Reseller Permits

[Guest betsy805]

Does anyone here use their reseller permit to avoid paying sales tax on their LEGO purchases?  Obviously not at the LEGO store as you'd be banned immediately  I've finally made an actual (read: legal) business of this whole thing and can't find the information I need about this little permit.  If I use it, am I obligated to charge sales tax to the people who buy from me?  Is there a reason to NOT use it other than being labeled as a reseller?

[supergman]

I am not the one to answer this with regards to LEGO's rules, but I do run my own business in a different industry.  As far as sales tax, if you defer the payment of it on purchases, it is still due at the end of the year, you just delay it until that period and pay it all at once.  As for customers, keep in mind that you are not CHARGING sales tax; you are collecting it on behalf of your state.

[imirish11]

Highly Recommended. You'll need to use your EIN/TIN obtained from the IRS to register for a Vendor's License from your respective state. Once you have your Vendor's License, you can create a reseller certificate to present to the various stores you shop at. After that, you're able to purchase tax free. Of course, you'll need to charge Sales Tax for customers located in your respective state, and remit the sales tax payment twice a year, or monthly, depending on state requirements. For most ppl, a small percentage of customers are actually located within the same state, so this presents a significant opportunity for savings.

[Brickbuilder.g]

what about online purchases with TRU? I'm afraid they do not have an option for this, do they?  And if so, will they limit purchases if they know you're reselling?

[imirish11]

TRU.com will require you to fax documents over for each transaction, then issue a refund for the sales tax. Which can be extremely tedious at times.

[Brickbuilder.g]

TRU.com will require you to fax documents over for each transaction, then issue a refund for the sales tax. Which can be extremely tedious at times.

For each transaction? Wow.

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[justafrog]

The rules for sales tax permits vary state to state, so check with your state and/or accountant. In general, yes, you are responsible for collecting the appropriate sales tax from your in-state customers and remitting it (generally monthly, quarterly, or annually depending on your state and sales volume) to your sales tax authority, along with a report.

 

Most retailers will cooperate with permit holders - if you do Google searches for Amazon, Target, Walmart, etc. and "resellers permit" or similar, you'll generally find the page with the company's specific policy on how to use the permit when purchasing with them.

 

Additionally, at least some states (California, for example, from my own experience) will allow you to claim overpayments of sales tax on your returns -- so when I pay Lego.com or Lego Store sales tax, I then take those sales tax payments on my returns and it offsets some of the tax I owe each reporting period.

[Spartikis]

Buy from ebay or amazon if you want to avoid sales tax.

[stoltzjl77]

Spartikis - Amazon is charging sales tax in about 30 states now, so this has become a major issue for many of us. I just submitted my tax exemption certificate to Amazon today, hopefully it goes through as I have no idea what I'm doing! But I will try to use it at Wal-Mart/Target/TRU as well.

[Guest betsy805]

awesome, thanks guys! The 9.5% sales tax I pay over here makes this look extra enticing, and it's good to know stores haven't yet banished the people using them.  Now, time to find an online business for dummies book...so much to learn!

[jaisonline]

Spartikis - Amazon is charging sales tax in about 30 states now, so this has become a major issue for many of us. I just submitted my tax exemption certificate to Amazon today, hopefully it goes through as I have no idea what I'm doing! But I will try to use it at Wal-Mart/Target/TRU as well.

Walmart stores are strict and can't use it online. When in stores, you need to fill out paperwork every-time. TRU follows the same model.

Target.com, Yoyo, and Amazon have own online app process. Depending in website, you either email or upload the resale license. Stores and websites uses different policies (target.com and target stores operate like diff companies all together for this).

Note for all trying to do this.

Don't just do this because you think it is a way to save money or not pay tax. Don't mess with the IRS and state governments. They will audit and prosecute you if they want. You must pay taxes quarterly. Keep records. Charge sales tax when buyers live in your state. Additionally, some posts in this thread is scaring me due to terminology. There is in such thing as a "sales tax exemption cert". How can people try to do this without even knowing the process?

Personally, I'm a licensed reseller in PA. I REGISTERED my business with the Federal, City, and State Governments. I have Account ID, resale IDs, and all the accompanying paperwork.

