Auction Sales Tax Question
 

Does Heritage Auctions collect sales tax even in states that it has no presence?

"Lots delivered to you, or your representative are subject to all applicable state and local taxes, unless appropriate permits are on file with Auctioneer. Bidder agrees to pay Auctioneer the actual amount of tax due in the event that sales tax is not properly collected due to: 1) an expired, inaccurate, or inappropriate tax certificate or declaration, 2) an incorrect interpretation of the applicable statute, 3) or any other reason. The appropriate form or certificate must be on file at and verified by Auctioneer five days prior to Auction, or tax must be paid; only if such form or certificate is received by Auctioneer within 4 days after the Auction can a refund of tax paid be made. Lots from different Auctions may not be aggregated for sales tax purposes.

Note: You will be billed for sales tax unless you have the appropriate documentation on file at and verified by Heritage five days prior to the auction. This documentation consists of a Resale Form (download now) and a legible copy of your state issued license or permit issued in your name and/ or the name of the business for an appropriately related category of merchandise. If you do not have this documentation on file with Heritage, you have 14 days from the date of the sale to complete the form and send/fax a copy of your license or permit to receive a refund for the tax. Lots from different Auctions may not be aggregated for sales tax purposes."

Rob M

" 3) or any other reason" That covers a lot

Generally no. This wording/clause sounds like it for those instances where a buyer lives in a state in which Heritage has sales tax nexus, and therefore is supposed to collect sales tax from that buyer. However, if the buyer is exempt from paying sales tax for any reason, they must have the proper paperwork (such as a valid sales tax exemption certificate) on file with Heritage so as to not be charged any sales tax. And if there is a problem with their paperwork, or it expired or whatever, the buyer then has to quickly and in a timely manner get the proper/corrected paperwork in to Heritage to have the sales tax charged get removed from their bill, or refunded if erroneously paid.

Heritage has to put wording like this in to protect themselves in case someone gives them an incorrect or improper sales tax exemption form. If Heritage gets audited for sales tax in some state and it is determined that some buyer gave them an invalid or bogus exemption certificate to get out of paying the sales tax, the state will likely go after Heritage for the sales tax as it is their responsibility to monitor, bill, collect and remit it to the state. This clause then gives Heritage the right to go back to the buyer and bill them for the sales tax that should have been collected to begin with, unless they can get the paperwork straightened out then.

In no case would Heritage ever want to bill a buyer for sales tax in a state they did not have nexus and were otherwise not required to collect sales tax from buyers in. Because if they did bill and collect sales tax, that could potentially obligate them to that state when they otherwise didn't have any liability at all. No company is going to want to voluntarily take on any potential liability for collecting and remitting some tax from buyers when it is not legally required to.

Thanks Bob. That is what I figured but in most instances, the auction company directly indicates what state(s) are affected in their auction information. They kind of leave you scratching your head in this case.

Rob M

In this case the auction house is probably putting out that general rule to try and cover whatever gives them the most protection and are not going into the specifics for each and every state, which could be unbelievably long and detailed to try and cover every possible instance or issue involving sales tax as the rules vary from state to state. In other words, it is a CYA (Cover Your A$$) thing and intentionally somewhat vague and unspecific so it doesn't lock them into something they can't get out of or around later on. As I noted, that particular clause I think is more for those instances where someone buys something from them in a state where they do have to collect sales tax and there is an issue with the buyer in trying claim they are sales tax exempt or how they go about getting out of that liability. You're correct though in that they don't come right out up front and say to everyone which exact states they have to collect sales tax for. Probably can't blame them as that issue seems to get some people riled up about having to pay more than others for something, and somehow the auction house gets some/all of the blame. Like its their fault they have to collect sales tax or that there is something they can do about it.