Sales Tax... can be refundable for purchaser buying used goods previously taxed

[niteprowler]

There is a lot of misinformation about sales/use tax paid on items purchased on eBay.

In most states the casual (non-business) seller is not required to collect sales tax from the buyer.  eBay, having no way to know this, is acting as an agent and collecting tax for every state as if every sale is taxable.  eBay may be able to handle these sales differently, but they are not going to go to the trouble of acting in the favor of the seller/buyer.

Many states allow a credit for sales tax paid by a buyer of a used item on which tax was previously paid.  This credit can be refundable and usually requires the buyer file a return to claim the refund.  This prevents double/multiple taxation for sales taxes already paid on an item by a prior purchaser.  These rules vary by state as do the technicalities of filing for the credit or refund.

A good synopsis here (https://www.wolterskluwer.com/en/expert-insights/sales-and-use-tax-foundations-refunds-and-credits) provides a brief outline of each states regulations and requirements.

[niteprowler]

Sidenote... on purchases of high-dollar items (with significant sales tax), it is worth the time and effort to see if you qualify for a refund and file for it.  That money rightfully belongs in the buyer's pocket in many states, and it is tacitly unfair for states to receive tax on the same item more than once.  Again... check your states tax information and do the research.  It may mean saving you several hundreds of dollars in tax... or more.

The buyer has to decide whether they meet the requirements and whether filing for a credit or refund is worthwhile in their state.

[dbfolks166mt]

There is a lot of misinformation about sales/use tax paid on items purchased on eBay.

In most states the casual (non-business) seller is not required to collect sales tax from the buyer.  eBay, having no way to know this, is acting as an agent and collecting tax for every state as if every sale is taxable.  eBay may be able to handle these sales differently, but they are not going to go to the trouble of acting in the favor of the seller/buyer.

     You are referring to individual state laws regarding intrastate sales tax collection and while eBay is quite aware of these along with most of the other 10,000 state sales tax laws the application of those laws is largely irrelevant in the wake of the Supreme Court's decision in Wayfair vs. South Dakota which largely pertains to interstate sales tax collection. EBay is acting under the provisions of the court's decision. 

Many states allow a credit for sales tax paid by a buyer of a used item on which tax was previously paid.  This credit can be refundable and usually requires the buyer file a return to claim the refund.  This prevents double/multiple taxation for sales taxes already paid on an item by a prior purchaser.  These rules vary by state as do the technicalities of filing for the credit or refund.

     You make this sound WAY easier than it actually is but you pretty much nailed it when you said "requires the buyer to file  return". 

[refdef · Accepted solution]

Best of luck with that tack.  You'll lose every time.  A sale is a sale and sales tax is due every time.  I don't agree with it, but going sovereign citizen on the issue is a guaranteed loser.

[dbfolks166mt]

Sidenote... on purchases of high-dollar items (with significant sales tax), it is worth the time and effort to see if you qualify for a refund and file for it.  That money rightfully belongs in the buyer's pocket in many states, and it is tacitly unfair for states to receive tax on the same item more than once.  Again... check your states tax information and do the research.  It may mean saving you several hundreds of dollars in tax... or more.

The buyer has to decide whether they meet the requirements and whether filing for a credit or refund is worthwhile in their state.

     They also have to decide if their time and effort is worth what they may potentially recover by filing a claim and dealing with their states governmental bureaucracy. Most of these laws are NOT for preventing double/multiple taxation but for correcting errors or for situations involving irregular transactions. 

[yuzuha]

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@niteprowler wrote:

That money rightfully belongs in the buyer's pocket in many states, and it is tacitly unfair for states to receive tax on the same item more than once. 

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A sales tax is not a tax on the item, the tax is on the transaction. That is why, when I buy something at my local thrift store or the church rummage sale, I am charged sales tax even though the item is used.

[lacemaker3]

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@niteprowler wrote:
...

Many states allow a credit for sales tax paid by a buyer of a used item on which tax was previously paid.  ...

...

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This statement is incorrect. If you have evidence to support this statement, please share it.

The link you provided does not support your claim. It is talking about cases where excess sales tax was collected, and does not state, imply or suggest that refunds can be claimed for purchases of used items where sales tax was collected on a previous purchase.

All states that have a sales tax, also have a use tax. Any time a state resident makes a taxable purchase, and is NOT charged sales tax on the transaction for any reason, the resident is obligated to pay use tax on the transaction, at the same rate as the sales tax would have been. It would make no sense for a state to give a credit for sales tax that was paid, because the resident would then be required to pay the exact same amount as use tax. I have never found any state with a sales/use tax, which provided an exemption for "used" items because a sales tax had already been paid on a previous purchase.

