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What do I do if I didn't collect sales tax for my state (California)?

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futurepbamember

Junior Member
I started selling stuff on eBay last year. One thing lead to another, and I grossed about $20,500 in 2014. I did not collect sales tax, or be setup with the state to do so. What can I do to correct this? I want to pay my share of all taxes owed, and get my business setup properly now.
 


LdiJ

Senior Member
I started selling stuff on eBay last year. One thing lead to another, and I grossed about $20,500 in 2014. I did not collect sales tax, or be setup with the state to do so. What can I do to correct this? I want to pay my share of all taxes owed, and get my business setup properly now.
Were you selling new or used merchandise and how did you obtain the merchandise? Did you pay sales tax on the merchandise when you bought it?
 

FlyingRon

Senior Member
Used merchandise is just as taxable in California as new. Just about any retail sale of tangible items barring certain specific exemptions like food and medical equipment is taxable and the California seller is obligated to collect and remit the tax on sales made to California customers.

Info here: http://www.taxes.ca.gov/sales_and_use_tax/index.shtml

In addition, while California allows those with resale certificates to avoid paying tax when they buy things for retail, the fact that you paid the tax when YOU bought it doesn't obviate the need for you to collect and remit the tax on the sale.
 

LdiJ

Senior Member
Used merchandise is just as taxable in California as new. Just about any retail sale of tangible items barring certain specific exemptions like food and medical equipment is taxable and the California seller is obligated to collect and remit the tax on sales made to California customers.

Info here: http://www.taxes.ca.gov/sales_and_use_tax/index.shtml

In addition, while California allows those with resale certificates to avoid paying tax when they buy things for retail, the fact that you paid the tax when YOU bought it doesn't obviate the need for you to collect and remit the tax on the sale.
Is the selling of a used good that was already once sold at retail considered to be a retail sale in CA? Because if that is the case, then anybody selling anything, even their old car or having a yard sale would be responsible to collect sales tax. Your link didn't mention anything about used goods or goods previously sold at retail...one way or another.
 

Zigner

Senior Member, Non-Attorney
Is the selling of a used good that was already once sold at retail considered to be a retail sale in CA? Because if that is the case, then anybody selling anything, even their old car or having a yard sale would be responsible to collect sales tax. Your link didn't mention anything about used goods or goods previously sold at retail...one way or another.
All your questions answered: http://www.taxes.ca.gov/sales_and_use_tax/index.shtml

On the matter of the car, tax is collected when the new owner registers the vehicle.
 

Zigner

Senior Member, Non-Attorney
Just for giggles - here is the definition of a "retailer": http://www.boe.ca.gov/lawguides/business/current/btlg/vol1/sutl/6019.html

ETA: More info on who is required to collect and remit sales tax: http://www.boe.ca.gov/formspubs/pub107/index.html

(This actually address the "yard sale" [garage sale] matter specifically.)
 

LdiJ

Senior Member
Just for giggles - here is the definition of a "retailer": http://www.boe.ca.gov/lawguides/business/current/btlg/vol1/sutl/6019.html

ETA: More info on who is required to collect and remit sales tax: http://www.boe.ca.gov/formspubs/pub107/index.html

(This actually address the "yard sale" [garage sale] matter specifically.)
Ok...the bolded was a lot clearer. People can make three casual sales a year or hold two garage sales a year without a problem.

In my state, and most others that I am familiar with, tax is only paid on "retail sales" and an item is sold only once "at retail". Therefore, once sales tax has been paid on an item once, sales tax is no longer required to be collected. The only exception to that are cars...and the DMV collects the tax on private sales.

CA sales tax sounds almost like a hybrid type of VAT system.
 

single317dad

Senior Member
Ok...the bolded was a lot clearer. People can make three casual sales a year or hold two garage sales a year without a problem.

In my state, and most others that I am familiar with, tax is only paid on "retail sales" and an item is sold only once "at retail". Therefore, once sales tax has been paid on an item once, sales tax is no longer required to be collected. The only exception to that are cars...and the DMV collects the tax on private sales.

CA sales tax sounds almost like a hybrid type of VAT system.
There is no exception for used goods in Indiana tax code. I have sold mostly used goods for years and I pay plenty of sales tax.

http://www.in.gov/dor/3986.htm

http://www.in.gov/legislative/ic/2010/title6/ar2.5/ch5.html

Oh, and the reason you see most large personal property auctions held at the owner's location? It's not convenience; it's because that makes it a "casual sale" exempt from IN sales tax. All auctioned goods sold at auction houses are taxable:

http://www.in.gov/dor/files/sib20.pdf

That document also addresses garage sales.
 

LdiJ

Senior Member
There is no exception for used goods in Indiana tax code. I have sold mostly used goods for years and I pay plenty of sales tax.

http://www.in.gov/dor/3986.htm

http://www.in.gov/legislative/ic/2010/title6/ar2.5/ch5.html

Oh, and the reason you see most large personal property auctions held at the owner's location? It's not convenience; it's because that makes it a "casual sale" exempt from IN sales tax. All auctioned goods sold at auction houses are taxable:

http://www.in.gov/dor/files/sib20.pdf

That document also addresses garage sales.
What kind of used goods are you selling? I have been through a lot of Indiana sales tax audits with clients. Are you selling reconditioned goods?
 

FlyingRon

Senior Member
CA sales tax sounds almost like a hybrid type of VAT system.
It's not uncommon among many US states. It's the "sale" that makes it taxable not just that the item had been taxed sometime in it's life.

California is unique in that they don't tax services, just tangible items.
 

futurepbamember

Junior Member
I sell a combination of both new/used. I get my inventory from various Thrift Stores, like Goodwill, Salvation Army and a few privately owned stores. Goodwill and the Salvation Army do not charge sales tax, I guess they built it into the price of the goods, but the private stores do charge it. I made a mistake! I got swept up into making money to live off, as this was my only income. I know this is gonna be costly to fix, but I just want to get everything legal and right tax wise.
 

davew128

Senior Member
and before everyone starts getting worked up about sales tax reporting, unless the buyer is ALSO in California, then there is no obligation to collect.
 

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