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]

     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".

AGAIN... NOT ROCKET SCIENCE.  Point is... that many are due refunds of taxes that they paid but are not legally required to pay.  These "returns" generally require very basic information about the transaction.

Nobody should have to... or want to, pay state governments money that they legally do not have to. 

THAT is what I was addressing in my post... not sales (including consumption or use) tax collection.  These are STATE laws and vary by state... but for someone buying a used $ 5000 item... the tax paid could amount to hundreds of dollars.

[lacemaker3]

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@niteprowler wrote:

...

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.

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I did read the article you linked to. It does not support your statement that:

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

The article does not say that, and it is not true. I have researched the sales and use tax laws in many states, and I have never found a single state that allows a "credit" (or an exemption) for sales tax paid on a used item, on which tax was previously paid. Not one.

You are misinformed, and you have misunderstood this issue. You are spreading misinformation.

If you can find any state which has such an exemption (or allows for a such a credit), please post the link here. I don't believe you will be able to.

[niteprowler]

And... casual sellers in most cases... MOST are not considered vendors and are not required to collect tax... and as I stated, eBay or any other "marketplace" is not in a position to make any decisions.  But... John Doe selling their old XYZ to someone is not a vendor or seller and that PERSON is not required to collect taxes.

THAT is precisely why states provide procedures for claiming refunds.

What I DIDN'T INCLUDE is that RESELLERS PURCHASING ITEMS FOR RESALE ARE GENERALLY ENTITLED TO A FULL REFUND OF TAXES THAT THEY PAID ON ITEMS FOR RESALE  AGAIN... THESE ARE STATE LAWS AND THERE ARE PROVISIONS FOR CLAIMING REFUNDS.

For example, John Doe buys $ 10,000 worth of "inventory" to resell on another marketplace, John Doe is almost always entitled to a credit against the sales tax he collects or pays for these items since their subsequent sale will be taxed.  The credit/refund is claimed by claiming a credit on a states (Retailers/vendors) sales tax return.

[niteprowler]

NOTE TO ALL...

THE BEST ANSWER... IS NOT THE CORRECT ANSWER.  DO YOUR OWN RESEARCH AND YOU WILL FIND WHAT I HAVE SAID TO BE CORRECT AND ACCURATE.  GO TO THE LINK I PROVIDED.... WHICH IS A LINK TO A MAJOR PUBLISHER OF LAW AND TAX PUBLICATIONS

RELIED UPON BY THOUSANDS OF TAX PROFESSIONALS EVERY DAY.  THEY... KNOW WHAT THEY ARE PUBLISHING... AND HAVE STAFFS OF LAWYERS AND EXPERTS WHO RESEARCH AND ANALYZE TAX LAW AND HAVE FOR DECADES.

[bonjourami]

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

Unfortunately, most of that misinformation is in your op.

[dbfolks166mt]

And... casual sellers in most cases... MOST are not considered vendors and are not required to collect tax... and as I stated, eBay or any other "marketplace" is not in a position to make any decisions.  But... John Doe selling their old XYZ to someone is not a vendor or seller and that PERSON is not required to collect taxes.

     You really need to read the Supreme Court Decision as well as the specific text of your own link. Following is the link to the courts decision. For all practical purposes eBay or any other ecommerce provide is considered to be the merchant of record. 

https://www.supremecourt.gov/opinions/17pdf/17-494_j4el.pdf

     With regards to your link the following is the key element and lays out the specific instances for claim sales tax refunds. It is a synopsis not a blanket statement regarding claims and specifics. 

THAT is precisely why states provide procedures for claiming refunds.

What I DIDN'T INCLUDE is that RESELLERS PURCHASING ITEMS FOR RESALE ARE GENERALLY ENTITLED TO A FULL REFUND OF TAXES THAT THEY PAID ON ITEMS FOR RESALE  AGAIN... THESE ARE STATE LAWS AND THERE ARE PROVISIONS FOR CLAIMING REFUNDS.

For example, John Doe buys $ 10,000 worth of "inventory" to resell on another marketplace, John Doe is almost always entitled to a credit against the sales tax he collects or pays for these items since their subsequent sale will be taxed.  The credit/refund is claimed by claiming a credit on a states (Retailers/vendors) sales tax return.

     Most retail sellers and/or businesses already have a state tax ID which many have provided to eBay and they do not pay sales taxes on their purchases. Others simply roll it into the COGS and take it off at tax time. 

