How to avoid double taxing an item for sale?
Hi all,
I buy stuff retail and pay the sales tax in California. I sell it on ebay and ebay adds sales tax again to the item. This seems wrong. From what I can remember on sales tax rules you are only allow to charge sales tax once. Is there a listing setting that avoid the sales tax because I already paid it myself? I also sell stuff that is not taxed in California and I'm ok with other states charging the buyer sales tax because I didn't pay it. I also have stuff for sale that I got for free and I don't mind the buyers getting charge sales tax .. again I didn't pay the sales tax. I sell maybe 3 or 4 items a month. Most are under $25.
I understand that this pay retail and sell in ebay is not what some people agree with but that is not the question so please don't answer that way. Thanks.
luckythewinner
·2 years agoHow to avoid double taxing an item for sale?
eBay does not allow you to violate sales tax laws.
I buy stuff retail and pay the sales tax in California. I sell it on ebay and ebay adds sales tax again to the item. This seems wrong.
First, you are not being 'double taxed' in the example you gave. You were only taxed once.
That aside ..
Sales tax is a tax on the financial transaction (the 'sale'), not on the item itself. Sales tax laws do not have an exception for people who just don't like the sales tax laws.
chapeau-noir
·2 years agoAs a private consumer you pay sales tax (if your state has a sales tax). As a merchant, you pay a use tax. This is collected and remitted by the marketplace. If you need to pay use tax on your sales in your own state, you file with a marketplace facilitator deduction (i.e., the tax has already been collected and remitted by the marketplace) and you pay nothing.
chubbycatcollectibles
·2 years agoIf you havent done so yet, get a resale permit. You can then submit it to eBay and never pay sales tax on items you purchase here or elsewhere. The easy way to to pay one of the online companies to do all the paperwork for you and you get it super fast.
slippinjimmy
·2 years agoLess than 5 minutes on the website of whatever State you are in is all it takes to get a Resale Certificate, paying anyone to do it for you is a foolish waste of money.
the_fancy_fox
·2 years agoOnly if you’re purchasing to resell the item. A resale certificate is not to buy your personal items tax free.
If you convert items you purchased on your sales cert to private ownership, you are to pay the tax owed on your taxes.
this is in California; Misuse of a resale certificate in addition, the purchaser may have their seller's permit revoked and may be required to pay one or both of the following: A penalty of 10 percent of the tax or $500, whichever is greater, for each purchase made for personal gain or to evade payment of tax
az93
·2 years agoEbay adds the sales tax that the buyer would have paid to his state, then ebay passes it on to his state. Seller never receives the sales tax or benefits from it in any way. Seller is charged a pittance fee for handling the paperwork. Sellers were once trusted to report and voluntarily pay all sales tax collected for items they sold on the internet. Few did and now sales tax collection and distribution is no longer voluntary, but mandatory. Seller does not pay the sales tax, the buyer does. It's a good thing.
monroe67
·2 years ago"I sell it on ebay and ebay adds sales tax again to the item. This seems wrong. From what I can remember on sales tax rules you are only allow to charge sales tax once."
It may have been true at one time, in some of the 50 United States, that sales tax was only to be charged at the first retail sale.
However -- that was all changed by the Supreme Court decision in South Dakota v. Wayfair, Inc., which was decided on June 21, 2018. Close to six years ago now. It is really more of a tax on the transaction than a tax on the item, product, or thing itself.
That decision said (paraphrased) that items sold on or through internet sites could be subject to sales taxes at the rate in effect at the zip code of the delivery address. After that decision said South Dakota could collect sales taxes on stuff their residents bought from Wayfair, the other states said, essentially, "Hey, we want those sales taxes, too!"
Internet sites such as eBay, Amazon, Etsy, Reverb (guitars, etc.), Poshmark, and many, many others were given the responsibility to collect those sales taxes.
So, where you say, in your post "ebay adds sales tax again to the item" -- yes, that is true.
eBay does add sales tax to the item's price. Because eBay HAS to.
The state laws of the 45 states that charge state-wide sales taxes require eBay to collect and remit those sales taxes. "Remit", of course, being sending the tax money to the appropriate state's treasury.
Oh, to your question: "Is there a listing setting that avoid the sales tax because I already paid it myself?" NO.
Not for your eBay sales.
Hope that helps.
dbfolks166mt
·2 years agoHowever -- that was all changed by the Supreme Court decision in South Dakota v. Wayfair, Inc., which was decided on June 21, 2018. Close to six years ago now. It is really more of a tax on the transaction than a tax on the item, product, or thing itself.
The Wayfair decision only changed the collection of sales tax as it pertained to ecommerce intrastate sales. The collection of sales tax on the resale of items within a state has been in place for a LONG time at least for those states that have sales tax. Thrift stores, consignment stores, pawn shops.............. have always collected sales tax.
monica-sells
·2 years ago"...I sell it on ebay and ebay adds sales tax again to the item..."
sorry, ebay does not add the sales tax....the state requires sales tax collection based on the residence of the buyer....ebay can only comply with the law......they collect it for you (the seller) and remit to the appropriate authority
If you buy for resale, you should have (as mentioned previously) a resale certificate. This would exempt you from paying sales tax on items intended for resale.
kensgiftshop
·2 years agoIt's not the item that is taxed, it's the transaction.
Every time it's sold, buyer pays sales tax if their state has sales tax.
gamersbaystore
·2 years agoGet a resale permit and you wont be required to pay a red cent of sales taxes on any product you purchase to resell. I grew up in California, had my first resale permit when I was 13. I could walk into any retail store and buy anything tax free, did it many, many times. You just present your resale permit when purchasing product for sale.
slippinjimmy
·2 years agoMore info for @rodo8
https://www.avalara.com/blog/en/north-america/2016/12/everything-you-need-to-know-about-california-resale-certificates.html
inhawaii
·2 years agoIt may seem wrong, but it's not.
ten_o_nine
·2 years agoWhen you buy a car, you pay taxes, and when you sell it, the buyer pays the taxes.
The buyer is paying the taxes on the sale not you, and if he sells it, the new buyer will pay taxes.