Sales Tax Exemptions

[Dark Helmet]

Sorry for the noob question but I just signed up to sell on Amazon last week as an individual account. They just suspended my account because I did not give them my tax ID. I contacted Amazon support and all of their answers were very vague and not helpful. I was wondering by filling out this form do I have to start reporting my sales to the IRS? I selected the option for Amazon to send me the info and not forward it to the IRS but how does that work?

-Thanks in advance

Edited June 4, 2015 by Dark Helmet

[marcandre]

On your seller page click on settings in the upper right corner. Scroll down to the legal entity column. Click edit and fill out your tax info, it should walk you through it.

 

If you sell over a certain amount they will send you a 1099 and send your tax info to the IRS. If your under a certain amount it will your responsibility to report it. The ebay threshold for tax forms is 20k in sales or 200 transactions. I'm not sure what amazons is but it may be the same. 

Edited June 4, 2015 by marcandre

[justafrog]

Sorry for the noob question but I just signed up to sell on Amazon last week as an individual account. They just suspended my account because I did not give them my tax ID. I contacted Amazon support and all of their answers were very vague and not helpful. I was wondering by filling out this form do I have to start reporting my sales to the IRS? I selected the option for Amazon to send me the info and not forward it to the IRS but how does that work?

-Thanks in advance

​You have to report your sales to the IRS regardless of what paperwork Amazon does or does not send them. Tax evasion is a serious crime, lots of people go to prison for it every year.

Go sit down with an accountant (an Enrolled Agent or a CPA who specializes in taxation) and ask them to help you get your bookkeeping procedures in order.

Even if you skate by for a year or three, at some point someone is going to report your income, Amazon or otherwise, or you may find yourself subject to random audit, or be audited for some other reason than your Amazon sales. When the IRS finds your income from Amazon, they will then look back at least 5 years to your other income. And if they find you've been evading taxes, they can and will look back further. Amazon will fully cooperate with them in reporting to them your other income from those years.

And then you're talking any taxes you should have paid, taxes you could perhaps have mitigated with expenses you may no longer have records for, penalties, interest, possible prosecution, and debt to a high-interest creditor who has powers no other creditor has over you in terms of taking your property, and that debt cannot be discharged via bankruptcy.

Now, if you simply set up your bookkeeping properly and use a tax professional to interpret that for you and get all legal deductions for you, chances are very good your legal tax burden each year is going to be very manageable. And far better than the alternative.

[jaisonline]

i'll merge the threads.

[justafrog]

i'll merge the threads.

​This is the wrong thread to merge it with There's a tax thread somewhere, but the moved post has nothing to do with sales tax exemptions, he's talking about venues reporting his income to the IRS.

[justafrog]

Here's one of the tax threads that would be more appropriate to the question asked - 

I think there's at least one other one? But that one is at least about income tax.

[Phil B]

Alright, after reading this thread and the "Tax Implications of Selling LEGO" thread and speaking with my CPA, I think I have clarity on how to start my (mainly selling pieces) BrickLink store. I believe I have 2 options:

1. I register for Sales Tax in Ohio, and start charging every order coming from within Ohio with 6.75% tax (the Sales Tax rate in my county). Advantage: I can sell to everyone. Disadvantage: I need to send monthly sales numbers to the state, every month (even if I sell nothing), until I cancel my registration.

2. I do not register for Sales Tax in Ohio, and put a disclaimer on my BrickLink store (and anywhere else I will sell, such as EBay) that I do not sell nor ship to Ohio customers. Advantage: I do not need to register for Sales Tax. Disadvantage: I lose ~12 million potential customers.

I'm thinking of starting under 2, and then once I have solid presence and decide that I'd like to continue being a BrickLink seller, switch over to 1. I assume here that I can do the same on BrickOwl (will set up shop in both marketplaces).

Does anyone see any issues with this approach?

Edited January 27, 2016 by Phil B

[belljohn]

2 hours ago, Phil B said:

Alright, after reading this thread and the "Tax Implications of Selling LEGO" thread and speaking with my CPA, I think I have clarity on how to start my (mainly selling pieces) BrickLink store. I believe I have 2 options:

1. I register for Sales Tax in Ohio, and start charging every order coming from within Ohio with 6.75% tax (the Sales Tax rate in my county). Advantage: I can sell to everyone. Disadvantage: I need to send monthly sales numbers to the state, every month (even if I sell nothing), until I cancel my registration.

2. I do not register for Sales Tax in Ohio, and put a disclaimer on my BrickLink store (and anywhere else I will sell, such as EBay) that I do not sell nor ship to Ohio customers. Advantage: I do not need to register for Sales Tax. Disadvantage: I lose ~12 million potential customers.

I'm thinking of starting under 2, and then once I have solid presence and decide that I'd like to continue being a BrickLink seller, switch over to 1. I assume here that I can do the same on BrickOwl (will set up shop in both marketplaces).

Does anyone see any issues with this approach?