[kensgiftshop]

Sales tax isn't about the item or it being new or used, the tax is on the transaction.

[dbfolks166mt]

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.

      OP has a pretty significant buying history I wonder how many times they have filed a claim with their state, whatever that happens to be, and actually gotten a refund. I wonder if they file claims on sales tax they pay at the grocery store, gas station.....  

[kensgiftshop]

If lawyers are involved, then it must be true, just like the Easter Bunny and Tooth Fairy.

[monica-sells]

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@niteprowler wrote:

For example, John Doe buys $ 10,000 worth of "inventory" to resell on another marketplace, John Doe is almost always entitled to a credit against the sales tax he collects or pays for these items since their subsequent sale will be taxed.  The credit/refund is claimed by claiming a credit on a states (Retailers/vendors) sales tax return.

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This part of your statement is somewhat accurate....

(but this is not what you were describing earlier)

If you 'register' with your state, you can (generally) purchase items for resale without paying sales tax.....

If you ultimately register (or even if you don't) you can file for a refund of sales tax paid on items you bought for resale...(accounting 101)

But, that is not what you are implying throughout this thread.....

[gone.c-33]

All your link says is “Every state that has a sales tax also provides for either a refund or a credit of the tax due to overpayments in the case of bad debts, repossessions, returned goods, or computational mistakes  resulting from matters of fact or law.”

Nowhere does it mention that refunds can be given because tax has already been levied when a used item is purchased again.

I’m not a CPA but I play one on tv.

[monroe67]

Your response to lacemaker3:  "Again... I'm not talking about eBay."

But the first sentence of your Original Post says this:    

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

I submit that you  are confused.  

[niteprowler]

Straight from eBay.

It is sales or use tax.  You don't know tax law.  I've dealt with it for decades.

[niteprowler]

Everything I posted is indisputable fact.  

Those of you who believe you know tax law would do well by spending time researching what you believe so you can find the facts for yourself since you are quick to rebuke facts based on your misguided opinions.

Bottom line... it doesn't affect me one bit when someone pays taxes that they are legally entitled to a refund for.  If you want to do that... be my guest.

Even vendors who have paid taxes on purchases for resale are entitled to a refund for taxes paid... because the sale to the consumer is taxed.  It is double taxation but if you don't want a refund for taxes you paid on your purchases for resale, the states thank you for your willing contribution to their treasury.

But.... again.  I have nothing to gain or lose. 

Anyone wanting to pay sales tax on items they resell and then have that tax collected again on sale to the end consumer... be my guest.  For example, if you buy $ 10,000 of inventory and pay 6% sales tax on your purchase, that's $ 600 that you are entitled to have refunded in most states.  If you don't care... I surely don't.

It's only money.  Huh?  

[niteprowler]

Wrong... go read eBay's own tax related pages.

Every word of my posts are fact.  I've dealt with taxation for decades and am trying to help people avoid paying taxes when they don't have to... to get refunds or credits they are entitled to and help resellers avoid paying sales tax on items they buy for resale.

You all would do well to read eBay's own information about taxes, their acting as an agent to collect tax, the general right to exemption from tax that resellers may be entitled to (on purchases for resale)... and their very basic related information. 

https://www.ebay.com/help/buying/paying-items/paying-tax-ebay-purchases.html?id=4771#section2

Read and learn...https://www.wolterskluwer.com/en/solutions/bizfilings/understanding-sales-tax-in-the-reselling-indus...

Just one area of sales taxation... quoted from above.

 

A wholesaler usually sells products to other businesses rather than end users. If you're a wholesale reseller, then hopefully you deal with many business customers that continuously make exempt resale purchases. In order to speed up the purchasing process for these types of customers, many state laws let purchasers use "blanket" resale certificates for purchases from their vendor. A blanket resale certificate is a resale certificate that you will keep on file which allows your steady customers to make multiple exempt purchases. You'll find that most states allow for blanket resale certificates, but the states have various requirements for collecting ("harvesting") and maintain a current file of valid resale certificates. We recommend that you check the rules for your particular state.

When you are harvesting resale certificates from your customers, you must maintain a file of properly completed and valid resale certificates that were accepted in good faith. Once you are satisfied that all the requirements for accepting a resale certificate have been met, you can apply a resale exemption to your customer's resale order as well as including any freight charges for shipment.