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Sales Tax License
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SheilaDeesPostcards



Posts: 3779

PostPosted: Tue Apr 30, 2019 1:26 pm    Post subject: Reply with quote

It's in the best interest of all sellers to maintain a record (database or spreadsheet preferred) of all sales for the year showing at least the date of the sale, amount sold, shipping, total, and state to which the order was shipped. This way a seller knows if they are getting close to a limit that would require a tax license for a state & requiring collection of tax. This would help the seller AND provide a written record to prove you were not required to collect tax.

So far, all the states I've checked require at least 200 orders to the state before you are required to collect tax. This could change tomorrow, but with a written record a seller would know where they stand. I have assumed (maybe incorrectly) that the 200 sales would be 200 that were not on a marketplace that collected the tax. For this reason, I'm also tracking the sales that had tax paid by the buyer on a marketplace that collected the tax.
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MoonwishesStore



Posts: 15206

PostPosted: Tue Apr 30, 2019 6:34 pm    Post subject: Reply with quote

[quote="SheilaDeesPostcards"]It's in the best interest of all sellers to maintain a record (database or spreadsheet preferred) of all sales for the year showing at least the date of the sale, amount sold, shipping, total, and state to which the order was shipped. This way a seller knows if they are getting close to a limit that would require a tax license for a state & requiring collection of tax. This would help the seller AND provide a written record to prove you were not required to collect tax.

So far, all the states I've checked require at least 200 orders to the state before you are required to collect tax. This could change tomorrow, but with a written record a seller would know where they stand. I have assumed (maybe incorrectly) that the 200 sales would be 200 that were not on a marketplace that collected the tax. For this reason, I'm also tracking the sales that had tax paid by the buyer on a marketplace that collected the tax.[/quote

I am assuming, also possibly incorrectly, that the 200 would include all sales to the state from all venues/sources, so I keep a running total of where my orders went to, how many for each venue, and the running total for the year for each state, even those that don't collect sales tax. I don't know where PR, Guam, and US Virgin Islands falls in the sales tax conundrum but I track those as well, plus any country I mail too. But then I like numbers and track as many things as I think are interesting and might tell me something about my business.

Anyhow, like Sheila I can tell at a glance if I am getting close to 200 sales to any one state - don't I wish! If I got that close to all states, I would be close to 10K in orders a year! I also track which orders that the customer had to pay sales tax on in my income worksheet. I also now, with Amazon orders, include a note showing how much they paid in sales tax and that Amazon collected it and will remit it. That way the customer can track how much sale tax they are paying if they need those amounts for doing their state sales tax like we do in PA. Just a short little form that I made up. eCRATER orders if you copy their invoice for a packing slip will already show the sales tax that they paid.

So whether Sheila is right or I am in how the states look at the 200 sales, if you are tracking most sellers have no reason at all to get nervous. I find it funny/interesting that it seems as if some of the smallest sellers are the ones most panicked by all of this. It's like "hey I only sell about $1000 worth of orders a year. How can I get out of having to pay sales tax?" The same kind that runs around trying to hide the $1000 gross income they have in a year and wonder about how to get out of paying income taxes on it. Confused

I do understand about people looking at the total price and sales tax increases it, but if you are a small seller and might only be shipping out 5 orders to even a big, in population, state in a year, wouldn't you rather have the income from those sales than the thought of scaring buyers away with sales tax? I think it is more than those sellers, aren't understanding and think somehow it is coming out of their pocket. Because PA has convoluted rules about how sewing patterns are taxed, to me it was impossible to tell Amazon how to collect it for me, while here on this much smaller site, we can charge sales tax by category, so all these years, I have had to pay the sales tax myself. Perhaps not the right way to do it, but at least my state got what they were supposed to.
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cosmicray



Posts: 6587

PostPosted: Wed May 01, 2019 4:21 am    Post subject: Reply with quote

SheilaDeesPostcards wrote:
Each state makes their own rules regarding Sales Tax. One really big difference between eCRATER and other marketplaces is how the money is handled. All money transactions between the buyer and seller on eCRATER is handled by the buyer & seller. With Amazon, they handle all the money, Etsy now handles all money, and eBay is moving in that direction. With South Dakota, that makes a difference and, from what I have read, excludes eCRATER. There really is no way eCRATER could collect the tax where they have no financial interaction with the buyer.

eBay is most definitely handling the money now, and acting as an agent of the seller. I see why that makes a difference for collecting/remitting, but how does that absolve anyone here of the responsibility to collect/remit ? eCRATER may not be in a position to do so. Does that, by default, put the sellers into that position ?

