Selling on Ebay and collecting State Taxes?

I've been selling off and on for sometime on ebay and I think it's about time I find out what the rules are on charging taxes for items sold. At what point do I start charging State taxes? Do I get a sellers permit first? At what point can I get in trouble if I don't collect taxes? Anyone know?

 

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Only if it is a taxable item in your state and you are selling within your state. You are under no obligation to collect sales tax for other states.

 

What rickmp said is correct. You would need to apply for a federal tax ID number to legally collect the taxes. Check with your own state code to verify this, as tax laws will vary from state to state.

 

You need a state ID, not a federal. The feds are not yet involved with state sales tax collections.

 

You will need to obtain a Certificate of Authority(what it's called in NYS) to collect sales tax, from the state you live in.

Contact your state's taxation and finance department to find out.

 

The federal tax ID number you speak of, is for employers to legally collect federal and FICA withholding from your paycheck and has nothing to do with collecting state sales tax.

 

Wouldn't he still need to pay taxes in his state for items he sold even outside the state? At least in CA we have to pay taxes on items sold in state, out of state, or out of country. In my community we even have to pay taxes on yard sale sales.
Guy

 

Someday the Feds will be allowed to subpena Paypal's recordss of amounts credited to individuals account from sells with the identification info Paypal has. When they compare the amounts being sold, to the amount people put on their Federal tax forms as income, I am sure they will be shocked, but we wouldn't be.

 

The OP is selling from California. If he sells to someone with a delivery address in California, he must collect any sales tax California levies and remit the tax collected to the state.

If he sells to someone with a delivery address outside of California, he is under no obligation to collect sales tax for the state of delivery. The buyer is required to report taxable purchases and remit those taxes due to his state of residence.

States can only impose and collect sales/use taxes on products that are used/consumed within the borders of that individual state.

 

Ok, I understand now. I think there was once a thread here someplace about buyers responsibilities in paying taxes on items bought outside their state. I forgot about that.
Guy

 

They do now. If you have over $20,000.00 in annual sales pass through PayPal, PayPal must issue a 1099 (or some equivalent type of document) reporting this to the IRS.

 

Buyers are required to report purchases made out of state and pay the taxes on those purchases, but those laws have proven to be unenforceable. That's why states are trying to get the feds involved in the collection process.

 

If the California seller has a nexis or business establishment/branch in another state and he sells and ships to a buyer in that state he has to collect CA sales tax from that buyer as well. For example Heritage is located in Texas but they have a Nexis in CA and in New York. So if you live in those states and buy something from Heritage and have it shipped to you you will pay sales tax on it. If you have a delivery address in a different state you don't.

 

You would still be responsible for either income/capital gains tax on any proceeds/profits from sales outside of California, but Sales tax is only collected for sales inside Ca.

 

My bad. You are correct. In PA you must apply for a license through the state dept of revenue.

 

Right. But how many ebay sellers, like the OP, have a nexis in another state?

 

Were lucky in iowa no sales tax on coins. Its money so why pay taxes to buy old money its like trading lol

 

Is this the first year that ebay is sending out 1099's? Anyone know?

 

To my knowledge they've always sent a 1099 on sales of $20k or more.

 

I believe it is PayPal who sends the 1099, not eBay. Not 100% sure, but someone else will chime in I'm sure.