Why I stopped buying world coins on eBay or from US dealers … sales tax

For any coin invoice totaling under $2,000, my state (California) charges sales tax, which is 8% or more depending on zip code. eBay or US dealers (except at shows) collect this sales tax. eBay collects it even if the seller is outside the US. Sales tax is based on where the item is delivered; not where it came from. And they collect it on shipping as well as the cost of the coin itself. Often the cost of shipping on a world coin bought directly from a dealer outside the US is less than the sales tax on the same coin purchased via eBay or from a US dealer.

It's been a long time since I bought a coin on eBay. If the price is right, I do sometimes buy world coins in auctions held by US dealers.

Cal

 

Log in or Sign up to hide this ad.

That's odd because I buy coins from eBay all the time and never get charged sales tax. I only get billed for the auction price + shipping (if it's not free). It must be a California thing; gotta pay for all those electric vehicles.

 

As he said, it's a state thing. Each state decides whether coins are taxable. I sell coins on eBay and it shows up when the buyer pays tax or not but I don't touch that money myself. I live in Illinois which does not charge sales tax on coins, so it doesn't affect me thankfully.

 

BTW, as a California resident, you owe Use Tax if the seller doesn't collect Sales Tax.

You can find the form here:
https://www.taxes.ca.gov/Sales_and_Use_Tax/forms.html

 

Yup, I'll fill-out the form and send them the money real soon now.
Cal

 

Whether you do or do not is between you and the State of California. Remember, taxes is how they jailed Capone.

 

If it bothers you that much, you can set up a remailing service in another state that does not charge tax. Packages get shipped to (for example) Nevada and every month they pack all them up and ship them to you in CA. No sales tax! Of course there is that voluntarily reported Use Tax issue.

And charging tax on shipping is an item specific thing. Sellers have the option to select charge on shipping or not. We must charge tax on shipping if the shipping charge is anything other than the exact cost of shipping.

 

I found out recently that eBay includes the sales tax collected when calculating selling fees. So even though I never see that money, I pay a fee on it.

 

I'm in Illinois too and eBay has some sort of algorithm that tries to pick out words (like medal, token, and possibly "Commem" or "Commemorative") in titles to charge tax. Most of the time, it works fine. However, I have won some items that were in the proper category that is not taxable (US Commemoratives) but eBay applied the Illinois sales tax to the sale. I could probably file a complaint with eBay but it's not worth the hassle over a few dollars (and they know that too, so there is little incentive to change things). I also tested it by adding several items from that category to my cart and some had tax while others did not (none were listed in a second category). This is how I figured the difference must be in the listing title or description (when the word medal or token is there, tax is added-likely because medals and tokens are technically taxable in Illinois).

edit: here is the latest example:


Note that the item was listed in the correct category:

 

That's interesting. I haven't noticed this but I don't buy a lot anymore.

 

I don't buy that much either but commems are one category I have made some purchases from and the tax has been applied incorrectly at least twice this year.
In the Exonumia (medals and tokens) category, the tax is always applied, so I expect to see it (and that is correct because those are taxable in Illinois.

 

Even if you do code products properly, the sheer number of products that are/are not taxable by jurisdiction makes Sales Tax a difficult problem.

It is an insanely difficult problem for a marketplace if you can't force sellers to properly code their products.

 

tax doesnt bother me for online purchases. its like a convenience fee for me. all the stores around here (CA) sell the same stuff. doesnt matter where you go or how far you drive. its all the same stuff

 

For tangible goods, like coins, the delivery address rather than the billing address is used to calculate sales tax. Nevada has no income tax but does have sales tax similar to Calif. Only 5 states charge no sales tax. The closest to me is Oregon. Not sure double shipping, double insurance, service charge and delay would make a remailing service worthwhile for less expensive coins. Link below has good discussion of sales tax issues for out-of-state purchases.

If ever there was an issue that needs simplification through Federal legislation, this is one. A uniform sales tax paid to the IRS by merchants at no more than quarterly intervals with the IRS then distributing lump sums to individual states would be one approach. The distribution to a state would be based on the sales to that state and the average sales tax rate in the state. The average rate for a state would be negotiated between the state and IRS. A merchant would have to deal with only two entities for sales tax: their state of residence and the IRS. At tax time, the merchant sends the IRS a list of states to which taxable goods were shipped and the total value shipped to each state. But only pays one tax based on the total value shipped and the uniform tax specified by IRS. The sales tax division of IRS would be separate from the income tax division, and they could not share info except with a court order.

Cal

https://www.avalara.com/blog/en/north-america/2023/06/is-sales-tax-based-on-shipping-address.html

 

I think it depends on the category it's listed under as well. I had a buyer whose state didn't charge taxes on bullion, but when I had it listed on eBay in a different category. He went to bin, but saw the taxes added. He messaged me about it. I relisted the item under bullion and he was able to buy the coin untaxed.

I too often wonder why they charge a sales tax on international goods I buy, but I think it's a Kentucky law that was passed maybe. Our sales tax is 6% here on everything except food, though some categories such as soda, candy, etc. are taxed.

 

That's about the funniest thing i've ever heard of.

There are about ten thousand taxing jurisdictions in the united states. Getting rid of fifty six of them does nothing. If I don't pay state taxes, I still have to pay county, city, and the local transit district.

Different things are taxable from city to city, county to county, and state to state.

The sales tax rate ranges from 0 to 12.625% ... whatever rate you set nationally makes for winners (more tax money) and losers (less tax money).

There are gererally five things you can tax:

Existance (flat)
Income
Consumption
Property (real)
Intangible (wealth)

Every taxing jurisdiction has different rates on those things.

 

Me too. I promise.

 

My plan would get rid of all of them for individual merchants. The negotiated single rate for each state is all that state (including all subdivisions) gets. Then it's up to the state to distribute the lump sum to the various jurisdictions.

Cal

 

Ever heard of State Sovereignty?

 

So, bullion and coins: taxed or not? Food? Drugs (prescription or recreational)?

As soon as you grant that different things can be taxed differently, we're back to keeping track of sales by individual category. Worse yet, states (and sometimes more local areas) can't even agree on what the categories are.

I suppose one could "simplify" by imposing taxes based on the seller's location, where the seller would only need to know one set of rules and classifications. But then you have to define a seller's location (warehouse location? headquarters? address on tax forms?), and keep sellers from skittering around to whatever jurisdiction costs them the least.

There's no solution that'll make everybody happy. At least the current solution provides employment for however many thousands work at the companies that provide "calculate sales tax for these items going to this address" services.