And to be fair, this is not exclusively an eCRATER issue. There has been barely a peep about it over on BrickLink. The big sites are jumping on it because they are a big ripe juicy target. How far down the list will the state governments go in pursuing (newly born) sources of revenue ?
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MoonwishesStore



Posts: 15206

PostPosted: Wed May 01, 2019 6:07 am    Post subject: Reply with quote

Quote:
I see why that makes a difference for collecting/remitting, but how does that absolve anyone here of the responsibility to collect/remit ? eCRATER may not be in a position to do so. Does that, by default, put the sellers into that position ?


but how does that absolve anyone here of the responsibility to collect/remit? -- It does not. It means that the individual seller will have to do this and it will be their responsibility to figure out how. Thus my earlier comment about so many small sellers panicking about the whole thing. Unless they sell enough to hit each state, that has parameters currently and in the future, they will not owe anything for sales tax except to their own state - which has no parameters for THEM.

Does that, by default, put the sellers into that position ? - Absolutely! Which is why the big sellers are screaming bloody murder about the whole thing. Even falling into the parameters of a couple of those states will undoubtedly cause them to have to hire a CPA with good knowledge of this 'taxing' situation. Can you imagine how much this will cost them?

I think that is why many states will not waste resources to try to 'catch' small sellers that may have shipped only a little over $1000 (50+ orders x 200 @ $5/order) when there is much bigger fish to catch. Such as those that anyone that goes to the Amazon forum and whines because they haven't sold anything for 90 minutes and why are sales so slow? Obviously not every seller posts about their sales here, but I am pretty sure that we don't have too many sellers that think eCRATER'S sales have slowed down if they don't get any sales for 90 minutes! Laughing Now those folks have plenty to complain about I would suspect when it comes to sales taxes for the states that collect them, remembering not all states do.
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PrimroseCafe



Posts: 576

PostPosted: Wed May 01, 2019 9:11 am    Post subject: Reply with quote

MoonwishesStore wrote:

and whines because they haven't sold anything for 90 minutes and why are sales so slow?.

OH! We had to wait until 12:26 AM May 1st. to get our first sale here on eCRATER.
Anyway, our "bean counter" is driving me crazy with the sales tax issue.
We "live" or try to survive here in Oregon and we have no sales taxes.
I guess it's a waiting game.
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MoonwishesStore



Posts: 15206

PostPosted: Wed May 01, 2019 9:33 am    Post subject: Reply with quote

I'm still waiting!
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grannysbargainattic



Posts: 333

PostPosted: Wed May 29, 2019 11:17 am    Post subject: Reply with quote

Just an FYI...as of 4/1/19 Poshmark is collecting sales tax on all sales and submitting it to various States on behalf of the seller....no matter how small the amount is. I suppose they are using some type of service to keep rates updated for the various States..I don't know. They process buyers payments...no stripe or paypal, etc. I can only assume that they are trying to keep sellers on board by reducing the work for sellers. Very interesting!

The bad side of this is that a buyer pays a larger fixed shipping fee to Poshmark in addition to the sales tax, plus up to a 20% Posh fee, so sellers have to charge a larger amount on items in order to make any type of profit. I sell larger ticket items there but they don't sell as often.

My eCrater store is actually picking up steam.
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purpleiris



Posts: 792

PostPosted: Thu May 30, 2019 2:20 pm    Post subject: Reply with quote

What gets me is that I'm not required to collect sales tax because I don't meet any state's threshold. Yet, Etsy still collects it on sales to states who demand money they aren't due. Just because I sell on a marketplace does not mean that the total combined gross sales of the marketplace should be applied to my own business's earnings. So, technically, Etsy is illegally collecting sales tax -- as are Amazon and any other marketplace charging sales tax on transactions of businesses that do not meet the threshold requiring them to collect it.

