Should Heritage charge tax on the buyer's premium and/or shipping also?
DMWJR
Posts: 6,046 ✭✭✭✭✭
I've never had the opportunity to buy at any auction (coins or otherwise) where sales tax was collected.
Example:
Winning bid: $1600.00
Buyer's Premium (20%) : $320
Shipping: $24.49
Subtotal: $1,944.49
State Tax (7%): $136.11 (This is 7% of the subtotal including BP and SH)
Total charged: $2,080.60
(In case you are guestimating final costs while bidding, $480.60 is your bid of $1,600 x 1.3)
Doug
0
Comments
that would be a good question for heritage
I'm sure they try to follow the law. I looked at my last Heritage win, and can't honestly say if they taxed shipping or not, (which seems like the only questionable category to me). I'm not exactly sure what my local tax is!
Added: Did some checking, and they did tax shipping. I tried to find a recent Amazon purchase, with shipping, to see if they collected on shipping too....but I tend to not pay shipping when I can, so didn't find any.
As for BP, I can't imagine why that wouldn't be taxable. It's part of the purchase.
Bottom line is "it depends." It would be governed by the state in which the sale occurs. Sales tax nexus is a tricky one, I could imagine scenarios where it would be governed by Texas law, the state where the auction is held, or the state in which the buyer receives delivery.
Actually just found this on their website:
Sales Tax Information
Lots delivered to you, or your representative are subject to all applicable state and local taxes, unless appropriate permits are on file with Auctioneer. Bidder agrees to pay Auctioneer the actual amount of tax due in the event that sales tax is not properly collected due to: 1) an expired, inaccurate, or inappropriate tax certificate or declaration, 2) an incorrect interpretation of the applicable statute, 3) or any other reason. The appropriate form or certificate must be on file at and verified by Auctioneer five days prior to Auction, or tax must be paid; only if such form or certificate is received by Auctioneer within 4 days after the Auction can a refund of tax paid be made. Lots from different Auctions may not be aggregated for sales tax purposes.
Note: You will be billed for sales tax unless you have the appropriate documentation on file at and verified by Heritage five days prior to the auction. This documentation consists of a Resale Form (download now) and a legible copy of your state issued license or permit issued in your name and/ or the name of the business for an appropriately related category of merchandise. If you do not have this documentation on file with Heritage, you have 4 days from the date of the sale to complete the form and send/fax a copy of your license or permit to receive a refund for the tax. Lots from different Auctions may not be aggregated for sales tax purposes.
AND ALSO
Lots delivered to you, or your representative are subject to all applicable state and local taxes, unless appropriate permits are on file with Auctioneer. Should state sales tax become applicable in the state for delivery prior to delivery of the property on the invoice, the bidder agrees to pay all applicable state sales tax as required by the delivery state as of the shipping date. Bidder agrees to pay Auctioneer the actual amount of tax due in the event that sales tax is not properly collected due to: 1) an expired, inaccurate, or inappropriate tax certificate or declaration, 2) an incorrect interpretation of the applicable statute, 3) or any other reason. The appropriate form or certificate must be on file at and verified by Auctioneer five days prior to Auction, or tax must be paid; only if such form or certificate is received by Auctioneer within 4 days after the Auction can a refund of tax paid be made. Lots from different Auctions may not be aggregated for sales tax purposes
Thanks @ModCrewman. I'm not an accountant, but I know enough to know that things aren't always intuitive, and this is a fairly new area of interpretation. For instance, some software that is purchased is taxable in my state if it is installed on one of our computers, but if it is a cloud based subscription, it is not. It looks the same on the computer
I can see us moving toward a national sales tax standard in the near future. It's going to be too cumbersome to drill down on every customer.
I’m not knowledgeable on tax law, but if you live in a state where sales tax is now required would it be possible to form an LLC in a state with a sales tax exemption on coins and bullion and then purchase through that LLC and have coin delivered to a representative in that state?
There has actually been a major case resolved by the US Supreme Court during 2018 that will change internet taxation across the country. Basically, there is a move towards requiring all internet merchants to collect sales tax on sales regardless of destination. You may start to see a lot of purchases that were previously not subjected to sales tax have sales tax on them, especially after the first of the year as most states required some law changes to implement the ruling.
@Wahoo554 - Orange is not in my color wheel
Thanks for the info on the 2018 case. That will definitely change some of the dynamics, especially for small sellers and thin margins.
That would only work if you met your state's requirement to be exempt from sales tax. That exemption isn't available solely on the basis of forming a legal entity, it would only be available to actual resellers of goods. In addition, you'd need to be making the purchase for resale.
Hah, obviously not worth ever risking breaking the law. Was just ruminating on whether there could be any nice tax loopholes to exploit. That’s of course a question for tax attys and CPAs rather than lay coin collectors such as myself...
You have to be a reseller to "get" the exemption, which just means you collect it once from the person you are selling it to, and prevents you from paying sales tax in addition (two times on same item). Nobody just gets out of the tax ... it's just how they collect it. If you are a business and use your certificate to buy goods (not resold, but used) without paying sales tax at the POS, then you have to file a Sales/Use tax return and declare it and pay the same sales tax rate, but called "use tax" in my state. I imagine most states work similarly.
I live in NC and my understanding of the law is that NC has a sales tax exemption on numismatic items that applies to purchasers, not just resellers. In other words, if an out of state seller sells a coin to a NC resident, my understanding is there would be no sales tax applicable to the transaction.
They have charge it on the buyers' premum because that is part of the selling price. In Massachusetts, you didn't charge it on the shipping charges when I lived there, but I'm not sure that has changed.
Gotcha. We were talking about two different things. No, you don't have to tell Heritage that NC is exempt. The thing you spoke of earlier would be closer to "evasion" than "avoidance"
The sales tax requirements amount to pretty much one full bidding increment at an auction house. It has pretty much blocked me out, as I live abroad and refuse to pay these taxes I will move the next time I spend any length of time in the States just for that reason, as I have spent less than thirty days Stateside in the last ten or so years. I guess I will just sto buying until then. I figured the tax into my bids in the last major auction, I participated in, and lost everyone of the four coins I was really interested in by one increment. I hope in the near future to run the show circuit again.
State sales taxes vary with each state. Many tax goods but not services. None that I can find tax postage. The details depend on definitions of taxable items and in some cases prior IRS opinions -- such as on auctions of vintage scotch where there is no intent to drink the liquor.
They have gotten to expensive for me
https://www.pcgs.com/setregistry/quarters/washington-quarters-major-sets/washington-quarters-date-set-circulation-strikes-1932-present/publishedset/209923
https://www.pcgs.com/setregistry/quarters/washington-quarters-major-sets/washington-quarters-date-set-circulation-strikes-1932-present/album/209923
Roger, is that the same as not inhaling?
Looking at a FEDEX receipt for shipping a package from Iowa to Wyoming there was no sales tax itemized on the receipt. I would say to contact Heritage and ask if they collect ST on shipping to certain states. They should also add to their Terms and Conditions for what and for whom ST is collected.
Well, maybe I should have said "auction houses" instead of Heritage because it probably could apply to others. The shipping thing is really nothing, but the buyer's premium was a little intriguing to me since it might be able to be a service and not a good, similar to my software example above.