Payment at card shows?

[gregr2]

I had a guy on eBay make me a best offer on a card of $5.00 (I was asking $5.50). I accepted and then he asked for my address and proceeded to mail me a $5.00 dollar bill.

[packs]

If you really want to piss a dealer off ask for a receipt.

[buymycards]

OK, let's get down to the nitty gritty. This doesn't have anything to do with comfort levels or lack of technical knowledge or chargebacks. It is plain old tax avoidance. (evasion?) The seller probably doesn't have a sales tax license and doesn't pay sales tax on the sale. The seller also probably doesn't report cash sales, so they are tax free.

If you have a sale of $1000 in cash, you have $1000 bucks to work with. If you accept a check, or paypal, or a credit card then it breaks down like this:

$1000 in sales
-15 % in federal income taxes
-5% in state income taxes
-5% in state sales tax
-15% for the employers share and the employees share of social security and medicare
This leaves the dealer with $600 to work with.

That is why dealers only accept cash.

[Rich Klein]

Not to nitpick but I thought most people would be in the 27 percent fed range

Rich

[buymycards]

Hi Rich, that may be true. It may also have something to do with only being able to earn around 15k if you are under age 66 and on social security. Yes - I am old.

Rick

[bnorth]

Originally Posted by buymycards

OK, let's get down to the nitty gritty. This doesn't have anything to do with comfort levels or lack of technical knowledge or chargebacks. It is plain old tax avoidance. (evasion?) The seller probably doesn't have a sales tax license and doesn't pay sales tax on the sale. The seller also probably doesn't report cash sales, so they are tax free.

If you have a sale of $1000 in cash, you have $1000 bucks to work with. If you accept a check, or paypal, or a credit card then it breaks down like this:

$1000 in sales
-15 % in federal income taxes
-5% in state income taxes
-5% in state sales tax
-15% for the employers share and the employees share of social security and medicare
This leaves the dealer with $600 to work with.

That is why dealers only accept cash.

+1 As a small business owner for most of my life I fricken hate the POS that do not have whatever license is necessary and does not pay their fair share of taxes. For those of us that actually pay taxes and follow the rules it is very hard to compete.

[pokerplyr80]

Originally Posted by buymycards

OK, let's get down to the nitty gritty. This doesn't have anything to do with comfort levels or lack of technical knowledge or chargebacks. It is plain old tax avoidance. (evasion?) The seller probably doesn't have a sales tax license and doesn't pay sales tax on the sale. The seller also probably doesn't report cash sales, so they are tax free.

If you have a sale of $1000 in cash, you have $1000 bucks to work with. If you accept a check, or paypal, or a credit card then it breaks down like this:

$1000 in sales
-15 % in federal income taxes
-5% in state income taxes
-5% in state sales tax
-15% for the employers share and the employees share of social security and medicare
This leaves the dealer with $600 to work with.

That is why dealers only accept cash.

I would hope that those dealers that are paying income tax are only required to do so on the profit of the sale, not the entire transaction. If the mentioned $1,000 card was purchased for say 800, taxes should only be required on the 200 difference.

[steve B]

Yep, when I was doing a fair bit of selling on Ebay I always declared a small profit as a hobby business. I wasn't allowed to claim a loss that way, but it made the book keeping nice and simple.
I suppose technically any leftover stuff that I'd gotten cheap and hadn't gotten around to selling was also profit, but determining value would have been a big challenge.

[Michael B]

Originally Posted by pokerplyr80

I would hope that those dealers that are paying income tax are only required to do so on the profit of the sale, not the entire transaction. If the mentioned $1,000 card was purchased for say 800, taxes should only be required on the 200 difference.

It would be less than that. You would get the itemized deductions for the cost of the item, cost of the table/booth, travel to the show including gas and tolls, hotel, food and any other ancillary expenses. It is easy to reduce the net profit by taking every deduction allowed. Most dealers are cash flow businesses. With cash flow you get the deduction when you sell the item. You cannot deduct the cost of the item purchased if it is done in a prior year. Don't forget, the I.R.S. encourages tax avoidance. It is tax evasion they don't like.

I have done one or two shows a year max and usually made just a little. At the same time I was also selling on ebay and did declare ALL of the income every year. It is easier to do that than try to play fast and loose.

[D.P.Johnson]

Originally Posted by gregr2

I had a guy on eBay make me a best offer on a card of $5.00 (I was asking $5.50). I accepted and then he asked for my address and proceeded to mail me a $5.00 dollar bill.

Yeah, but the important question is: Did you send him the card???
(And, was the card sent priority mail with tracking and insurance???)......

[Luke]

It's important to acknowledge that most "dealers" are collectors who set up at shows a few times a year. It's tough to justify the expense of setting up the infra-structure needed to take credit cards for something you just do a couple times a year for fun.

For the last couple years, I have set up at a small show twice. So far, everyone has just paid cash, but if they didn't have cash or want to use Paypal, I guess I would lose the sale. Even in those cases, it would be pretty easy for the potential buyer to send me a check, or send Paypal the next day, or meet up with cash.

It never occurred to me before this thread to try and pay with anything but cash honestly.

[Laxcat]

I have recently added CC. Haven't tried it at a show yet. Paypal is super easy with the prevalence of smart phones. If you want the card, bring the cash or make sure there is a bank within driving distance.

[kmac32]

Never thought about paypal for a card show but makes sense as you pay other things with it. You do have more bargaining power with cash.