I even had to refund an Etsy customer a portion of the sales tax charged, but never got reimbursed by Etsy. The reason for the refund? Get this...I was offering "free" shipping on the item, which means shipping included. Yet, Etsy adds the cost of shipping to the invoice, then deducts it as a discount, but still charges the customer sales tax on the shipping. After refunding my customer for their error, I contacted Etsy about it, but never got a response, much less reimbursed.

So there are numerous ways these marketplace sites are overcharging for sales tax that they're not required to pay to the state. Where does that money go? It certainly didn't come back to me after giving it back to the customer. Does Etsy get audited to make sure they're doing things properly and legally? Do the states really care when they're getting money they're not due?

So, what do I think about all of this? They can kiss my tush. Until I start making enough money to warrant collecting sales tax, I simply am not required to collect it...period. I'm certainly not about to let a site collect it on my behalf when they're overcharging and making me eat it because, unlike them, I'm an honest businessperson. What happens when the state comes back and says, "Hey, you overcharged that customer"? (not that they would) Is Etsy going to take the usual stance of just being a venue and not responsible for what shops do? Is the small business going to take the heat for it when they're not even the ones collecting it? They never even see that money because it goes straight into Etsy's till. When we refund a customer any portion of it, we don't get it back from Etsy.

As for when I do get to the point where I'm required to collect it...they can kiss my tush. LOL Until they get their moo-poo together and make it a uniform thing across all participating states so small business owners aren't having to spend 3+ months of their time figuring it all out, I will only collect for my state where I know the rules and will be kept informed of the rules by my state.

Some might argue that I'd be setting myself up for trouble, but that is one fight they don't want to take up with me. It is unconstitutional what they're doing...period. It's one thing to do away with your state's use tax and make sure residents are charged sales tax on all purchases, but an entirely different thing to make small business owners responsible for up to 50 states' worth of differing sales tax laws and tax collecting agencies.

Then there's the whole issue with B&M's not having to collect another state's sales tax for out-of-state customers. Why should we have to if they don't? When you think about it, it doesn't really make sense for B&M's to be held responsible for that. So what makes them think it makes any sense for internet business owners?

Mind you, I don't have a serious issue with an internet sales tax, but I do take issue with what's happening at the moment. These states are jumping on the bandwagon and enacting these new sales tax laws without taking into consideration what they're expecting of small businesses. They just want their money, they want it now, they want to control it, and they don't care about anybody else.

If they want this to happen, they need to compromise and let go of the reigns over internet sales tax and let ONE government entity be responsible for regulating, collecting and distributing a uniform tax. The other thing I take issue with is these marketplaces collecting sales tax on transactions they shouldn't be -- not to mention things like adding shipping costs that shouldn't have been just so they can charge more.


Last edited by purpleiris on Thu May 30, 2019 4:16 pm; edited 4 times in total
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heritagelaceandtreasuresboutique



Posts: 97

PostPosted: Thu May 30, 2019 3:32 pm    Post subject: Sales Tax License Reply with quote

Purpleiris, you are just adorable! Loved your post and the sales tax license is a told fiasco. I seriously doubt that the whole online sales tax issue willl ever be resolved.

I have my own online website as well as selling here on eCrater. Between the 2 I still do not come close to any of the states requirements of sales made. And that is for the year.

I have a SD state sales tax permit and with my online website I just charge the SD tax to all customers as everything I purchase is new and for resale purposes. SD charges sales tax on freight and I too offer free shipping so it is all figured in together.

Frankly I do not know if this is the correct thing to do or not but at least I am collecting for our state. As for the rest of the states, until I meet their requirements, which I seriously doubt will ever happen, I am not going to sweat bullets worrying about this crazy mess. There is enough going on in this country to be concerned about without fretting over a few dollars sales tax.
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MoonwishesStore



Posts: 15206

PostPosted: Thu May 30, 2019 4:58 pm    Post subject: Reply with quote

If Amazon wants to collect and then remit sales tax for states, fine by me. I don't owe it as I don't hit the parameters either, however, the buyer is supposed to pay the sales tax so have fun Amazon.

