posted on September 5, 2001 03:26:39 PM
I noticed that some merchants on the net (Ebay sellers included)do not charge sales tax on those who live in the same state, while others do.
posted on September 5, 2001 03:30:22 PM
I talked with the Director of the Sales Tax Division in my state and he said we didn't have to collect sales tax on used merchandise. My comment was that if yard sale people don't collect sales tax, then why do Internet auction people have to. He couldn't give me a good reason why we had to as there is NO WAY our state can monitor collection of taxes from all the yard sales that go on every weekend. His comment was that yard sales didn't have to pay because they were holding the auction in their own yard. Well, last time I looked my auction stuff ain't goin' nowhere either! Very gray area!!
posted on September 5, 2001 03:40:13 PM
Our state had passed a law that all used items must be taxed as well -- this was several years ago. They were trying to collect on used car sales from person to person.
Anyway the state Supreme Court overturned the law and it's not been brought up since.
posted on September 5, 2001 04:05:17 PM
I believe the difference is whether the seller has a tax certificate. If he is operating a business with a tax certificate, especially if he is using it to buy locally for resale, he must charge and remit the tax. Some don't, but can endanger their business tax certificate. If a seller has no certificate and no registered business, he can probably justify, if asked, that he is just selling like a yard sale. Departments of revenue don't have the personnel to check them all out. Bottom line, a business with a tax certificate is likely to charge and remit tax to protect himself and his business. I have a Florida tax certificate, but very few Fla. sales, so I just pay the tax myself.
posted on September 5, 2001 07:35:25 PM
Is the idea that "used" items have already had sales tax paid on them? What is being taxed, the item or the transaction?
posted on September 5, 2001 07:41:49 PM
Well I live in New Yeork where they have did away with sales tax on clothes up to like $300 per purchase.
So Some Items are taxable like prepard food and packaged snack Items But Most food in a super market is not Taxable so I would say they are taxing the items not the transaction.. http://www.Dman-N-Company.com
Email [email protected]
posted on September 5, 2001 08:49:03 PM
Well, New York certainly has it's own way of looking at things. The Pennsylvania state government had quite a go-around with New York a few years ago. Since PA has never taxed clothing we were a popular destination for New York shoppers.
I live very close to both the New York and Ohio borders. The mall near me was a favorite of cross-border shoppers from the north. Then it was suddenly discovered that New York tax agents were crossing into Pennsylvania and driving through the shopping center parking lots looking for New York license plates. They recorded the license numbers and went back. The lucky drivers received fan mail from the New York Department of Revenue stating that their vehicle had been observed at XXX Mall on XXX date. The persons purchasing clothing were to fill out the enclosed form and remit the sales tax to New York that didn't need to be paid in Pennsylvania.
Now that takes some huge ones!
Last year Pennsylvania was caught essentially doing the same thing. Pennsylvania Liquor Control agents were found to be parked in Ohio and recording license plate numbers on Pennsylvania vehicles where the occupants had purchased alcoholic beverages and put them in the vehicle. The vehicle descriptions and license numbers were transmitted by radio to waiting vehicles on the Pennsylvania side of the border. As soon as the people crossed the border they were stopped and arrested and their vehicles impounded.
Pennsylvania had begun enforcing the fairly little used liquor tax laws regarding transporting liquor across state lines. Mind you that most of these laws dated back to the prohibition era but now became quite a money maker. Pennsylvania has higher taxes on alcohol than Ohio and it's popular to cross the border to make purchases. A case of a local person who got caught up in this is still tied up in the courts from last year. It seems that this person had borrowed the car to cross the border. The person along with all occupants were arrested upon crossing back and the vehicle was siezed. It happens that the alcohol laws also contained specifications that the vehicle used to transport the liquor could be seized and sold under forfeiture laws. This was a new car and not even the driver's. The driver and occupants were found guilty and fined $500 each along with 30 days jail time. The vehicle is up in the air as a civil action has been filed against the state.
Apparently, it's also popular with the Pennsylvania liquor agents to do this in Deleware near Philadelphia.
posted on September 5, 2001 10:38:02 PM
I digressed... More on topic, taxes are going to be quite specific to the state and sometimes the area in the state where the sellers and buyers are located. Pensylvania would require collection of sales tax on sales to parties within the state. Allegheny and Philadelphia counties would want their add-on taxes for items sold to parties within Pittsburgh and Philadelphia.
There is no simple answer to the question. What is deemed to be taxable is going to dramatically differ from state to state. When one gets a sales tax license in Pennsylvania, a book is also supplied that defines the taxability of the most common types of items. If the item is not in the tax book a call to the regional office will give an immediate answer as to whether a particular type of item is taxable.
As has been noted above, what is taxable in one state doesn't mean much when dealing with another state. Some items can be taxed differently depending on how they are used.
Taxation on sales comes down to the standard methods of taxing which have been in place for years. You are essentially a mail order business and have to follow the rules for that type of business. If you reside in New York and charge buyers a "handling" fee, the shipping is not taxable but New York wants their tax share on the handling.
