Why do some eBay Sellers charge their State tax, and some don't?

braddick

I'm always frusturated when I come across an auction I'm interested in only to have the Seller state, "California residents must include sales tax".
Most don't do this, some do.
Am I really to believe this guy is then sending this collected sales tax to the state?
The big PowerSellers, maybe. But the little guy working out of his home?

cascade

Thats a good point. For the little bit of ebaying I do, I tend to eat the tax myself. Maybe others do as well, considering in state ebay purchases are small compared to the overall out of state purchases.

IrishMike

What, I gotta collect sales tax? I understand I do for residents in my own state, but I don't pay any sales tax at the local coin show I go to. I also rip off the mattress tags too, the ones that tell you that you can be thrown if jail if you remove them. I must have a go to jail complex.

BigD5

You don't know for sure. The legitimate sellers are paying the tax, because they know the penalty isn't worth the money saved/stolen. If it really bothers you, send the sellers name off to the dept. of revenue for your state (CA?). They would be interested in knowing that the tax has actually been paid

relayer

Actually the difference is if they comply with the law or not.

Any business that sells on ebay will charge tax or risk audits and fines and loss of their business license.

Remember what ebay is - A national yard sale. A lot of ordinary people selling stuff they don't have a use for anymore.

In California "occasional" sellers are exempt from collecting and reporting sales tax. But if you start running a yard sale every week though, you start to lose that exemption status. That means a lot of paper work has to be filed with the state and deposits made to cover your estimated quarterly sales tax (the minimum used to be $300).

That's one thing I hate about Teletrade is they charge sales tax and they are in New York.

Elcontador

Pat,

In California, entities that do business selling tangible personal property are required to have a permit to conduct such activity with the State Board of Equalization. They also must file a sales tax report on either a monthly, quarterly, or annual basis with the SBE, at which time they must remit whatever sales and use tax that was collected for the period covered by the report.

Sales and use tax is collected by entities doing business in California which sell or lease tangible personal property to end users residing or doing business in said State. So, technically, if you are a California resident using E-Bay on more than what the SBE deems to be an "occasional sale" basis, you are required to register with them to get a sales / use tax permit.

Sales by registered entities where title passes outside the State of California or sales to a reseller are not subject to California sales tax. However, they must be reported as such on the related sales tax report, and such reports are subject to audit by the SBE.

It has been my experience that SBE auditors are the most aggressive of all of them. You don't want to **** with these guys.

braddick

Sounds all reasonable. It's just the guy who is selling a $22. coin or something like that and is mostly a buyer on eBay, not a seller. He collects the tax- then what? I just doubt the State is getting it.

BSqr

Business entities must collect sales tax for customers located within their tax district (city and/or state).
I own a small business and must collect sales tax on taxable products or services I sell within my tax district

Folks that are supposed to collect tax and don't are crooks and they only hurt their own tax district. Ironically this illicit behavior can contribute to higher tax rates within the cheat's own district. Having to compete against businesses that don't charge tax, whether they deal in cash or not, is tuff and unfair.

Luckily, I can point out to a potenial customer that someone bidding against me doesn't include or even mention tax in their quote is probably not someone they want to do business with. I mean if they will cheat on sales tax then obviously their integrity is somewhat suspect.

Elcontador

Unlike the IRS, the SBE audits most businesses every 3 or 4 years or so, as this is a cash cow for the State. Any business permitizied by the the SBE which knowingly fails to remit sales tax will pay serious money to a criminal defense lawyer, if discovered.

People who stiff the State re sales tax aren't just crooks. They can be put out of business and do serious time in the "big house" as well.

clackamas

If they are 100% on the up and up in CA with a CA resident they must charge sales tax. That is not to say that by collecting sales tax that they actually report the sale. I had a dealer I used to buy from when I lived in the bay area that said "if you want a receipt I'll charge you sales tax". Needless to say it was tempting not to get a receipt, especaiily when buying bullion for melt.

I was just thinking that if you a a private individual and you sold something in the paper classifieds, you are not required to charge sales tax. So I guess the answer is that if they are in the business of selling coins and have a California resellers permit they would be required to collect and PAY sales tax but I do not think that if you, a California resident, sold a coin you had would have to charge sales tax.

The one upside if you are more than a casual seller on Ebay and you do charge sales tax is that you do not have to PAY sales tax on coins. You just need to provide you CA resellers permit.

DesertLizard

In CA sales of over $1000 of coins are NOT subject to sales tax, there is one dealer of cameo stuff who still does not get it.

If I buy less than that amount I buy from someone out of state.

relayer

It's just the guy who is selling a $22. coin or something like that and is mostly a buyer on eBay, not a seller. He collects the tax- then what? I just doubt the State is getting it.

If he has any type of retail business selling something else, he has to pay tax on his ebay coin sales too. The state doesn't care if you sell cars by day and coins by night.

Or he's just pading 7 1/2% - the legit and the ripoff would look the same to the customer.

I've bought coins on ebay from dealers in California who don't mention sales tax. When the invoice comes the sale price is reduced by the tax amount and the tax is listed sepertately. One guy ate $60 in tax - or so it said on my copy.

BAJJERFAN

As a rule in states where there is a sales tax if you make a purchase intrastate (meaning within the state) then that purchase is taxed whether it is face to face or thru the mail. Generally merchants are NOT required to collect sales taxes on interstate or state to state transactions tho there are exceptions. Boy how the state revenooers would love to change that.

Wisconsin

It's sort of a poor deal for the seller that wants to run a legit. business because they are losing sales because of doing the right thing. One way to look at a seller collecting tax is that he is actually running a legitimate business(should be anyway) and your odds are probably better of not getting scammed out of your money.

CarlWohlforth

I am sure I lose many California bidders. Even if they do calculate the tax and bid they are at an %8 disadvantage to those living elsewhere.

When I was just getting started I was an occasional seller selling a few extras. When I decided to make it a small home business I applied to the BOE and got my sellers ID. I now have to keep track of tax and file another tax form with a check. It is really a pain. I'm dreading my first tax return. Actually since my wife helps, I think she is dreading it more than me BTW we have other partnerships and it takes us close to 100 hours to do our taxes each year...