I am glad that eCRATER hasn't dipped their toe into this mess. The state that I have had the most sales from currently isn't anywhere near 200 orders, nor anywhere near $100,000 or whatever the amount was. My problem is Amazon is now collecting sales tax for my state. I never had them do it before as it is confusing enough in PA but Amazon seems to think Patterns are sales taxable - all of them. I don't think the law has changed, just the charts, but fabric, thread, trims and patterns for regular wear clothing like kids clothes to play in or go to school has never been taxable, but then those types of garments are not taxable either which is why we get huge amounts of buyers coming by the busload to our mall as it is the closest one to parts of OH, NY and Ontario and no one has to pay sales tax on back to school clothes. However, things like formals, Halloween costumes, dog clothes, home decor patterns are all taxable as is the made-up item. So when Amazon started collecting PA sales tax I wrote to them to say they were doing it wrong. I got a response that they were supposed to collect it on all these items. And even though the form stated especially no sales tax on ladies dresses patterns, guess what gets charged sales tax?

It is so frustrating. I am so glad that eCRATER stays out of it. I pay my PA sales tax directly to the state and before Amazon did, I chipped in the sales tax when required to as I knew that there was no way Amazon would keep it straight.

Granted I would love to be making all the money that is required to owe sales tax as then I could afford an accountant, but not now. Even the money or amount ordered, isn't fair. If someone is selling $2 items, they will hit that 200 items ordered much faster than trying to hit $100,000. The $2 widget person has to deal with sales tax at the $400 level, while someone selling 10-15 things at $5000 level is allowing thousands in non-taxable sales even though if the person were buying it in their state they will be paying several hundred in taxes for the item. That is not fair and it shows a total lack of math ability in the legal folks that were voted into office. Perhaps they should all take an SAT type test in math to be sure that they will have their ducks in a row when passing laws like this!

edited for bad spelling - I hope I caught them all:)


Last edited by MoonwishesStore on Thu May 30, 2019 9:46 pm; edited 1 time in total
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purpleiris



Posts: 792

PostPosted: Thu May 30, 2019 6:19 pm    Post subject: Re: Sales Tax License Reply with quote

heritagelaceandtreasuresboutique wrote:
Frankly I do not know if this is the correct thing to do or not but at least I am collecting for our state.
I don't know what SD laws are, but Texas only requires me to collect from fellow Texans. However, your post got me to thinking why states don't just require us to collect on all sales (beyond that threshold) and remit to our own state.

Of course, the powers that be can never make anything simple, right? LOL
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grannysbargainattic



Posts: 333

PostPosted: Thu May 30, 2019 8:26 pm    Post subject: Reply with quote

I'm trying to figure out just how Poshmark is remitting the taxes paid on my sales. I've ordered a sales report and it should be emailed to me shortly. It's a SMALL report LOL. I'm not sure why they started collecting tax; I can only assume it is because they are huge and want to comply...a guess on my part. The whole sales tax thing is a mess. I don't expect I will go beyond any threshold, period.

It is good that sellers there don't have to worry about taking care of taxes, so I don't really mind..it just drives up the total price for buyers who are looking for a bargain. If someone wants to buy my 850.00 bohemian wedding dress that I will list soon they probably don't care about a bargain. My store there is The Attic Closet. I used my daughter's picture as my "Posher" picture...LOL..she's much younger! Everything with me has to do with an Attic. My grandfather was a carpenter and he built a home in Little Rock with a HUGE attic. In the attic there was a closet filled with things from Ireland (his dad came over during the potato famine) and some old dresses. The entire attic was a wonderland. So....my attic story.

I have my sales tax license in Texas now so I need to update my eCrater store. I have only made one sale to a Texas person in the last 10 years. I am now stuck with sales tax reports for Texas....but, I used to do them for a company I worked for so the report will be a snap.
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MoonwishesStore



Posts: 15206

PostPosted: Thu May 30, 2019 9:47 pm    Post subject: Reply with quote

Totally off topic, but I would love to see what an $850 Bohemian wedding dress looks like!
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grannysbargainattic



Posts: 333

PostPosted: Fri May 31, 2019 1:51 am    Post subject: Reply with quote

Lol Moonwishes! I'm having the dress repaired. It was missing 2 rhinestones. As soon as I list it I'll send you a link. It's gorgeous....brand new from Nordstrom.
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