Question - I live in California, I'm drop shipping from Las Vegas...question on taxes, shipping

[littlehills-collector1]

Hi, I live in California, and my brother-in-law lives in Las Vegas where he has accumulated over 150,000 books.  I am going to list/sell, but product is being shipped from Las Vegas.  Questions:

1) If I live in California and I ship from Las Vegas,  who gets charged for sales tax?   California customers or Nevada customers? 

2) If I live in California, but ship from Las Vegas, books will ship via media mail with tracking.  Since labels are being shipped from my eBay account...should the labels have the Nevada shipping address or California address as the "mailed from" section. 

--My concern with #2 is if buyers check on the shipping tracking #'s, assume that product is shipped from California..and check the USPS tracking # and sees that it originates from Las Vegas and wonders what's going on...

Do dropshipping accounts just simply say something like "I'm in California but product is shipping from Las Vegas"...and that's sufficient?   Thanks for any help.  

[dougsue123b · Accepted solution]

In my opinion you are asking for trouble selling those books, you cant inspect them and describe them properly. 

But, I believe you would have to pay tax in both states, near as I can tell.

If you use calculated shipping the price will be off. Maybe you should have some shipped to you so you can inspect and ship yourself.

[nobody*s_perfect]

1) Both

2) The return address should be whichever address you want the item returned to if it is undeliverable.  The shipping label preparation form has a separate "Shipping from"ZIP Code BELOW your return address; this should be the Nevada ZIP Code that you are shipping from. Buyers will be shown NV as the  origin in the tracking record. That should not cause them to wonder what's going on, because your listings should show NV as the location of the items.

[agent006140]

buyer pays sales tax to his state.

150,000 books?

Paypal will send YOu a 1099 when you exceed 200 transactions and $20,000 ,IRS will also get a copy.

so in your tax return,you have to provide your brother in law SS number that you are working for him and only get to keep ??0% or whatever the two of you agree upon.

[agent006140]

consult your tax accountant if you have not done so already

[sam9876]

Why would you collect sales tax?

[7606dennis]

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@sam9876 wrote:

Why would you collect sales tax?

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Because of the law is my guess, Sam.

[agent006140]

if he sells them on AMZN,may be AMZN has implemented this sales tax business but not ebay.

but his problem is more with his brother in law,with 150,000 books,his paypal account would easily exceed 199 transactions and $20k,so he gets a 1099 from Paypal,same copy goes to IRS.

but he does not get to keep all or some of the proceeds,his brother in law does.

if his brother in law gives him a commish,he would need to issue him a 1099 as an independent contractor.

If I were OP,I would have his brother in law open a paypal account and I will set up a new Ebay ID just to sell his books and link to that Paypal account,so his brother in law gets all the sales proceeds,but he will need to access that account to print shipping labels,issue refund and worse eat chargebacks.

and how is his brother in law going to get the money out of his paypal account?

link to his bank account.

then does his brother in law trust him ?or should he open a bank account just for selling books?

[lja440]

First off, I think I am in love with your BIL. I have a large walk in closet made into a library and still have rolling shoe containers (4) under my bed full of books, same with the guest bedroom bed. 

OK This is how to work it.  You set it up as if you are in Nevada. Your return address I suggest you use your ID such as:  

celebrity-hub

c/o John Doe (BIL's name)

123 main (BIL's address)

Or if they don't want their address on it they can rent the smallest PO Box and use a local to them PO Box address. Just let their PO know that it is just for eBay and they are not changing their personal mail from the home address. 

You then would basically just be working remotely from Cally. As far as the taxes, I can't answer that.

[lja440]

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@sam9876 wrote:

Why would you collect sales tax?

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You haven't been keeping up on current laws I see.

[7606dennis]

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@agent006140 wrote:

if he sells them on AMZN,may be AMZN has implemented this sales tax business but not ebay.

but his problem is more with his brother in law,with 150,000 books,his paypal account would easily exceed 199 transactions and $20k,so he gets a 1099 from Paypal,same copy goes to IRS.

but he does not get to keep all or some of the proceeds,his brother in law does.

if his brother in law gives him a commish,he would need to issue him a 1099 as an independent contractor.

If I were OP,I would have his brother in law open a paypal account and I will set up a new Ebay ID just to sell his books and link to that Paypal account,so his brother in law gets all the sales proceeds,but he will need to access that account to print shipping labels,issue refund and worse eat chargebacks.

and how is his brother in law going to get the money out of his paypal account?

link to his bank account.

then does his brother in law trust him ?or should he open a bank account just for selling books?

---

Fact is that if he, as a California business, he is required to collect sales tax under the law.  My reply was to Sam's about collecting sales tax.  Whether or not he is currently required to collect Nevada sales tax would depend on other details of his operation.  The law doesn't apply only to Amazon or eBay seller, it would apply to all.

So my reply to Sam is the same.  Because the law requires it.

[agent006140]

selling for others can get dicey,as you have no control over merchandise,shipping and condition of the merchandise you are listing.

OP should not say he is in Nevada as he is in CA,EBAY  would not like that.

Assuming he already have at least one Ebay ID,can he pop a new one saying he is in Nevada as well?

