When to pay tax, when not to?

Sales tax law does not accept purchasing a commodity as converting money. They also have provisions of collectible coins, meaning any coins you pay more than face value is not money but a collectible.

Of course, some states make exceptions for coins, bullion, etc. Every state is different in that regard, but all from a baseline tax collectible coins and bullion, then has to pass a law to exempt them if they wish to exempt them.

This is why going to the bank to buy a $50 bag of cents is never taxable, but buying a bag of wheat cents for $200 is taxable. The first example IS you changing currency to coinage, since its at face value. Make sense?

 

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Kinda... I mean it does make sense from a pure understanding of how the law is written standpoint, but doesn't make sense I guess to my own personal definitions of the way it should logically work. Then again, I guess that's why laws are written in black and white, and not open to interpretation....

I've seen many an auction state that "in XX state you must pay sales tax on the purchase", so way back to the original OP's point, if they didn't state it within the auction, don't pay it, but look into the local laws regarding what you're obligated to do on your own for these items. I understand if a seller is obligated to collect tax based on specific criteria he should do that, but it should be disclosed clearly in the auction details so the bidders/buyers can take that into proper consideration.

 

I do not disagree at all. A seller should disclose what state sales tax they are collecting. Why they have to collect in some states and not others is another topic, but I 100% agree is should have been disclosed in the auction information.

 

What the heck is "tax"?

 

As a buyer you are (almost) always protected on ebay when you use PayPal.

You do not have to pay the sales tax.

Either ask for the transaction to be cancelled or else go ahead and pay for it and then return the item and ask for a refund.

 

eBay and PayPal have absolutely nothing to do with it at this point. Sales tax laws vary from state to state. I can only vouch for Pennsylvania, where coins and bullion are not subject to sales tax, but paper currency is taxable for amounts over face value.

Now, if it turns out that the seller in this case is trying a scam, then your premise holds water. But I saw nothing in the discussion yet that points to that. A link to the completed auction, so we can see the actual terms he agreed to, would be a big help.

 

NO!

The operative word is "taxable".
Many items in a grocery store are not taxable under any jurisdiction.

And many are.

 

yes, and what state does the OP live in?

 

He said New York, and like Doug said New York taxes coin sales. So the OP either owes sales tax if the seller is in the same state, or Use tax if the seller is in a different state. If the seller is in a different state though he should not be collecting the sales tax. Unless the seller also has a nexus in New York, in which case he would collect sales tax. For example two collectors, one in New York and one in New Jersey, each buy a coin from Heritage, a Texas company. Heritage has a nexus in New York so the New York collector would be charged sales tax. Heritage does not have nexus in New Jersey, so he would not be charged sales tax, but would owe Use tax to NJ.

 

If the seller is in a different state, but has nexus to NY and therefor has to file sales tax returns for NY, then the seller has to charge NY sales tax.

So the seller may be right, that he has to collect NY sales taxes on the sale, but in an interent environment I still say the seller should have let potential bidders know this. The bidder has every right to be upset for not knowing there would be NY sales tax collected on this sale. What the bidder wishes to do vis a vie Use taxes is his own business.

 

The name the seller uses doesn't really matter. Send the seller a PM and ask for an explanation. Because he didn't list it in his sale, may just save you from paying the taxes. You won't ever know unless you ask and we all may learn something.

 

We agree, you posted while I was editing my post to cover the nexus possibility.

 

Sorry. We have had this discussion before, I should have known you would cover nexus as well.

 

In North Carolina, if you have records of every taxable-but-untaxed expenditure, you are to total them up, and pay use tax on them.

If you don't have complete records, you have the option of using a standardized use tax table, which effectively assumes that you spent 1% of your total taxable income on purchases subject to use tax.

I don't keep very good records. Based on some quick in-my-head estimation, this policy does little to encourage me to keep better records.

(Yes, we pay our use tax every year, all nice and legal...)

 

If don't live in NY, I live in Indiana and the seller is in Indiana

 

I've actually enjoyed and learned a lot here, so I hope this thread wasn't in vain. After an email, the seller quickly removed the tax. I'm not sure what that says or doesn't say, but that's what happened. I hope folks at least had fun chatting about it... if not my apologies...

Kevin

 

Whether correct or not, my first two thoughts are: 1) he took off the sales tax and will pay it himself rather than risk losing the sale to you. It might cost him more to keep the coin in inventory and re-sell, or conversely make you pay and then have you return the coin and he has to deal with that, or 2) He didn't have the right to collect sales tax (i.e. business license and turning it into the state), and he didn't want to deal with someone causing a stink.

Or it could be something else. Anyways, thanks for the thread. It was interesting.

 

Indiana State Sales tax to my knowledge currently is at 7%. So, do the math, does your total purchase warrant $24 worth of sales tax?

Do what others state though, find out if the coin falls under the sales tax law, if it does and $24 is 7% of your purchase price, then you pay it. If coins don't fall under such tax rules, then kindly tell the seller that there's no need to add sales tax to coins by pointing out the laws to them so they are aware.