Thread: Its now costing Even MORE!

Originally Posted by Maximilian

The only logic I would agree on is that if you charge the official shipping rate one should not be taxed on the shipping charge as the post office is already paying taxes on it but any amount that you tack on should be taxed as that would be considered profit. Same with any shipping and handling fees. In NV we don't charge sales tax on the shipping charge. In the end I don't make the rules, i just follow them as getting audited is a headache and I like to sleep with a good conscience.

Amen to that. As a business owner, I fully expect to be audited sooner or later, and things like this are a good way to get hefty fines.

Btw it depends on state law of course. In Europe we have VAT as you know so it is passed on through the chain to the final customer. That is very similar to you paying sales tax on the amount you tack on to shipping charge (if applicable). The end result of sales tax and shipping tax are very similar. The way I understood it, it is a different way of doing things.

Originally Posted by Magpie

I disagree with the line of thought that shipping is service provided by the seller. No, its a service provided by the Post Office, or UPS. I dont make any money on their shipping, THEY do.
So now we have Ebay charging fees on the shipping charge, and PayPal charging fees on the shipping charge, and the Govt, charging fees on the shipping charge...

Well, that is one line of thought. In reality when a business is audited, the auditor works with what the law says, not with what the customer thinks.

In our example here, the seller is the one providing the service because HE is the one that the customer is dealing with. If the customer had a private contract with the shipping agency and arranged for pickup himself, then it would be true what you say. But if I ship something to you, then I am the one providing that service to you.

Originally Posted by Magpie

I also disagree that we should pay sales tax on ANY ITEM. sold used. When it was new, it was taxed. I am not a store, I am not a business, this is a private transaction between private parties, why should it be taxed yet again?

Because you derive income from it. Which you are supposed to declare

Originally Posted by Magpie

I have always disagreed with the practice, and just because "thats how it is" does not mean I have to accept it, and will always advocate for how it "should be"

It is fine to advocate 'what should be'. But any company or businessman you ever deal with will have to comply with 'what is' because they are the ones getting the visit from the auditors. And they don't want to incurr hefty fines just because the customer thinks that tax law is wrong and shouldn't apply to them.

Originally Posted by Kees

Sales tax is nothing compared to VAT. Everything worth more than approx USD 25 (and that includes the cost of shipping) that enters the EU from outside of the EU is charged with VAT. VAT in the Netherlands is 21%. The postal services collect the tax and charge a few percent as well so that makes it about 25% on top of what you paid for the item.

Actually, I think this does not apply to stuff coming from China and Japan because they have agreements in place. It's mainly from the USA that this happens. and you are right that it is a crap shoot.
Whatever is applied is subject to whoever assesses it, but I have had packages from USAKnifemaker that ended up being 50% more expensive than the cost, because I had to pay import, VAT, and a default handling fee.

In the Netherlands VAT is levied on everything imported from outside of the EU, China and Japan are no exceptions.

Originally Posted by Bruno

Because you derive income from it. Which you are supposed to declare

Being a private party I cannot right off depreciation etc. like a business.

If I sell something for 50% of what I paid for it which was taxed originally.

I have lost money not derived an income from the sale.

It's not ebay who wanted this. You have to read up on all the articles which led us here. It's very messed up. I don't think this is anywhere near over fwiw.

In our state it is particularly galling knowing how corrupt albany is. It's going to be a cash grab for their buddies complete with kickbacks while these new internet tax dollars do nothing to revitalize regions or build infrastructure.

Seriously though, how this is legal I will never know...

Good Afternoon Gentlemen

I couldn't help but notice this thread on shipping. My own personal complaint is the amount of shipping charged by my suppliers now, with some charging as much as 70% of the actual cost of the raw material ordered. It's crazy!!!! But the average is about 45% - 50%....which is still incredibly expensive.

Obviously some of these vendors are padding their shipping costs, and I still remember the day the accountant asked me, "how much are you padding your costs?" lol....I was like, uhhh I don't know what you mean. And she said, "you have to pay tax on that", to which I replied, "I don't do that". So it's true, that sometimes I have to eat the cost of shipping for a customer but I'd rather do that, than the other way around.

As far as charging tax on sales. I'm only obligated to charge sales tax to a resident of my state, not to any other person. This would change however, if I started selling my wares on Amazon and had items located in one of their warehouses, siting I now have "nexus" in another state, which is silly, so that's a factor I'll have to consider in the future.

Here's a link that might be helpful to some regarding sales for a small business......you don't have to charge sales tax if your sales are under $100,000 and/or fewer than 200 transactions in the previous calendar year. Everybody else is gonna have to pony up.

https://www.salestaxinstitute.com/sa...internet_sales

Cheers,
Colleen

I think the taxes on shipping have been there for quite some time. I remember checking few years ago how it works and the law (in NY) was that the tax is on the full amount plus shipping. It doesn't make logical sense from a fairness POV because the same service (shipping) is sometimes taxed and sometimes not (and when taxed is taxed at different rates) depending on the content inside the box. It shouldn't matter if the shipping box has clothing, or razors, or books, or food - the service is the same and it should be taxed the same, while the inside is different and it can be taxed differently.
However, I think due to abuse the gov. has made it easy for themselves and in order to prevent sales of 1c items with $1000 shipping they've made the law that the tax applies to the full cost, including the shipping. This is what happened on ebay years ago when their final value sale fees (the analogue to tax) applied only to the item cost and not the shipping charges. Back then many sellers reduced or avoided their fees by reducing the item costs and inflating the shipping. It was aganist the ebay rules, but from the POV of ebay the cost of enforcing those rules were too big so they updated the rules to benefit them doubly (reduced enforcement costs and increased revenue).

As far as charging sales tax, I just bought a $12 item with $8 shipping (flat rate envelope) on ebay from a seller in TN sending it to a friend in CT and got charged an additional 6.35% sales tax for CT. It wasn't done by the seller but by ebay. My paypal account shows two transactions - one for $20 to the seller and another $1.27 to ebay Inc. Presumably ebay will hand over the $1.27 to CT.

I suppose when you're a big entity like Amazon and Ebay the states would go after you to make you a tax collector. I'm sure ebay would rather not do this as it, no doubt, depresses use of their platform and thus their revenue and profit but at the end of the day the government wins.
I believe we're supposed to pay local taxes on stuff we buy from out of state, so in theory one should keep track of their out-of-state purchases through the year and pay taxes on those. I am pretty sure almost no one does, so the government can't really enforce it. The only thing they can do is what they do now - go after the biggest chunks of money they can get by forcing the biggest platforms to collect the tax.

I'm sure that individual people can still transact privately the old way outside of the tax-collecting platforms if they so choose.