He should say he is in CA but item is located in Nevada. and return addres is Nevada,now definitely he would not be using his current Ebay ID as his return addr is CA.He should open a new seller ID just for selling BIL books.

Assuming his BIL is not going to ship him 150,000 books to examine ,describe and list,he has t o go by whatever BIL tell him,as to condition,edition,year published,if buyer disagrees,he would have no way to tell if he is telling the truth as he never see the book and never ship the book.

If his BIL is shipping the book,how prompt is he?Ebay buyers usually want their item yesterday WITH TRACKING,can his brother print shipping label and run to the post office ?OH,weight of the package,BIL would have t o p ack it and weigh it,so who is going to print the shipping label,OP does not know the weight of the shipment until his BIL pack,weigh and email him.

then comes $$,is he working for free,whose Paypal account will be used?

An easier way is to ask his BIL to list by ISBN on AMZN.

[nobody*s_perfect]

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@agent006140 wrote: ... OP should not say he is in Nevada as he is in CA,EBAY  would not like that.

eBay doesn't care where the seller is.  They want the listing to accurately show where the ITEM is.

[lja440]

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@agent006140 wrote:

selling for others can get dicey,as you have no control over merchandise,shipping and condition of the merchandise you are listing.

OP should not say he is in Nevada as he is in CA,EBAY  would not like that.

Assuming he already have at least one Ebay ID,can he pop a new one saying he is in Nevada as well?

He should say he is in CA but item is located in Nevada. and return addres is Nevada,now definitely he would not be using his current Ebay ID as his return addr is CA.He should open a new seller ID just for selling BIL books.

Assuming his BIL is not going to ship him 150,000 books to examine ,describe and list,he has t o go by whatever BIL tell him,as to condition,edition,year published,if buyer disagrees,he would have no way to tell if he is telling the truth as he never see the book and never ship the book.

If his BIL is shipping the book,how prompt is he?Ebay buyers usually want their item yesterday WITH TRACKING,can his brother print shipping label and run to the post office ?OH,weight of the package,BIL would have t o p ack it and weigh it,so who is going to print the shipping label,OP does not know the weight of the shipment until his BIL pack,weigh and email him.

then comes $$,is he working for free,whose Paypal account will be used?

An easier way is to ask his BIL to list by ISBN on AMZN.

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Some good points. I have listed for family and friends but just a few items and I physically have the items in my possession. 

A new ID would be a good idea. You could put the whole thing under the BIL's name and address. The only thing you would need is the password for that ID to work up and post the listings. This way if the drop shipper doesn't want to do their portion of the work then it only ruins his rep and not yours.

[7606dennis]

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@agent006140 wrote:

selling for others can get dicey,as you have no control over merchandise,shipping and condition of the merchandise you are listing.

OP should not say he is in Nevada as he is in CA,EBAY  would not like that.

Assuming he already have at least one Ebay ID,can he pop a new one saying he is in Nevada as well?

He should say he is in CA but item is located in Nevada. and return addres is Nevada,now definitely he would not be using his current Ebay ID as his return addr is CA.He should open a new seller ID just for selling BIL books.

Assuming his BIL is not going to ship him 150,000 books to examine ,describe and list,he has t o go by whatever BIL tell him,as to condition,edition,year published,if buyer disagrees,he would have no way to tell if he is telling the truth as he never see the book and never ship the book.

If his BIL is shipping the book,how prompt is he?Ebay buyers usually want their item yesterday WITH TRACKING,can his brother print shipping label and run to the post office ?OH,weight of the package,BIL would have t o p ack it and weigh it,so who is going to print the shipping label,OP does not know the weight of the shipment until his BIL pack,weigh and email him.

then comes $$,is he working for free,whose Paypal account will be used?

An easier way is to ask his BIL to list by ISBN on AMZN.

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I agree that acting as an agent for someone else, especially a relative, can be somewhat of a sticky wicket.  That is auction business owners like myself  utilize very carefully worded contracts when taking on clients.  Frankly, I wouldn't attempt to sell anything I didn't own here on eBay.

Ordinarily, sales tax liability is determined by the location where the sale takes place.  Online and mail order that usually means the buyer location since that is where the item is delivered.  However, the Supreme Courts recent ruling may alter that somewhat.  

If a buyer in California purchased the item, they would, I believe, be required to pay the California sales tax rate and if they were in Nevada, pay that tax rate.  However, I'm not sure how or if a buyer in any state could be required to pay both state's sales taxes.  Of course, I haven't studied the Supreme Court's decision yet.  Perhaps double taxation has been deemed legal according to it.

I suppose a state could add a tax on sales made by a seller on the seller, although I would probably consider that a form of state income tax if it was a tax required to be paid by the seller rather than collected from the buyer.  Since many states already have a state income tax I'm not sure how those business operators will be voting the next time the legislators that voted for such double taxation came up for re-election.  Or the buyers that end up paying higher prices because of it, for that matter.

Of course, there is the alternative of sellers limiting their sales to there own states and those that do not charge sales tax.  Naturally, that would eliminate them selling on eBay or other sites that require them to ship to all states.  They would probably have to have their own web sites to do it unless someone comes up a site that permits it.  Of course, their sales would probably be much lower by limiting their selling area.