Sellers who charge State Sales Tax

262Runner

I am not sure what to say about some of these sellers who charge State Sales tax. It seems to me, in most auctions, the same people charging sales tax are also overcharging for shipping. I have been in business for many years (wholesale) and do have a California State Resale License. I never charge sales tax for internet sales.... why would you?

I recently made a purchase on ebay, sent a check for the cards with my License number and now the seller wants me to fax or send a copy of the license. I just wont do that. The claims they need to prove to the state that these cards will be re-sold at reatail...Not true. I want these cards, what should I do?

262

FYS

<< <i>I am not sure what to say about some of these sellers who charge State Sales tax. It seems to me, in most auctions, the same people charging sales tax are also overcharging for shipping. I have been in business for many years (wholesale) and do have a California State Resale License. I never charge sales tax for internet sales.... why would you?

I recently made a purchase on ebay, sent a check for the cards with my License number and now the seller wants me to fax or send a copy of the license. I just wont do that. The claims they need to prove to the state that these cards will be re-sold at reatail...Not true. I want these cards, what should I do?

262 >>



If someone is trying to run their business legitimately, then they should be charging sales tax. Also, if someone claims to be exempt from sales tax, it is the sellers responsibility to obtain proof, which is a copy of your license. This request for proof is very normal in the business world.

262Runner

I understand the laws and I hope that most sellers are honest enough, however, this is a copy of the email from the seller:

"We have your resale number but need a copy of your actual certificate which shows you
are actually reselling the cards."

My Certificate does not show if I am actually reselling the cards. If i was in another state, this would not be required, and could not be tracked. Personally, I think charging sales tax on only those in your "State", is a big game and I would bet that the slaes tax collected is never reported on 95% of all in-State ebay sales. If you don't report sales to other states, why would you report sales to this one?

maraya

Rearding the collecting of Sales Tax in the State of California of items sold within the State of California to someone residing within the State of California:

ALL RETAIL TRANSACTIONS ARE TAXABLE!

If the seller conducts the sale of cards at a show or ebay or from
the website and they are sold to someone within the State of California, the seller is required by LAW to collect the appropriate sales tax from within his district. A legitimate dealer who makes selling sports cards his business and pays quarterly the taxes collected from sales of his cards within the State of California should be collecting the sales tax from his buyer(s) or otherwise must "eat" the money he should have collected. If the buyer refuses to comply, this is totally rude and unfair towards the seller.

If the buyer buys cards to resell and makes this his business also, he can avoid paying sales tax BUT must supply the
reason why he wishes to avoid paying sales tax, in which case he
must supply a copy of his VALID CA STATE RESALE CERT to the seller
from who the cards were purchased. By valid is meant, you are
purchasing to resell, this is your business, not your hobby.

Simply supplying a Resale # is not enough for the State as proof the sale was made at the "wholesale" or "resale" level and the state
could force the seller to pay up if an audit arises. The Resale Certificate does not state ones business. In many cases at the
wholesale level, the seller can request the buyer (if the buyer is also a dealer in cards) the fill out and SIGN a resale card to verify the
purchase as a legitimate tax exempt purchase.

To state the seller does not report sales or pay the sales taxes made on the internet 85% is just plain ignorance and not understanding how rules regarding sales tax work, when these sales on ebay can be traced a mile long. It is just too big of a risk not to report sales on ebay. If you don't want to report your sales on eBay, go ahead, just don't ask me to do it and break the law.

On the other hand, if sales are made from California to another state, collecting sales tax is not required.

In the future this might change. I have a hunch in the future all
internet sales will be spot tracked by State auditors or IRS auditors.

If you have questions call the State Board of Equalization!

ArchStanton

I have had suppliers request a copy of my certificate. Most are satisfied with the number from the certificate.

In Pennsylvania, we also have a use tax. That means if a Pennsylvanian buys any taxable product from another state, we are supposed to pay sales tax to the Pennsylvania Department of Revenue. It gets pretty serious when people are buying cars and other titled items.

