Taxes Collected On GB??

Discussion in 'General Sako Discussions' started by Rocky, Jan 12, 2021.

  1. Rocky

    Rocky Well-Known Member

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    It's been a while since I have sold anything on Gun Broker but I've heard that they now collect sales tax for purchases made.


    Does anyone here know if this is correct?
     
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  2. stonecreek

    stonecreek SCC Secretary Forum Owner SCC Board Member

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    Yes, I understand that GB is now "collecting" sales taxes. Whether they are actually remitting those taxes they collect to the various states or are simply putting the money in their pocket is another question.

    Lots of online sellers are now using this scam, but since they have no presence in the various states there is no way for the state authorities to force them to send in whatever they have collected. Whereas the state tax authorities can go down to the local Cabela's outlet and put a chain around the door if they don't send in their taxes, no one can touch a website that only exists in the "virtual world". This makes me highly suspicious of the new GB policy.

    By the way, GB's fees and commissions have gotten so far out of line that sellers are being punished pretty harshly by the overhead. Of course, it all has to come out of what the buyer pays, so their policies are pushing up the price of firearms. Too many sellers now make a practice of listing their guns way above market, leaving them to recycle week after week (for free), then awaiting an offline offer to buy, thus avoiding GB commissions.

    I assume that there is a process that bona fide resellers can follow to avoid paying the GB tax by presenting their state sales tax exemption certificates, but I haven't researched to see what it is.
     
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  3. Rocky

    Rocky Well-Known Member

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    Thanks Stone for the feedback. Do you know if GI is doing the same?
     
  4. kevinlg

    kevinlg Well-Known Member

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    Tax facilitator subject?

    Here's what I found on the GB forums.

    Per the newest update they will initially only be collecting for these states:

    • Georgia – GA
    • Iowa – IA
    • Indiana – IN
    • Kentucky – KY
    • Maine – ME
    • Nebraska – NE
    • New Jersey – NJ
    • Nevada – NV
    Hope this helps.
     
  5. stonecreek

    stonecreek SCC Secretary Forum Owner SCC Board Member

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    Kevin: Are they collecting taxes if the seller is located in one of those states, or if the buyer is located on one of those states? Or either?
     
  6. Tomball

    Tomball Well-Known Member

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    FWIW, I did a purchase late yesterday for some mounts from Arkansas and tax was not collected by the seller or when GB sent receipt from check out. I live in the Houston area.
     
  7. kevinlg

    kevinlg Well-Known Member

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  8. L61R

    L61R SCC President Forum Owner SCC Board Member

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    Wow!

    Bad news for you guys over there for sure!

    How does it work in the U.S. (or various states) when average people buy and sell used rifles from and to dealers? Is there a sales tax on both transactions?

    Do you guys have sales tax on all kind of used goods bought from dealers?

    Over here in Sweden we have VAT on new goods with various percentages depending on type of goods, but in general, there is no VAT on used goods.

    But, as a dealer selling used goods, you either collect VAT as on new goods or you can do a profit margin scheme, where you add VAT on the actual profit. So you just take the difference betweeen purchase price and profit and calculate the VAT. And buying/selling used goods inside EU is pretty much the same as domestic transactions.

    Over here, commission sales at auction houses often come with a fee for both buyer and seller, and VAT is only collected on the fees, not the sales prices. And at Tradera, the Swedish eBay, VAT is only charged and calculated on the sellers fee. Not the final sales prices.

    So the VAT cost is actually a pretty low part of the final cost. I find it strange that GB collects sales tax when they do a kind of commission sale, right? But do they calculate it on the final price or only on their fees?

    I’m asking since we have a vintage shop and have an interest in how the world works in other parts of it.

    And two other questions, how much can an average Joe in the U.S. earn from a ”hobby business” before having to pay taxes? In Sweden it’s an annual profit (not turnover) of 30000SEK (approx 3300USD or 2700€) before having to pay income taxes.

    And does anyone know how buying and selling second hand or used guns and other stuff is taxed? For dealers and for individuals?? Does it vary from state to state?