I would register and get a sales tax number.  For me, it wasn't that much effort to do, and I only had to file monthly reports for 1 year.  After filling in a lot of zeros, Wisconsin let me change to annual sales tax filing.  You also want the sales tax number for tax exempt purchasing from the stores that allow resellers like Amazon and Walmart.  Huge savings when you are tax exempt.

[Guest betsy805]

3 hours ago, Phil B said:

Alright, after reading this thread and the "Tax Implications of Selling LEGO" thread and speaking with my CPA, I think I have clarity on how to start my (mainly selling pieces) BrickLink store. I believe I have 2 options:

1. I register for Sales Tax in Ohio, and start charging every order coming from within Ohio with 6.75% tax (the Sales Tax rate in my county). Advantage: I can sell to everyone. Disadvantage: I need to send monthly sales numbers to the state, every month (even if I sell nothing), until I cancel my registration.

2. I do not register for Sales Tax in Ohio, and put a disclaimer on my BrickLink store (and anywhere else I will sell, such as EBay) that I do not sell nor ship to Ohio customers. Advantage: I do not need to register for Sales Tax. Disadvantage: I lose ~12 million potential customers.

I'm thinking of starting under 2, and then once I have solid presence and decide that I'd like to continue being a BrickLink seller, switch over to 1. I assume here that I can do the same on BrickOwl (will set up shop in both marketplaces).

Does anyone see any issues with this approach?

I'm not sure about Ohio, but I'm now on my 3rd year with reseller permit and have always only had to file annually (WA state).  The tax exemptions are amazing though, especially in this neck of the woods with our 9.5% rate.  

[Phil B]

28 minutes ago, betsy805 said:

I'm not sure about Ohio, but I'm now on my 3rd year with reseller permit and have always only had to file annually (WA state).  The tax exemptions are amazing though, especially in this neck of the woods with our 9.5% rate.  

I assume you can only claim those exemptions for goods you use for resale .... not for private use, correct? So how would I tell Amazon that some of my purchases are for my resale business, some are for myself, and some are for my other business (the latter two are not tax-exempt)? Is there a flag I use? Or do I need to send in my tax-exemption after every applicable purchase?

[Guest betsy805]

9 minutes ago, Phil B said:

I assume you can only claim those exemptions for goods you use for resale .... not for private use, correct? So how would I tell Amazon that some of my purchases are for my resale business, some are for myself, and some are for my other business (the latter two are not tax-exempt)? Is there a flag I use? Or do I need to send in my tax-exemption after every applicable purchase?

That is correct.  On Amazon it automatically applies tax exemption to EVERYTHING, but on the checkout page there is a box you can click next to each item you're buying to remove tax exemption from that item.  

[Phil B]

@betsy805, @belljohn - thanks so much for the advice! I know my next steps now!

[belljohn]

1 hour ago, Phil B said:

@betsy805, @belljohn - thanks so much for the advice! I know my next steps now!

Also on Amazon, businesses get free prime shipping on $49 of orders without having to pay for prime.  On Walmart.com, you have ask for a reimbursement after each order.  Walmart in store is super easy because they give you a card to give the cashier.  

If anyone hears about Target allowing resellers again, let us all know.

[airhanny]

On 2/23/2014 at 9:39 PM, jaisonline said:

Target requires you to show the cert each time.

 

TRU (and my Walmart) requires you to show your cert PLUS fill out a form with each visit. See the attached picture what I need to fill out. Cashiers just love this form as most seem not trained about it. Honestly, it wouldn't surprise me if TRU shared the info with Lego due to their strong partnership. Hence, I don't shop much at TRU?

 

As you already know, forget about Lego stores.

 

For supplies, Home Depot and Lowes store your info so you only need to show ID and give your phone number.

Is this still valid for Target to be able to get tax exempted. 

Also I went to LEGO store yesterday and they said they did not take Resale Certificate for tax exempt. Is this true?

[redcell]

22 minutes ago, airhanny said:

Is this still valid for Target to be able to get tax exempted. 

Also I went to LEGO store yesterday and they said they did not take Resale Certificate for tax exempt. Is this true?

Target quit taking tax exemptions in 2014 or 2015 after some debacle involving a limited run clothing brand.  Neither the LEGO store nor LEGO.com take tax exemptions.

[mlc3423]

1 hour ago, airhanny said:

Is this still valid for Target to be able to get tax exempted. 

Also I went to LEGO store yesterday and they said they did not take Resale Certificate for tax exempt. Is this true?

Just my opinion but the last thing you should do is walk into a lego store and mention anything about reselling 

[gmpirate]

1 hour ago, airhanny said:

Also I went to LEGO store yesterday and they said they did not take Resale Certificate for tax exempt. Is this true?

Maybe you just need to be more clear at the Lego Store.  Tell them your purchases are for sure "not for personal use" and you solely intend to resell them on Ebay.  Be sure to ask for their purchase limits and how often you can come in.  Sometimes you need to try several times to get to the right people.

[46andTWO]

2 hours ago, airhanny said:

Is this still valid for Target to be able to get tax exempted. 

Also I went to LEGO store yesterday and they said they did not take Resale Certificate for tax exempt. Is this true?

Way to do your homework, kudos to you!