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When must a Seller on GunBroker collect sales tax "based on ship to address".

RockinCowboyRockinCowboy Member Posts: 6
edited October 8 in Ask the Experts
I have completed 14 purchases on GunBroker and no Seller shipping to GA (my state) from any state other than GA has added sales tax to the transaction.  I have used "Ask the Seller a Question" on at least 30 Postings and all have said they only charge sales tax on shipments inside their state.  I know that if a Seller has established Nexus in GA (either by meeting the sales threshold or having a physical presence) they are legally obligated to collect sales taxes and remit same to the GA Dept of Revenue.  Recently I won a bid and the out of state Seller tacked on a 7% sales tax which I was not expecting.  He claimed that was the way he did business and refused to remove the charge for sales tax. This Seller has only completed a few sales on GB and may not be familiar with the laws.  In general, should a seller from outside my state who has not established Nexus in GA, charge a sales tax?   

Comments

  • mark christianmark christian Forums Admins, Member, Moderator Posts: 22,850 ******
    edited October 8
    You say that you were not expecting to pay sales tax, but apparently the listing stated that taxes would be collected based on shipping address. 


    Unless the shipment is made to one of the few states that has no sales tax, or the listing contains the specific wording shown below, there should be a reasonable expectation that you will pay sales tax at the sellers discretion.

    Any questions as to the terms of the auction should have been discussed before bidding. 

    Because sales taxes are subject to state, county and municipal regulations, Gun Broker does not impose any criteria on collecting or paying sales taxes. Collecting sales taxes, if any, is strictly the business of the seller and subject to the rules detailed in the auction listing. 


  • MIKE WISKEYMIKE WISKEY Member Posts: 9,258 ✭✭✭
    just to note; anytime you buy something from 'out of state' YOU are SUPPOSED to pay the applicable sales tax your dept of Revenue. If the seller has a 'presence' in your state they will collect and make the payment for you.
  • nmyersnmyers Member Posts: 16,312 ✭✭✭
    I can't prove it, but I suspect that some sellers don't really send the "tax" that they collect to my state.  I think that the money just becomes "excess profit" for them.
    OTOH, I found that LL Bean does collect & send tax on mail orders to my state, even though they no longer have any "presence" here.  They do that because it's "company policy".  I stopped buying from them because it's "Neal policy".
    Neal
  • RockinCowboyRockinCowboy Member Posts: 6
    @nmyers I am quite sure that some Seller's use "sales tax" to boost profit.  I learned from the GA Dept of Revenue that one must obtain a Sales Tax Certificate in order to collect Sales and Use Tax in GA and then file a Sales and Use Tax Return with the state in order to pay the sales tax collected.  Sales Tax belongs to the Taxing Authority and anyone who collects sales tax is acting in the capacity of a trustee for the Taxing Authority (usually the State Dept of Revenue which distributes any applicable share to local jurisdictions).  I know for a fact the Seller I am dealing with has not obtained a GA Tax Certificate and therefore is not legally authorized to act in the capacity of Trustee for the State by collecting Sales Tax on their behalf.  Therefore it would be incumbent upon me as the Buyer to pay the Sales Tax on my State Income Tax return.  With regard to large retailers such as LL Bean, the 2018 Supreme Court Ruling in South Dakota v Wayfair, established the concept of "Economic Nexus" which altered the landscape for online retailers with regard to requirements to collect and remit sales taxes.  Here is an article about the Supreme Court Ruling should you care to learn more https://taxfoundation.org/supreme-court-decides-wayfair-online-sales-tax-case/.  The majority of States have passed legislation to establish thresholds for Economic Lexus (because they don't trust their citizens to self report and pay them voluntarily).  In GA, it's $100,000. or more in annual GA sales or 200 annual transactions in GA.  Since new states are coming on board each year and each state's thresholds are different, many retailers such as LL Bean have just started collecting and remitting sales tax in every state rather than check after each sale to see if new legislation has been passed that attributes Nexus to them.  
  • RockinCowboyRockinCowboy Member Posts: 6
    @mark christian  Thanks for your input Mark.  I would have no problem paying sales tax if given any reasonable expectation that it was actually being collected legitimately with intention of paying it to the taxing authority.  Through communications with this particular Seller (who shall remain unnamed) I have learned that he has not obtained a Sales Tax Certificate for the state of GA.  Therefore, based upon my extensive research on the GA Dept of Rev website and other reputable online sources, he is not legally authorized to collect sales tax in GA.  Sales Tax belongs to the taxing jurisdictions and any person or entity who collects sales tax is acting as a Trustee for the Taxing Authority (in my case, GA Dept of Revenue which will dole out respective shares to local jurisdictions as applicable).  In spite of my best efforts, I have been unable to find any other Sellers on GunBroker (including FFL Licensees with retail outlets) who charge sales tax outside their jurisdiction.   I suppose I can conclude that it is not my job to police whether a particular Seller who charges me sales tax will actually pay the sales tax or simply pocket the money.   And the lesson learned here is that I should ask before placing a bid, so I will know what to expect.  
  • mark christianmark christian Forums Admins, Member, Moderator Posts: 22,850 ******
    All licenses and tax permits are public record, so it looks like he's pulling a fast one. The problem is that you are between a rock and a hard place: You can refuse to complete the transaction, but will receive an F, and since it would be based on your not following the terms and conditions of the auction (paying sales tax as indicted in the listing) the F will stick. Gun Broker is not going to investigate sales tax permits and local business licenses. These regulations are outside the scope of GB's involvement. 

