Sales Tax - Dealers At Stamp Show

With the talk about sales tax w/r to online purchases, it raised a question in my mind about dealers collecting sales tax at stamp shows. This has probably been discussed in previous threads, but my searches did not turn up much.

At a recent show, only one of 8 or 9 dealers that I made purchases from explicitly collected sales tax. The others, including one from the state the show was in, did not add on sales tax.

Can someone explain what's happening here and what the dealers should be doing?

Thanks.

Depends on the state.

Also depends on the Province/country. Tax rates differ. Apparently, in Canada if their sales are kept under $30,000 and they pay sales and hst taxes on everything they buy and do not deduct it in buisness, as a small seller, they need not charge it, and need only to pay income taxes on their earnings. If they sell over $30,000 annually as a larger seller they have to collect the rate applicable to the place they send it and remit it monthly.

The obligation is to remit sales tax, not to collect it. Dealers may be choosing to simply include tax in their price and not collect on top, though I suspect many dealers simply don't pay sales tax.

I suspect it depends on how the money is collected. Cards and checks have to be accounted for exactly, cash does not.

I've only ever encountered one single show dealer who insisted on sales tax for a cash sale. I ask him for a receipt, and he became very insulted and annoyed. He asked to see my ID- lol - for a cash sale??? Right.

Then I asked him to produce his sales tax certificate, which in Florida is required to be available at any establishment that "collects" sales tax. No certificate, and annoyance at providing a receipt. I walked.

I paid cash for all of my purchases. The one dealer, located in CA, who collected the tax provided a complete receipt. The other dealers collected nothing additional, including the local dealer. Sales tax here in AZ depends on locality - 5.6% state plus county, local rates.

I'm doing my first show in a long time (a local 1 day bourse) in July. My intent is to simply absorb the sales tax and remit it out of my proceeds rather than to collect it from customers; since it's so atypical at shows historically I don't want to offput buyers by calculating tax and it's harder to deal with cash transactions that way. Of course, it will impact the giving of discounts...

At shows cash is king, I have never been taxed however the few times I was short cash and used plastic or a check with a full time dealer I was taxed.

Looking back through my receipts from the stamp show, I now remember that I made two separate purchases on two different days from the CA-based dealer. I see that he charged sales tax for the second purchase, but not for the first purchase, even though they were both in cash. Not sure why I didn't notice at the time, but I'm still confused.

At stamp shows it is easier to include sales tax in the price. State sales tax returns in the states where I have resale permits allow "tax included in gross". Wholesale transactions are also tracked to avoid remitting taxes on items purchased by dealers. Dealers at the show and dealers known to me are presumed to have resale permits. Unfortunately, it is not practical to collect resale information from every dealer that stops by, particularly those visiting from out of state, but an invoice to an out of state address may suffice.

Wayfair opened a new set of hassles for show dealers. Some states may require visiting dealers to collect sales tax on Internet sales once a "physical nexus", no matter how fleeting, has been established. California requires 15 days selling in state to establish a physical nexus and a state tax return. Washington state recognizes a physical nexus if selling or presence in the state occurred in the previous or current year. Each state has different and possibly conflicting rules that may result in dealer decisions to stop participating in some out of state shows. Dealers on buying trips who happen to sell an odd item here or there may be at risk of establishing a physical nexus, possibly triggering creation of an "economic nexus" even if their Wayfair thresholds are not met.

Dealers who fail to report taxes are taking some risks. In the past, the risk may have been small, but now that Wayfair is here, the risk has substantially increased.

It would interesting to see how far we go. In some countries, any seller must provide a receipt and record the transaction in a fiscal device that is used to collect taxes.