    Jim
     
  9. stonecreek

    stonecreek SCC Secretary Forum Owner SCC Board Member

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    Retail sales taxes are exclusively the province of the states. So far as I am aware, the only state without a sales tax is Oregon (?). The rate varies greatly among the states, but generally the states without an income tax have higher sales tax (and property tax) rates to compensate for the lack of an income tax. Some state subdivisions like counties or cities have an add-on sales tax in addition to the state tax. Many states exempt some necessities like food and medicine, while others tax the bread right out of the mouths of hungry children (then brag about not having an income tax). Some states tax services as well as goods.

    Among the states the rules vary just as the rates vary. Generally, an "occasional" sale between individuals is not subject to tax. However, running an actual business without registering as a retail seller is illegal. There is no tax on sales between a wholesaler and a retailer -- only on the ultimate consumer. And a retailer pays no tax when he buys something for the purpose of resale, regardless of from whom it is purchased. This is unlike the European VAT where each step is taxed at whatever the increment between what the seller paid and what the seller received.

    Used goods are just as subject to retail sales tax as new ones. But if a trade is involved, only the "difference" is taxed. For example, I buy a Sako worth $1,100 from a store, but I trade the store a Rem 700 for which they give me credit of $500. The tax is only paid on the $600 difference. But used goods can be taxed indefinitely: Fred buys a Winchester 94 for $400 at the pawn shop, pays the sales tax on $400, hunts one season with it, then needs to sell it back to the pawn shop in January for $250 to get money to fix his truck. Bob comes along in a few weeks and buys the same Win 94 for $400 and again pays sales tax on the full $400. So, every time this old Win 94 sells and resells at a retail dealer the full amount of the sales price is taxed. This is one way that low-income people end up carrying a disproportionate share of the tax load since they tend to buy and sell used goods, ranging from guns to cars to furniture to clothing. And those used goods can get taxed over and over again. Clever, no?

    Because sales taxes are levied by the individual states there has previously been no way for a state to collect taxes on a sale across state lines. This has recently changed with court cases and state laws, largely due to the advantage this gave "mail order" (now internet) sellers over local brick-and mortar stores. Amazon's incredible success largely spurred on this change. Now if a seller has a presence ( location) within a state the state can force it to collect sales taxes for anything it ships into the state, even if it came from a store that is out-of-state. The "market facilitator" provisions were instituted at the behest of Amazon and a few other large internet sellers to keep smaller operations which have locations in just one state from selling tax-free to 49 other states and thus competing with Amazon. Sales tax is collected on the selling price of the item, not on the fees to the seller or the shipping costs.

    As far as how income from a "hobby business" is taxed, it is taxed as part of a person's overall income. If Joe works as an electrician's helper and makes $40,000 per year, but he has a baseball card shop on the side that nets $10,000, then he is taxed on a $50,000 income (of course, much of the first several thousand is tax-free until Joe reaches the income threshold for paying income tax.) But many "hobby business" are cash businesses which don't keep records or report income, so much hobby business income goes untaxed. It is nickels and dimes, however, compared to the manifold ways in which high income individuals and corporations have to avoid paying their otherwise legal tax liabilities. Most economists are in agreement that if all of the taxes which are legally due were actually paid that the U.S. would have no deficit.

    Tourists in Europe (back in the days where there was such a thing as tourists) are eligible to get their VAT tax refunded if they take the proper paper work to the proper authority at the airport where they depart for home. Of course, this is somewhat theoretical. I bought a piece of jewelry for my wife a number of years ago when we were in Paris (not my favorite place to spend time -- or money). I gathered all of the paperwork from the shop to take to the airport for the VAT refund. The tiny kiosk at the airport was out-0f-the way and hard to find, but even though I risked being late to check in at the gate I insisted on valiantly making a run to the VAT office to get my money back. When I finally got there and presented my documents the pleasant young man staffing the station said, in a voice dripping with sarcasm, "Oh, I am so sorry, Mssr, but these are the old forms, so I cannot process your request; however you may return to the store to get the new forms ce vous plait." More recently, my wife bought a somewhat expensive item in Namibia. She was told about five different stories at both the store and the airport, but was assured that she did not collect her refund at the airport, but rather should mail in the documents to the store. She wrestled with this for weeks until finally giving up and never got back a penny. Caveat emptor.
     

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