One kink in the system which probably exists in other states as well is the "Use Tax." When I, as a resident of Pennsylvania, buy something out of state I am not subjected to sales tax. Pennsylvania has a "Use Tax" which says I must submit to the state the amount which would equal the sales tax as if it were sold in Pennsylvania. This item is always placed in the back of every yearly state income tax book and most people ignore it. Our Use Tax is admitted by the state to be one of the least enforced and least collected taxes we have. I could see the state eventually starting to figure out a way to effectively collect this tax to recoup losses from Internet sales.
I just looked up the USE TAX for Pennsylvania and it refers directly to Internet sales. It states:
"Purchases made over the Internet, through toll-free numbers (800, 888, and 877), from mail order catalogs, or any other purchase from an out-of-state location are generally examples of purchases that would be subject to USE TAX. The tax rate is the same as the Sales Tax, 6% state and 1% local tax, if the purchaser is located in Philadelphia or Allegheny County." http://www.revenue.state.pa.us/revenue/cwp/view.asp?A=101&Q=153611
posted on September 6, 2001 02:08:39 AM"Are new items and used items taxed similarly?"
It depends upon the state the seller resides in.
I'm in Texas, and ALL items except 'unprepared' groceries (which excludes candy bars, soft drinks, cooked deli food, etc.) and prescription drugs are supposed to be taxed if sold retail to a buyer within the state, whether the goods are new OR used. Retail means the buyer isn't buying for resale (with a sales tax exemption certificate), so EVERYONE without a business tax certificate (or a non-profit exemption certificate given to churches, schools, etc.) is supposed to pay sales tax on their purchases.
This includes the purchase of used cars, used clothing, used EVERYTHING---even at garage sales. Technically, anyone holding a garage sale here is supposed to get a temporary sales tax collection permit, collect sales tax on all their sales, and turn it in to the state comptroller's office. . . .but that is realistically unenforceable.
Texas has recently begun having one weekend in August when shoes and clothing priced at less than $100 per item can be purchased sales-tax-free. Those of you not paying sales tax on clothing year-round should appreciate the savings you're getting.
Mail order companies here (which includes internet sellers) have to collect and turn in sales tax for all sales to buyers within the state (who don't have resale certificates), including tax on shipping and handling fees. In addition, Texas buyers who make purchases (which haven't been taxed) from out-of-state sellers are SUPPOSED to send sales tax for the transaction to the Texas Comptroller's Office voluntarily---a law very few people know about and which is also unenforceable.
In my opinion, taxing used goods is double and triple taxation, since sales tax was **already** collected when the item first sold new, and in each subsequent sale it goes through---which can be several times for items like cars and jewelry.
Don't assume that groceries are always sales tax-free. Some areas of Alabama with low property taxes get a chunk of local government revenue by taxing groceries at the same rate of other items---7 or 8%.
I would guess that MOST sellers on eBay not charging sales tax to buyers within their own states are selling "off the books" (they don't have business permits/state tax certificates---some are only selling personal items and others are resellers not reporting income). Some legitimate dealers of lower-priced goods find that charging and collecting tax on a small fraction of their internet sales isn't worth the extra time and effort involved, and they simply pay the sales tax out of their own pockets.
posted on September 6, 2001 04:01:59 AM
As far as used cars go, in Ohio, when you take the title to have it changed into the new owners name, you must pay sales tax at that time, based on the amount of the sale that is written on the title. The only way to lessen it is to falsify the amount you write on the title.
Ohio also has a Use Tax that is supposed to be paid with the yearly State tax return. I don't think it really has to do with buying stuff on ebay, but is more pointed at purchases from Amazon or Buy.com type sales etc.
I have no idea how Ohio polices sales such as garage sales and hobby type sales on a "venue" such as eBay. The filing fee to get my state tax id would far and away outweigh any amount that might be due from instate buyers.
posted on September 6, 2001 05:19:15 AMif anyone can further clarify the rules governing sales tax on the net, please do so.
I can talk to new items at least, and it's very simple to explain.
In most (if not all) states, when you buy certain items, there is a sales tax and/or use tax. This is buying eBay, Amazon, gap.com, whatever. Sometimes the seller will charge it to you. Sometimes the seller is required to charge it to you if they have a business presence in your state.
In any case, the law says you are supposed to pay it. If the seller doesn't charge it to you, then it is your duty to calculate it yourself and write a check to the state revenue board. Of course, no one ever does this - the law is unenforceable, except in some limited and extreme examples like the above with the liquor border gestapo.
Many eBay sellers buy in bulk, and many bulk sellers require a resale certificate, sales tax certificate, or some equivalent. And anyone who has a sales tax certificate is presumed to be selling stuff and thus is presumed to be collecting the tax. So that's why you will see some people collecting tax and others don't.
IN my case, I have a certificate and state in my EOA that tax is required from TX residents, but very few remember to pay it. And it's usually only a buck or so, and I can't justify having someone paypal me the additional $0.96 and then losing 40 cents of it in fees, and irritating the buyer in the process. So I just absorb it as a business cost.
posted on September 6, 2001 08:27:36 AM
Well, I can add New York & PA to my list of states to NEVER move to! Not only an invasion of privacy, but infringing on my pursuit of happiness at the liquor store!
posted on September 6, 2001 08:57:25 AM
How do you acquire a resale certificate? Any downside to this?