    Make sure that the sales tax charge is clearly listed on the shipping invoice. You don't want to get dinged twice; this time by the GA Department of Revenue! 
  • RockinCowboyRockinCowboy Member Posts: 6
    @mark christian  Good advice Mark.  Thank you very much.  I was not sure what the consequences would be for refusing to complete the transaction although I'm not inclined to do that regardless - but might suggest a mutual agreement to cancel the transaction.  I just confirmed on GunBroker that there is a mechanism through which the Seller would be able to relist the item without penalty, and said Seller has another identical item still under an active listing with zero bids, so cancelling the sale should not harm the Seller in any way.  And in case Seller insists I complete the purchase and pay the tax, I have already printed the Order Summary that shows the Sales Tax and would keep that with my tax records.  
  • mark christianmark christian Forums Admins, Member, Moderator Posts: 22,850 ******
    edited October 9
    Hopefully it will work out for the both of you. I don't know if you sell here on GB, but when the seller creates his listing, he is presented with a drop down menu and must state clearly whether or not he collects state sales taxes:

    The listing cannot be completed without making this issue clear; one way or the other. I am a Class 3 dealer in Florida and I leave the tax issue in the hands of the FFL dealer who is receiving the firearm. Whether or not the dealer who makes the transfer to the buyer collects sales tax on the sale amount does not interests me in the least!

    Check back in and let us know how this sorts itself out.
  • RockinCowboyRockinCowboy Member Posts: 6
    @mark christian  I have not yet sold anything on Gunbroker but I did assume there was a drop down selection.  I also made a flawed assumption that the second half of the Seller Collects citation  ("based on 'Ship To' address") was an indication that sales tax would be collected in ship to locations where Seller has an established Nexus and is required to collect and remit sales tax - which usually means any sales shipped to the state where Seller has a physical presence.  Going forward, I will make it a point to clarify with each individual Seller prior to placing a bid unless they select "Seller does not ...." . And yes I have heard that some FFL facilitators do feel the need to collect local sales tax.  I did confirm with the one I use that he does not.  Otherwise I might be facing triple taxes! lol  
  • chiefrchiefr Member Posts: 10,973 ✭✭✭✭
    Best to ask before you bid. Sales taxes in my state are not required between private individuals and some business may be exempt if income is less than xxx.xxx K even if small business or LLC. All states have different tax laws and some have no sales tax. 
  • nunnnunn Forums Admins, Member, Moderator Posts: 35,088 ******
    I collect sales tax, and remit same to the Comptroller, for sales in Texas.  Most of my sales are items shipped out of state, so my checks to the Comptroller are usually pretty small.

    If I buy something for myself, through my license, I write myself a receipt, and pay sales tax on it.

    Transfer fees on this end are taxable, so I collect tax on them.
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