PA Use Tax

larryallen73

I am in Sacramento and have a good friend who works at the California State Board of Equalization and she has told me they go after all types retail sales within California including net sales. She has told me some stories about small vendors they go after. I don't know of any minimum level of sales that legally avoids sales tax. In theory all of us who sell stuff on Ebay should be charging sales tax to instate buyers... unless we have a valid resale license. It's called THE LAW. As for your question about the seller asking for more proof about you reselling stuff I think he is going overboard. I always see people ask for proof of a resale license; not proof that you are actually reselling. That doesn't make any sense. Good luck!

larryallen73

P.S. I should add that I often avoid in-state sellers as I don't want to pay an 8% premium; especially on high dollar buys. Sucks for me since several big sellers are in California.

MooseDog

I'm in California.

Technically, the seller does not have to CHARGE sales tax for in-state sales, but he/she does have to PAY the sales tax on those sales. It's been my policy for a while to not charge the extra sales tax to California customers, except for large $$$ items. I sell a lot of fixed price/store items, don't have a LOT of California sales but in essence give CA customers and 8.25% discount on many of the things I sell. For smaller items this does not add up to that much compared to my out of state sales. I think if I add the sales tax to the purchase price in my listings I think CA customers might think twice.

Oh yeah, and I don't overcharge for shipping either...

In regards to resales, most sellers in CA are happy with either just having the number or a signed form stating your resale number and statement of purpose. Those forms are standardized and used to be available as 4x6 index card size forms in office supply/stationery stores. I've had some vendors send me a Word .doc with the same wording. There is probably a copy floating around somewhere on the Internet.

bobwilley

<< <i>I am not sure what to say about some of these sellers who charge State Sales tax. It seems to me, in most auctions, the same people charging sales tax are also overcharging for shipping. I have been in business for many years (wholesale) and do have a California State Resale License. I never charge sales tax for internet sales.... why would you?

I recently made a purchase on ebay, sent a check for the cards with my License number and now the seller wants me to fax or send a copy of the license. I just wont do that. The claims they need to prove to the state that these cards will be re-sold at reatail... >>



Why,
Because it is the LAW
And if you are business person in California, you should already know the law.
You are required to pay Sales Tax on ALL in-state sales, that goes for most states.
And as for requiring a copy of your Resale Permit, that is normal and part of good business practice.
When you got your Resale Permit the instructions clearly told you to collect a copy of the resale permits on alll exempt sales, for your records. If you don't have it, they can make you pay the Sales Tax on those items (whether you collected it or not).
If you ever get audited, you are in for a rude awakening (and an expensive lesson).

P.S. If you run auctions on eBay and don't list collecting Sales tax, it is easy for the Comptroller's office (or equalization) to locate those sellers that appear to be businesses not collecting sales tax and audit them. Busted.

I hope you also don't believe that for sales on eBay you don't have to pay income tax. Another common misconception, that has cost a lot of people a lot of money and serious trouble. (Tax evasion can be prosecuted with jail time)

gemint

Just scan a copy of your permit and keep it on file. Then when a seller asks for your permit, you can attach the scan to an email. It's no big deal.

As for sales tax, I don't charge it to bidders but I do pay it. It's usually not a big deal since the majority of bidders for my items are outside California. However, if I start selling bigger ticket items again, I'll probably have to pass the tax on to the buyer if they're in-state.

MooseDog

bobwilley is right on the money regarding sales tax.

Has not happened to me, but someone I know owned a business in CA and got audited by the State Board of Equalization. You'd be better off dealing with the IRS. The CA BOE can pretty much disallow any non-taxable sale if you don't have documentation, and PROPER documentation at that. They can invalidate a resale if they think the buyer is not buying for resale. They can pretty much disallow any sale they want, in short they can F**K with you all they want. Bottom line, this guy sold components that went into electronic equipment, didn't have valid resale numbers from a lot of his customers and got hit HARD in penalties and back sales taxes.

In addition, they audited him every year until he went out of business 4 years later (not related to the tax issue, just bad business).

The CA BOE is NOT to be messed with. The state has a LOT of bills to pay (thank you, Enron - jerks!).

larryallen73

The CA BOE is NOT to be messed with.

I 100% agree.