State Taxes Deductibility

[BobC]

Originally Posted by Exhibitman

All this granular detail on nexus and localities is irrelevant. If you live in a state with a sales tax, you also live in a state with a use tax. The only difference is the mechanics: the seller collects a sales tax from you, versus you having to track, declare and remit a use tax. Either way you are supposed to pay it. I hardly have to remit any sales tax because my main selling venue is eBay and they collect the taxes on my sales, but I have to track my PC purchases and declare and remit the use tax. Whatever I pay then becomes part of my cost basis in the item. The main difference is that most people who do not have a resale permit simply ignore the use tax. Those folks are the ones aggrieved at having to 'suddenly' pay the sales tax. It is a completely incorrect analysis. Effectively, they are foaming at the mouth at going from tax cheats to taxpayers. Since I do pay my taxes, I am happy they no longer get a 10% advantage in bidding against me.

Adam,

It really isn't irrelevant. I was just trying to demonstrate how the "point of sale" determines what state/local jurisdiction the sales tax is owed to, while the seller's sales tax "nexus" determines who is responsible for actually reporting and sending the sales/use tax money to the state.

If the seller has sales tax "nexus" in that state, they are responsible for charging and collecting the sales tax from the buyer, and then reporting and remitting it to the state. If the seller does not have "nexus" in that state, then it is the buyer's responsibility to report and send in to the state the sales tax on their purchases, except it is now referred to as a use tax and not a sales tax. Either way, the buyer is ultimately responsible for paying the sales/use to someone, be it the seller or the state.

I agree with you that many people don't even realize they may be personally responsible for a use tax when they buy something sent to them from out of state. I'm merely hoping to educate those people as to exactly what the sales tax rules are so they better understand and realize that they maybe shouldn't be complaining about enhanced sales tax collections. And as for those people that knew fully well they should have been paying a sales/use all along, and are now bitching because they can't so easily get away with being a tax cheat anymore because Ebay and others are now forced to collect sales tax on them, they really do need to learn to STFU. Keep bitching enough on a public forum like this and watch someone turn your names in to the state sales tax authorities where you live.

If paying state sales tax bothers you that much, PWCC and Goldin (and I guess now Ebay as well) offer "vault" services specifically designed to get you out of paying sales tax. And if that doesn't work for you, you can always claim to be a dealer in business and file for a resale exemption certificate you can then give to sellers so they don't charge you sales tax. But then don't come bitching to me if later on you end up selling/trading something you originally bought using that sales tax exemption certificate because the gain/profit you make on it is no longer capped at capital gains tax rates, but is taxed at potentially higher ordinary income tax rates instead. Oh, and it will also be subject to an additional Self-Employment tax of up to 15.3% of the profit from the sale/trade as well, on top of whatever income tax you ended up owing on the sale/trade already.

And Adam, none of these last paragraphs are directed at you obviously. You know exactly what I'm talking about. These are posts once again for the edification and enlightenment of many of our fellow forum members who don't fully know or understand how various tax law s can and do affect their hobby, investing, or dealer activities. If nothing else, at least they know what some of their options might be so they can better decide what they want to do for themselves.