eBay Sellers and State Sales Tax Numbers

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How and Why To Get A State Sales Tax Number
by: Skip McGrath - eBay seller: mcgrrrrr
Publisher of The eBay Seller's News

Most states charge sales tax on goods sold within their state. A lot of eBay and web site sellers seem to wonder why they need a sales tax number. If you only run a few auctions for used goods you buy at garage sales, I wouldn't worry about it. But if you run several auctions a week, you probably should get one.

There are three reasons for having a state sales tax number (also called a Resale certificate or Resale Number)

1. It's the law. If you sell goods on eBay or the internet and ship them to someone in your same state, then you have to collect (charge the buyer) sales tax and pay that tax to your state. However, if you sell less than $4 million in annual sales (I think that covers most of us), then you do not have to collect or pay sales tax on sales when you deliver the goods to an out-of-state address. For example, if you live in Virginia and you sell something to someone else in Virginia or to someone out-of-state that asks you to ship it to someone in Virginia, then you need to collect and pay sales tax to the State of VA. But, if you sell the same item to someone in Florida, you can forget all about the tax.

2. You can purchase items without paying sales tax on them. When you buy something that you plan to resell, you can purchase it without paying sales tax. But it must be for resale. For example you can not buy a new computer to use in your office and not legally pay sales tax. But if you buy a computer that you plan to sell on ebay, then you can buy it without paying sales tax.

3. Most real wholesale companies require a sales tax certificate.  Almost all legitimate wholesale companies will ask for a copy of your resale certificate before they will sell to you at wholesale prices. Besides wholesale companies, in most states you need it to open a commercial checking account. Every wholesale trade show and merchandise mart I have ever been to requires a copy before letting you in.
If your state does not charge sales tax, (Oregon for example) then it will probably issue some type of Business License that will serve the same purpose for wholesale companies.

Getting a sales tax number is very easy and inexpensive. You can link to your state's website to get information on obtaining a sales or use tax number. Some states allow you to apply on line and other will give you forms to download, fill out and mail in.

Once you have a number, don't worry about doing a lot of paperwork. Most states require you to file a quarterly report. The report of my state is one page long and takes me about five minutes to fill out and mail.

One last thing. You do need to read what is taxable in your states.  Some states charge no tax on clothing, or food or books and magazines.  So if you were selling one of these products you may not need a tax number.

If you search my name, Skip McGrath, on eBay you can find several sellers listing for my books that have much more information on this topic and other business issues related to selling on eBay.

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