I also usually have 2 groups of items when checking out in stores. Personal use and work-related. People actually watch and if they don't , the IRS, city or state gov will by looking at your receipts if you are audited.

Businesses also expect a certain amount of revenue from you if you are a licensed reseller of goods. Due to my buying volume at Target.com, that is why I get some perks that others do not. Like a $44 gift card since they screwed up a $200 order of Batwings and Superman - Lex sets. Who else gives back an estimated 22% for a UPS shipping delay.

Finally, I just hope people I are trying this know what they are doing, remember, taxes are among the most common legal areas where people get prison time or heavy fines with interest.

.

[krayzie]

^

Yeah, getting audited is no fun.

[imirish11]

Provided that you already have the proper documentation, Walmart stores can issue a Tax Exempt Card at the customer service counter. This card contains a unique reseller ID used in WM database. This ID is keyed in before each transaction, allowing items to be purchased tax exempt. Unfortunately, it does not work online, so similar to TRU.com, Walmart.com will require you to fax over your documents for each transaction.

[stoltzjl77]

Walmart stores are strict and can't use it online. When in stores, you need to fill out paperwork every-time. TRU follows the same model.

Target.com, Yoyo, and Amazon have own online app process. Depending in website, you either email or upload the resale license. Stores and websites uses different policies (target.com and target stores operate like diff companies all together for this).

Note for all trying to do this.

Don't just do this because you think it is a way to save money or not pay tax. Don't mess with the IRS and state governments. They will audit and prosecute you if they want. You must pay taxes quarterly. Keep records. Charge sales tax when buyers live in your state. Additionally, some posts in this thread is scaring me due to terminology. There is in such thing as a "sales tax exemption cert". How can people try to do this without even knowing the process?

Personally, I'm a licensed reseller in PA. I REGISTERED my business with the Federal, City, and State Governments. I have Account ID, resale IDs, and all the accompanying paperwork.

I also usually have 2 groups of items when checking out in stores. Personal use and work-related. People actually watch and if they don't , the IRS, city or state gov will by looking at your receipts if you are audited.

Businesses also expect a certain amount of revenue from you if you are a licensed reseller of goods. Due to my buying volume at Target.com, that is why I get some perks that others do not. Like a $44 gift card since they screwed up a $200 order of Batwings and Superman - Lex sets. Who else gives back an estimated 22% for a UPS shipping delay.

Finally, I just hope people I are trying this know what they are doing, remember, taxes are among the most common legal areas where people get prison time or heavy fines with interest.

.

I am licensed to do business and collect sales tax in my state (IN) and county. I don't know what the form is called in PA, but I was instructed to fill out a form ST-105 "General Sales Tax Exemption Certificate" to use for purchases made for resale. I am keeping full documentation of everything, opened a separate Amazon account that will be used solely for business purchases, and I have no intention of avoiding sales tax on purchases made for personal use. The form makes it quite clear that misuse of the form is perjury and subject to the full penalties of the law. I know some people who post on this site play fast and loose with taxing authorities - I am not one of them, and I will not encourage anyone else to do anything less than legal to avoid paying required taxes.

 

If you know something about the way sales tax exemptions work in IN and think I'm doing something wrong, your input is appreciated!

[stoltzjl77]

P.S. Amazon accepted my ST-105 as valid documentation that I am exempt from sales tax on purchases made for re-sale. That doesn't guarantee I've done everything right, but Amazon has gotten strict about taxes so I'd like to think that their vetting process is legit. I have set up my Amazon seller account to collect IN sales tax as well. Again, if you know something about IN sales tax laws and think I'm doing something wrong, I appreciate your input.

[Guest betsy805]

Don't just do this because you think it is a way to save money or not pay tax. Don't mess with the IRS and state governments. They will audit and prosecute you if they want. You must pay taxes quarterly. Keep records. Charge sales tax when buyers live in your state. Additionally, some posts in this thread is scaring me due to terminology. There is in such thing as a "sales tax exemption cert". How can people try to do this without even knowing the process?

 

If I've made terminology mistakes it's because I admittedly have no idea what I'm doing right now.  But rest easy that I'll research, document, and figure it out before using use the darn thing.     I should hope anyone else using it already has or plans to do the same....IRS is no joke.