when you get an answer, have them send you a copy of the reg as many of the teleservice reps don't know the regulations well.
posted on December 24, 2000 10:38:45 AM
Sales tax rule very state to state but in genral if you are a business or a corp you must charge sales tax even on used item you make no profit on.
The local church here in NY runs a thrift store They decided they wanted this to be a incorparated business separate from the church they sell Used Item that are donated and sell way under retail in order to keep corp status they can not sell sales tax free.
Also the town this store is in had a town wide garage sale they to put loads of things out for this garage sale while residence sale can sell tax free the trift store garage sale had to charged sales tax as well on garage sales purchases.
Another note since a good amount of the donations come from church members and the store is run by members it could be said they are selling there own personnel item and still must collect sales tax.
So if you are a registered business or corp you must collect sales tax to maintain your business status even on old personnal Items sold at your front lawn garage sale.
There had been so much talk and disagreement on this issue in the past here I started doing some home work and so far this is what I can up with so far.
How ever you do not need to be a registered business to sell a few personal item now and again in this case you would not need a TIN to sell or collect sales tax but you would need to report any actual profit from sales $400 or more ovr the year.
Profit is any amount over what you orginally paid for the Item like a car you bought 2 years ago for $3000 and managed to sell for $5000 today.
posted on December 24, 2000 01:51:08 PM
From what I read in the directions about line 10b of the Sales Tax Form:
"Cost of Tax-Paid Purchases Resold Prior to Use"
You can deduct the Cost of "Sales Tax Paid" items from your total sales only if
1. you paid CA sales Tax on the item when you bought it
and
2. Sold it before you used it, other than display or demo in the normal course of business.
So if you buy something for $15 and pay CA sales tax, and sell it for $25, you can deduct $15 from your total sales
So, my unqualified opinion is that you have to pay sales tax on your personal items. but do ask the folks down at the Franchise Tax board. They have some nice helpful folks down there; at least in San Jose they do.
--------------
Don't take life so serious, it ain't nohow permanent.
edited cause the CA Tax form is a nightmare.
[ edited by honestjonstoys on Dec 24, 2000 01:57 PM ]
