posted on October 12, 2001 08:23:08 AM new
I just recently started selling on Ebay. Some wholesalers that I'd like to buy from require me to provide a Certificate of Resale/Resellers No., so I applied for this document. MY QUESTION: AM I RESPONSIBLE FOR SALES TAX OF ITEMS SOLD ON THE INTERNET? A person at the internal revenue service told me YES. I thought I'd only be responsible for sales tax of items sold to someone that lives in MY STATE. I'm confused b/c I shop on the internet a lot & haven't had to pay sales tax. (How do companies get around this?) By the way, if you as a Seller is responsible for sales tax on the Internet, do you state this in your TOS or take it out of your profit? Any other info that you could volunteer would be greatly appreciated.
posted on October 12, 2001 08:29:20 AM new
I collect and turn in sales tax on in-state sales, which reminds me, I need to mail that off pronto! I put in my auctions that Virginia buyers will need to pay 4.5% of sale price for sales tax, then in my email I give them the specific amount to add to their total.
posted on October 12, 2001 08:48:42 AM new
That's what I thought...but I was told that I'd have to charge sells tax for ALL internet sells (I live in IL). Maybe the person I spoke with was just confused.
posted on October 12, 2001 08:49:09 AM new
You're now only responsible for sales tax on in-state sales. There have been many moves to legislate this and make an across-the-board tax mandatory, moves that are of course strenuously opposed by businesses doing heavy business on the Internet.
posted on October 12, 2001 08:55:41 AM new
The usual state rule is you need to collect sales tax if you have a physical presence in that state. For example, if you have stores in several states, then you need to collect sales tax for those states even if your ebay activities may not reside in that state.
For out of state sales, the buyer is responsible for reporting and paying the sales tax.
posted on October 12, 2001 08:56:16 AM new
Yes, you probably need to collect SALES TAX from items being shipped to your own state, but not to other states. For instance, in California, you need to go to the State Board of Equalization and fill out paperwork to be authorized to do this.
I moved to a state with no sales tax, I am quite happy about that, much less complicated, and possibly even an adantage!
posted on October 12, 2001 08:56:39 AM new
Useful information regarding your STATE sales tax liability is not to be had from the IRS.
The practical,if not legal, "rule" is that if you have a "business presence" in a state, then you have to collect sales tax on all items sold in that state, regardless of channel used (store, flea market, internet, etc). A "business presence" would include stores or employees who work in a state.
So if this is just "you" who are the business, you only have to collect for sales to in-state people (exceptions of course for those with valid reseller certificates, non-profits with exemption certificates, etc).
When I buy from staples.com, I have to pay sales tax (sad to say) because they have a store in my state, even though I am ordered from a web site hosted elsewhere,and the inventory is kept elsewhere, and the profits go elsewhere...but OfficeMax doesn't collect it since they have no store here.
posted on October 12, 2001 11:53:00 AM new
And buyers who buy out of state & are not charged sales tax are supposed to pay "use tax" in many states (sales tax & use tax are very simliar).
Your state department of revenue should be able to answer your questions about state sales tax collections.
posted on October 12, 2001 01:40:12 PM new
"By the way, if you as a Seller is responsible for sales tax on the Internet, do you state this in your TOS or take it out of your profit? "
First, of course, sales tax is only collected on in-state sales.
As for this question, it depends on the state you live in. In one eastern state, tax must be added to the sales price. In a western state, it can be considered to be included in the sales price (i.e. comes out of the total sale price).
