Why Do Some Dealers Charge Sales Tax And Other Dealers Do Not? 2 2

[Math Teacher]

I have bought from a variety of dealers, and some (such as MyComicShop and ComicConnect) charge sales tax, while others (who I will not name, lest I get them in trouble) do not. Can someone please explain this discrepancy to me?

[MattTheDuck]

This is from Intuit (QuickBooks).  There are a few instances where a dealer might not have to withhold sales tax, but I'm not sure "comic books" are an exempt item in any State with a sales tax.

[Nick Furious]

On 10/25/2023 at 8:23 PM, Math Teacher said:

I have bought from a variety of dealers, and some (such as MyComicShop and ComicConnect) charge sales tax, while others (who I will not name, lest I get them in trouble) do not. Can someone please explain this discrepancy to me?

I assume you are referring to inter-state sales from one state to another?  If a company from one state does enough volume in another state ($100K is the typical threshold) they are considered to have a de-facto presence in that state.  According to a Supreme Court ruling, the state they are shipping into is allowed to collect sales tax from that company.  It's a fairly recent thing.  The ruling came from a lawsuit, I believe it was North Dakota sued a company that was located in South Dakota and shipping millions of dollars in product into North Dakota without charging sales tax.  The Supreme Court ruled that even though the company was not physically located in North Dakota, they could be considered to have a presence in North Dakota because of the volume of business they were doing there.  They could not escape the North Dakota sales tax by being located across the border.  This ruling opened the door for states to charge sales tax on higher volume inter-state commerce. 

Edit:  The short answer to your question is that the ones that do not charge sales tax probably do less than $100K of volume in your state.  You would not get them in trouble by naming them because they are within their rights to not charge sales tax.      

Edited October 26, 2023 by Nick Furious

[ttfitz]

On 10/25/2023 at 9:23 PM, Math Teacher said:

I have bought from a variety of dealers, and some (such as MyComicShop and ComicConnect) charge sales tax, while others (who I will not name, lest I get them in trouble) do not. Can someone please explain this discrepancy to me?

To be clear, those dealers do not charge sales tax, they collect it. Your state charges the sales tax, and if yours is like mine (Virginia) even if the seller did not collect it, you are still liable for it. Each year when I file my state income taxes I am required to pay any taxes on out-of-state purchases that were not collected by the seller.

Mr. Pedantic

[jimjum12]

On 10/26/2023 at 12:28 AM, ttfitz said:

To be clear, those dealers do not charge sales tax, they collect it. Your state charges the sales tax, and if yours is like mine (Virginia) even if the seller did not collect it, you are still liable for it. Each year when I file my state income taxes I am required to pay any taxes on out-of-state purchases that were not collected by the seller.

Mr. Pedantic

You should get a business license to sell, it's only around 50 dollars and all you have to do is generate a profit three out of five years and you can purchase, sales tax free, as long as you enter it into your inventory. . It can be small scale. GOD BLESS ...

-jimbo(a friend of jesus)

[PsylockeSmythe]

As Nick stated:

On 10/25/2023 at 10:34 PM, Nick Furious said:

I assume you are referring to inter-state sales from one state to another?  If a company from one state does enough volume in another state ($100K is the typical threshold) they are considered to have a de-facto presence in that state.  According to a Supreme Court ruling, the state they are shipping into is allowed to collect sales tax from that company.  It's a fairly recent thing.  

Edit:  The short answer to your question is that the ones that do not charge sales tax probably do less than $100K of volume in your state.  You would not get them in trouble by naming them because they are within their rights to not charge sales tax.      

After the SC ruling, most states passed laws with the $100K limit, while some also made it transaction based, so for example North Carolina has a limit of $100K or 200 transactions.  So it very well could be that the stores you are purchasing from are not hitting the state limits for collecting the tax and paying it directly to the state for you.

