Individual sellers: Collecting sales tax with Paypal?

[Meeotch]

I'm an individual who may sell a handful of guitars/amps per year on the forums. All the recent sales tax activity and discussion has me questioning if I am being unlawful by not charging my buyers sales tax on Paypal purchases.

Maybe I am confusing sales tax with income tax, but I've read that Paypal doesn't report your sales to the IRS unless you hit $20,000 and 200 transactions in one year. Any help?

 

[RedB4Black]

It's the buyer's responsibility to pay sales tax (or use tax) regardless of whether or not you, as a seller, collect it. You'd likely need a sales tax certificate of some sort from your State to collect and remit sales taxes on a buyers behalf. If you are not operating a business, I wouldn't wouldn't worry about it.

 

[zuel69]

Yea what mhenson said..Reverb automatically collects the tax from the buyer then takes the money to pay the state that collects. It suck's but this is how it is now.

 

[Meeotch]

Thanks guys, after doing some more research I found some fairly good answers. Basically it all boils down to each individual state's economic threshold for total revenue or number of transactions in that state. For most states, this threshold is $100,000 - $200,000 in sales and/or 100 - 200 transactions in one year before you’re legally obligated to collect and remit sales tax to that state.

Check here for details on individual states: https://blog.taxjar.com/economic-nexus-laws/

And as we all know by now, Reverb is automatically calculating and collecting sales tax on all transactions.