NY Sales Tax

[Bricklectic]

Hi, I'm new to the forums but I took a quick look around and didn't see the question so hopefully someone has experience with this.

 

I live in NY and have bought about 40k in Lego since 2016. I never paid too much attention to the Sales Tax I was paying on my purchases aside for of course calculating my profit. But it really does eat significantly into profits - with Amazon taking 20% on the way out and NY taking 8% on the way in, with box/tape/return costs, it's really hard to make money until a set appreciates at least 50%. 

My question is, is there a way to recover the roughly 3k I spent over the years to NY (40k * 8% sales tax) ? What I could find googling was somewhat confusing. IF it is possible, is it a mountain of paperwork? Would I need to dig through my emails and show every last purchase?

Thanks in advance.

[gmpirate]

There are things that can be done but you need to provide more background on your operation.

[Bricklectic]

59 minutes ago, gmpirate said:

There are things that can be done but you need to provide more background on your operation.

I sell everything on Amazon and I buy everthing from Lego/amazon/target/walmart. Not an LLC or anything..

[gmpirate]

7 hours ago, Bricklectic said:

I sell everything on Amazon and I buy everthing from Lego/amazon/target/walmart. Not an LLC or anything..

If you are "not an LLC or ""anything"" there is nothing you can do.  Get a business license and resale permit and you can avoid paying the sales tax in the first place to accommodating merchants.

As far as recovering sales tax you already paid I've only "heard" of things.  Every state is different.  When filing your sales tax there is a line item to deduct "sales tax paid to other merchants for purposes of resale".  Of course this only works out if you are collecting a significant amount of sales tax to deduct from.  Best thing you can do is contact your local agency and ask.

[Bricklectic]

9 minutes ago, gmpirate said:

If you are "not an LLC or ""anything"" there is nothing you can do.  Get a business license and resale permit and you can avoid paying the sales tax in the first place to accommodating merchants.

As far as recovering sales tax you already paid I've only "heard" of things.  Every state is different.  When filing your sales tax there is a line item to deduct "sales tax paid to other merchants for purposes of resale".  Of course this only works out if you are collecting a significant amount of sales tax to deduct from.  Best thing you can do is contact your local agency and ask.

Thanks, was hoping someone had experience with my situation and could share if it was possible

[Phil B]

24 minutes ago, gmpirate said:

If you are "not an LLC or ""anything"" there is nothing you can do.  Get a business license and resale permit and you can avoid paying the sales tax in the first place to accommodating merchants.

As far as recovering sales tax you already paid I've only "heard" of things.  Every state is different.  When filing your sales tax there is a line item to deduct "sales tax paid to other merchants for purposes of resale".  Of course this only works out if you are collecting a significant amount of sales tax to deduct from.  Best thing you can do is contact your local agency and ask.

I don't have an LLC either. I _do_ have a Sales Tax Exemption (I'm in OH) but I can only use this at Amazon currently, which is a very small part of my purchases over the last years. Of course, not paying sales tax is preferable, but you do get some relief on the sales tax you paid, because in your tax submissions you will likely claim the entire amount you paid for sets (including sales tax), which takes your profit down a bit, meaning you pay slightly less tax over your profits compared to the scenario where you buy everything tax-free. 

To say it with numbers: Let's say you buy $1000 of LEGO, consisting of $900 RRP and $100 sales tax. You sell this for $2000. As a sales-tax paying entity you would claim $1000 as COGS on your taxes and report $2000 in sales, for an operating profit of $1000, on which you pay (let's say) 25% tax, so $250 in tax, for an after-tax profit of $750.

Now if you can buy tax-free, your tax return shows $900 in COGS, $2000 in sales, for an operating profit of $1100, on which you would pay $275 in tax. So yes, this scenario would "save" you $75, but not the full $100 due to the extra tax burden.

If you are really willing to put in the leg-work for the $3k (minus ~25%), I would recommend you hire a Tax Accountant to go through your scenario. That might eat up a large part of the potential savings though ....