Psy

[Math Teacher]

On 10/25/2023 at 9:34 PM, Nick Furious said:

I assume you are referring to inter-state sales from one state to another?  If a company from one state does enough volume in another state ($100K is the typical threshold) they are considered to have a de-facto presence in that state.  According to a Supreme Court ruling, the state they are shipping into is allowed to collect sales tax from that company.  It's a fairly recent thing.  The ruling came from a lawsuit, I believe it was North Dakota sued a company that was located in South Dakota and shipping millions of dollars in product into North Dakota without charging sales tax.  The Supreme Court ruled that even though the company was not physically located in North Dakota, they could be considered to have a presence in North Dakota because of the volume of business they were doing there.  They could not escape the North Dakota sales tax by being located across the border.  This ruling opened the door for states to charge sales tax on higher volume inter-state commerce. 

Edit:  The short answer to your question is that the ones that do not charge sales tax probably do less than $100K of volume in your state.  You would not get them in trouble by naming them because they are within their rights to not charge sales tax.      

Thank you for your concise explanation. 

[Math Teacher]

On 10/25/2023 at 11:28 PM, ttfitz said:

To be clear, those dealers do not charge sales tax, they collect it. Your state charges the sales tax, and if yours is like mine (Virginia) even if the seller did not collect it, you are still liable for it. Each year when I file my state income taxes I am required to pay any taxes on out-of-state purchases that were not collected by the seller.

You are correct. I certainly misspoke. Thank you for correcting me.

[ttfitz]

On 10/26/2023 at 12:09 PM, Math Teacher said:

You are correct. I certainly misspoke. Thank you for correcting me.

I hope you didn't take offense (my "Mr Pedantic" sig was supposed to humorously indicate that I was just being picky) - my main point was that most states with sales taxes charge them regardless of whether the retailer collects it or not, it just becomes your responsibility to pay when they don't.

Although compliance isn't very good, it seems - according to an article from NPR, "Forty-five states have a use tax. About 1.6 percent of the taxpayers in those 45 states actually pay the use tax."

Edited October 26, 2023 by ttfitz

[Math Teacher]

OK. So I see how this applies to Amazon and Ebay. But does MyComicShop and ComicConnect really do $100K of business in a state like Iowa, which is where I live?

[Math Teacher]

On 10/26/2023 at 5:37 PM, ttfitz said:

I hope you didn't take offense (my "Mr Pedantic" sig was supposed to humorously indicate that I was just being picky) - my main point was that most states with sales taxes charge them regardless of whether the retailer collects it or not, it just becomes your responsibility to pay when they don't.

Although compliance isn't very good, it seems - according to an article from NPR, "Forty-five states have a use tax. About 1.6 percent of the taxpayers in those 45 states actually pay the use tax."

No, I did not take offense. I knew what I meant, but you clarified it for me.

[mycomicshop]

On 10/26/2023 at 7:44 PM, Math Teacher said:

OK. So I see how this applies to Amazon and Ebay. But does MyComicShop and ComicConnect really do $100K of business in a state like Iowa, which is where I live?

https://www.salestaxinstitute.com/resources/economic-nexus-state-guide

Yes, we are over the threshold to have sales tax nexus in Iowa as well as most other states. As of Jan 2024 we'll be collecting sales tax for all states except the following:

• no sales tax: DE, MT, NH, OR 
• has sales tax but we're below the threshold: MA, MS, ND. In Massachusetts, both new release comics and old/collectible comics are not subject to tax, and with those categories excluded our sales are below the threshold.

[Sweet Lou 14]

On 10/27/2023 at 4:04 PM, mycomicshop said:

In Massachusetts, both new release comics and old/collectible comics are not subject to tax

I love living in Massachusetts!!!

[Ryan.]

On 10/27/2023 at 7:02 PM, Sweet Lou 14 said:

I love living in Massachusetts!!!

 

On 10/27/2023 at 4:04 PM, mycomicshop said:

In Massachusetts, both new release comics and old/collectible comics are not subject to tax, and with those categories excluded our sales are below the threshold.

Good to know. I'll be sure to order no more than $99,999 in prints and vintage paperbacks from you guys next year.