Also, there are some Ebay sellers who do charge tax if you live in the same state, but if you do an off-Ebay deal with them, they don't bother with it. Is this just an issue of making the Ebay page look right, since you never know who's watching or keeping track?
posted on September 6, 2001 09:05:51 AM
This sounds to me like a clear case of taxation without representation.
If people will notice that if there is something wrong with an item purchased you can not make a claim against the seller except in his/her state of business or residence - therefore when your state charges tax on an item purchased in another state you are being taxed without the possibility of representation in your state because you can not file a small claims action against the seller in your state.
This is what I found out the hard way when I purchased a manufactured home in Vermont and had it set up in New York. I paid sales taxes in both states, but had to travel to Vermont to file a small claims action against the seller when they did not service the home as in the contract of sale.
This was clearly taxation without representation in New York State.
posted on September 6, 2001 09:31:41 AMHow do you acquire a resale certificate? Any downside to this?
Every state has their own version of it, and they are called by different names. Call your state taxing authority and tell them you are setting up a business. They will tell you what you need. In Texas there is no such thing as a "resale permit" - only a permit to collect sales tax.
The "downside" would be that once you register for a tax certificate, you will be a registered business in the eyes of the state, and you'll be expected to collect applicable sales tax from your customers and submit tax returns on a regular basis.
For me, it's not much paperwork (5 line form), and my in-state sales are small enough that I can submit the paperwork yearly and the amount due is usually less than $100.
As to whether to collect it or not based on "on-eBay" or "off-eBay" - I don't make a big deal of it. I state in EOA that tax is required, and a few pay it, and most don't. Initially I would hold items until they paid the extra tax. Many of my customers did not believe I was really a business, and thought I was just keeping the tax money. I got tired of emailing out scanned copies of my permit. Especially now with increased Paypal fees, it's just not worth it to hassle someone over 75¢.
posted on September 6, 2001 02:57:34 PM
Can only speak for Texas - and that not with complete authority.
You must collect sales tax on any item sold to someone residing in Texas, excluding food, drugs, etc., or for resale. The amount depends on the county and city in which you live as many taxing authorities have different amount of local sales tax.
I believe the states allows you to have two garage sales each year without collecting sales tax. Any more and you are supposed to collect sales tax.
It is a relatively painless form to file. I only file once a year as I have very little taxes to report. The first two years on Ebay, I paid the taxes myself, but decided that I would collect as much as I could. I don't quibble if they don't send the taxes unless it is a large amount.
The really strange thing about the form for submitting sales tax in Texas is the fact that you must report ALL of your sales for the year. In or out of state, Ebay or not--and your sales tax number is your Social Security number with some additions. What do you think they are doing with this information????
I do resent that the state does not make everyone collect and remit taxes. It does put the ones who do at a disadvantage. This would be very easy to do with a venue like Ebay, but I don't see them really lifting a finger to do this. If like items are selling for the same price and someone must pay 8.25% more to one dealer than another - which one would you purchase?
posted on September 6, 2001 03:28:43 PM
Wow, interesting topic, makes me glad to be an Oregonian (no sales tax here)
I didn't realize it could be so complex.
posted on September 6, 2001 04:12:03 PM
From Article I, Section 8 - Powers of Congress, US Constitution:
"To regulate Commerce with foreign Nations, and among the several States, and
with the Indian Tribes;"
In other words, ONLY the feds can regulate interstate commerce.
From Article I, Section 9 Limits on Congress, US Constitution:
"No Tax or Duty shall be laid on Articles exported from any State."
And even though the feds can "regulate" interstate commerce, they CAN'T tax it.
This is WHY we don't have an "internet tax" tax YET. Most internet sales are from one state to another. But sonner or later, they will amend the constitution again.
posted on September 6, 2001 04:30:42 PM
Microbes wrote:
This is WHY we don't have an "internet tax" tax YET. Most internet sales are from one state to another. But sonner or later, they will amend the constitution again.
And when or if they do, they will also have to change a lot of laws - especially small claims laws to comply with the taxable state. This will need to be done to avoid the taxation without representation issue which I think is the only reason the tax has not been set as of yet.
posted on September 6, 2001 07:30:28 PMLet's cut to the chase:
Am I to understand that every seller who does business on the net, has to include with their tax filing, the name and address of every person with whom they've sold anything?
Unless that is the case, I don't see how an "in the same state" sales tax can be enforced.
posted on September 7, 2001 07:57:00 AM
i live in texas and when i buy from a thrift shop where most dealers buy,i always notice salescleark with a big grin on her face when i told him i am a reseller and so i would not pay sales tax,i think most dealers would rather pay the sales tax than leave any trail as with each transaction we need to fill out paperwork.
so everytime you buy from a retailer for resale or from wholesaler (unless you have an account with them),you need to fill out form and i believe the state does go thru the forms.
one wholesaler told me that he cannot just sell to any retailer(he sells gift ware),some gas station operator may have a small room next to the office and they used it as a gift shop and sell giftware.
