Selling on Ebay and collecting State Taxes?

Correct, but usually spelled nexus. Sorry to be a spelling nazi, but googling nexus will come up with better results.

To Rick, a seller can get nexus in another state by traveling there for coin shows potentially, or other things. Nexus rules were established by the Supreme Court in the 1991 North Dakota case, but states have been passing their own "versions" for years. CA has a rule now I believe if you travel to a CA show more than 2 times a year you have nexus with CA. This is what haas been killing some show in CA since many dealers go to Long Beach or SF Bourse, and will not risk gaining nexus with CA to attend other shows. Other things that could creat nexus is if you have a house in another state, visit another state fairly frequently, (even to visit relatives), etc.

Just to clarify to everyone, every state with sales tax also has use tax. If you buy from out of state, so the seller does not collect sales tax, legally in your state you are required to disclose this to your state and pay the use tax. This is why theoretically its the same to buy from anyone, since either you must pay sales tax or use tax. in practical terms, almost no one pays use tax. However, audits of use tax have been going up, and for larger purchases people are getting hit with huge taxes and fines, so beware.

 

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Thanks for the spelling correction and I think I was wrong about one other thing. Say you lived in CA and bought something in a heritage auct and had it shipped to CA, you would be charged CA sales tax not Texas sales tax because you are charge the tax based on the CA nexus. Likewise a NY buyer would pay NY sales tax.

 

Sales and use tax laws vary from state to state, and can get very complicated.
I offered an explanation of the law for the average ebay seller, one that sells
a few items annually from their home, not the person making a business of it.

 

You are correct sir. Its only ever the tax rate in which the buyer lives that is collected.

Rick, I understand. I was just trying to be a little more "all inclusive" to possibly fit more situations. Like many things, having someone with experience with these helps. If someone is in this position, the one thing I would say is to NOT trust the advice of state taxation agencies. Their answers are ALWAYS the answer most favorable to the state, and many times they are outright wrong and the advice they are giving people is unconstitutional.

Anyone can always ask here on advice on this issue. I worked in Corporate tax for the largest mortgage bank, so my group had to file sales and use taxes to every state that has them, as well as other tax returns. I only worked there a few years though before deciding a career in taxes is just my lifelong goal.

 

That goes for ANY state agency. I worked for many years in state government. I never gave incorrect information or advice to anyone. I was totally "by the book". What I saw in many of my co-workers over those many years was an absolute shame in the way they treated and advised the public.

 

But what I am saying sir is "the book" for state revenue agencies is wrong. I commend you being above board and doing what was right, but I can take any sales and use tax booklet from any state and point ouot multiple citations where the advise is at best misleading, at worst unconstitutional. It really is sad. I went to a Sales and Use tax seminar once and we pulled out a State booklet, (maybe CT), and as a group found about 35 misleading/unconstitutional areas of advice. I have seen similar from CA, MN, IA, CO, TX, just off the top of my head.

 

I have no doubt in your statement.

When dealing with government, it's always best to use the services of an attorney.

 

Btw Fretboard, the direct answer to your question will be answered if you are selling "casually". "Casual Sales" is usually a loophole in which those who don't do it often are exempted from collecting sales taxes. It will vary by state. This will only really apply to CA sales. Outside of CA, unless you have nexus like we discussed, you do not need to worry about it.

So, its up to you to see if you believe you qualify for "casual sales", or whether you want to mess with collecting sales taxes, or whether you wish to risk it, or whether you just deny any sales to CA residents on Ebay. That is about as much as I can help with the little info provided.

Chris

 

Please correct me if I'm wrong, but I don't believe that a nexus is
created by simply visiting or having a residence in another jurisdiction.

 

Nexus is a physical connection to a jurisdiction. There are numerous things that will create it, and a question of nexus can come down to a legal determination. For a company, (which I have most experience), employees, physical assets, too many sales trips if you collect orders, etc can create nexus. For a person, if he owned a house in another state that state could claim some of his business had to be done there, or if many trips into a state they could argue the same. I didn't say it NECESSARILY caused it, just that it could. A CPA or lawyer could help you sort it out if necessary. I know as I currently am having my CPAs fight MO on a nexus question for my firm.

 

No sales tax on coins in Florida either.
Check for loopholes in your state.

Btw: In Florida you have to get a Federal Number to get a state license. So, even though you don't need the Federal Tax ID number, you need it to get a state account.

 

Keep in mind once you are in the Sales Tax folks' computers, you NEVER get out, and eventually you will be asked to prove that you didn't sell so-and-so or that you didn't ship to Podunk or that Godzilla didn't remit sales tax when he bought a boxcar of bananas; in other words, monumental headaches as greedy, opportunistic states get better organized. Amazon, for one, is in the thick of all this controversy and finger-pointing.

Just to show you where we're headed, in Ohio, school districts are allowed to impose an income tax!!

 

I was thinking of simply denying sales to CA residents on ebay but with my luck I will receive a 1099 and have to answer up on my tax return anyways. I believe you receive a 1099 if you sell over $20,000.00 a year. Is that correct? Also, who gets the 1099? Would I get it and the feds, or just the feds? Anyone?

 

My understanding of the eBay initiative is that you must achieve two levels of activity before they generate a 1099: you must have 200 transactions, AND, the gross must exceed $20,000. Either one by itself is not sufficient. Can someone verify this?

 

State sales taxes and your personal income taxes are two different things. One has nothing to do with the other.

 

Really? Well don't you file a 1099 with your income taxes?

 

i thaught coinage was non tax able in most places i believe theres no tax here in mi

 

Yes, you do file a 1099 with your income taxes. A 1099 has nothing to do with sales taxes, though.

 

Sales tax on US currency is usually based on the sale price minus face value.

 

Every time I buy coins from my favorite coin shop I get charged tax here in CA. Besides that there's a ton of sellers on ebay who charge me taxes when I buy coins from them if they're in CA too. CA makes a lot of money off of coins and everything else too. It's expensive living here but it's worth it.