As the link you provided states, a credit for excess sales tax paid can be requested from the state. This would apply in rare cases where sales tax was charged on a sale that should have been tax exempt. This would include, for example, if sales tax was charged on a purchase of clothing, in a state where sales of clothing are not considered to be taxable. It would not apply on the purchase of a used item which is otherwise a taxable purchase, simply because the item was "used" and sales tax had been paid on a previous purchase of the item.

All states that have sales tax (and use tax) legislation, now also have marketplace facilitator legislation, which requires eBay to collect sales tax (or use tax) for all taxable purchases that are delivered to residents of that state. None of these states have exemptions for used items where such a tax (whether sales, use or marketplace facilitator tax) has been paid in a previous sale.

[monroe67]

"There is a lot of misinformation about sales/use tax paid on items purchased on eBay."

Your post  contains misinformation about sales taxes collected by eBay on items purchased on eBay.   

"In most states the casual (non-business) seller is not required to collect sales tax from the buyer.  eBay, having no way to know this, is acting as an agent and collecting tax for every state as if every sale is taxable.  eBay may be able to handle these sales differently, but they are not going to go to the trouble of acting in the favor of the seller/buyer."

While there are individuals and businesses who may choose to sell things online, your post and link do not address selling on eBay or any other selling platform, such as Etsy, Poshmark, Mercari, etc., etc.  Selling on those platforms fall under the Marketplace Facilitation laws, not the laws discussed in your post.  

It's hard to know whether are choosing to disregard the Marketplace Facilitator laws or you simply do not understand them.  

Those laws, which vary among the 45 states with state-wide sales taxation, came about as a result of the US Supreme Court Decision in South Dakota v Wayfair, Inc., in June of 2018.  

Under the Marketplace Facilitator laws, eBay (as well as other platforms) is not merely an "agent" who collects sales tax on behalf of the millions of individual sellers who choose to use eBay's platform.  Those laws define eBay as a Marketplace Facilitator, which has the legal obligation and responsibility to collect and remit state taxes, in accurate amounts, to the appropriate states.   

Your handy link to a "synopsis" also does not address the Marketplace Facilitator laws.  

[niteprowler]

No...  I'mm not talking about the need for vendors to collect tax although those laws vary by state depending on the status of the vendor (or casual seller).  And I'm not talking about eBay collecting tax as an agent of the vendors/states (which is the role that the law puts them in).

I'm informing buyers that they should look into the laws in their own states and file for refunds where applicable... which, if you went to the link I posted, would provide the status in their own states.  OFTEN they are entitled to a refund and these "RETURNS" are not that complicated.  They are well worth buyers time when hundreds of tax dollars may not have to be paid.

IT ISN'T THAT HARD... I'm a CPA who has dealt with taxation my entire career and I hate seeing misinformation costing buyers money they don't legally owe.  This is not so much about eBay... but it can benefit vendors if their purchasers know that they may get back the taxes they were charged.

[niteprowler]

Yeah... it's not rocket science.  State tax departments also have to provide information to buyers who want to claim their refunds.  Usually we are talking about a one page form.

[niteprowler]

That is how eBay is characterizing it.  

As a purchaser... it clearly shows the "tax".   It is not that hard for buyers to claim their refunds.   We're not talking about income tax returns here.  Most often just a one page form that will allow buyers to get their money back.

Read the link.  This is from a professional level tax publisher that professionals (ie. CPA's)  rely on for clarification of federal and state tax law.

[niteprowler]

Don't go into a diatribe.

Go to the link I provided... which is a tax publishing source who publishes a litanty of professional tax publications that decipher the law for tax professionals every day.

Again... I'm not talking about eBay.  Read the title of the OP and you will see exactly what I am addressing here.  Purchasers are paying taxes that, in many cases, they are not required to pay.

[niteprowler]

You are confusing the issue of vendor/agent vs purhcaser.

Vendors and their agents are NOT at all what I'm relaying information about.

Laws regarding purchases and taxation of purchases (sales tax / use tax) are a completely different subject... and purchasers are many times not required to pay tax on an item that, due to having previously been taxed, is not subject to tax again.

[niteprowler]

YOU ARE WRONG.

Go argue with the publishers who provide tax information for tax professionals...

BUYERS... BUYERS ARE NOT ALWAYS LIABLE FOR TAXES ON USED ITEMS ON WHICH TAX HAS PREVIOUSLY BEEN PAID.

[tobaccocardyahoo]

You are helping to provide the misinformation.

Ebay is collecting the sale's marketplace facilitator taxes which may differ from sales taxes in most of the states which have one.

The rules may differ and are simplified.

Your link appears not to reference market facilitator tax. So it is likely to apply to sellers who are directly collecting and remitting sales tax.