recapture sales tax in NY
- Thread starter incendia
- Start date
I'm interested in this too. I've looked into it a little in WA and actually have a reseller's permit now. However, my main source of goods, Kohl's (see here http://saverocity.com/forum/threads/stores-you-use-for-reselling.18/), doesn't like reselling so I don't use it with them. Apparently instead of using the certificate you can claim sales tax back but I haven't dug into this too much yet. Does anyone have experience doing that?
Someone I met described a method to me that I don't fully remember. I think his trick was to ship to a PO Box in a tax free state, and have it automatically forwarded for a small fee of $10 or so (it may have been $1 a box, I can't remember).
A similar idea I thought of would be to use UPS My Choice to reroute your packages from a tax free state for free. FedEx might have this feature too.
Let us know if you find something that works!
A similar idea I thought of would be to use UPS My Choice to reroute your packages from a tax free state for free. FedEx might have this feature too.
Let us know if you find something that works!
Just so you know (and I am not judging here!) if you reside in a state tax collecting state you have a requirement to pay the taxes even if you aren't charged them. So if you were to do this you would still be liable.
Not to get Nick picky but if you're not liable for the tax in the first place (because you're reselling) then you're not liable for the tax at all.
In general you are correct if you live in NY you have to pay Use Tax for anything bought or shipped from out of state.
Picky is good
So, here's what I understand then... if you are reselling in your example then you are also a legitimate business. You can deduct the sales tax in relation to cost of goods sold. I think it line items out separately from base cost, and can offset your general overheads.
Eg Buy an iPod for $100 plus $10 Sales tax, sell for $120
Deduct $100 from $120 (cost of goods sold) = profit of $20
Deduct $10 from overheads
I'm not a tax pro though, so might be worth looking at.
But if you aren't 'legit' with your business and declaring the profit and cost basis then I think you can't scoot around sales tax (legally) because if you aren't declaring the sale then it is a Use item.
Where I struggle is the mismatch between sales tax paid and sales tax collected once resold. I've paid three or four figures in sales tax but only sold a small portion of those goods in my home state, so only paid a small amount of collected sales tax here. What I need to figure out is if I can claim the sales tax on all goods sold or just what was sold in my state.Picky is good
So, here's what I understand then... if you are reselling in your example then you are also a legitimate business. You can deduct the sales tax in relation to cost of goods sold. I think it line items out separately from base cost, and can offset your general overheads.
Eg Buy an iPod for $100 plus $10 Sales tax, sell for $120
Deduct $100 from $120 (cost of goods sold) = profit of $20
Deduct $10 from overheads
I'm not a tax pro though, so might be worth looking at.
But if you aren't 'legit' with your business and declaring the profit and cost basis then I think you can't scoot around sales tax (legally) because if you aren't declaring the sale then it is a Use item.
The answer is beyond me... I think we are in CPA territory... but I don't think that you should seek to offset collected and paid - paid are a deduction, and collected should be declared in a manner that keeps them distinct from income. Hopefully someone might have more experience with this and can help.
If you are buying something for resale and have a sales tax ID number, the vendor you buy from may not collect tax. Whether Kohls likes it or not, they don't have a choice in the matter.
You, when reselling the item, must either collect sales tax from the buyer (and remit it to the state), or sell into jurisdictions where you don't have a physical presence (likely the other 49 states).
If you do pay sales tax on an item you buy for sale, you could include the tax in your cost of goods sold, if you actually included the buying/selling on your tax return. Few, if any, do this....taking the position (knowingly or not) that this is a money-losing hobby. Certainly once you factor all the costs (including depreciation of computers, Internet fees, mileage, etc), for the vast majority of people in this game this indeed a money losing hobby (ignoring the value of points received).
You, when reselling the item, must either collect sales tax from the buyer (and remit it to the state), or sell into jurisdictions where you don't have a physical presence (likely the other 49 states).
If you do pay sales tax on an item you buy for sale, you could include the tax in your cost of goods sold, if you actually included the buying/selling on your tax return. Few, if any, do this....taking the position (knowingly or not) that this is a money-losing hobby. Certainly once you factor all the costs (including depreciation of computers, Internet fees, mileage, etc), for the vast majority of people in this game this indeed a money losing hobby (ignoring the value of points received
).Very helpful, thanks. Couldn't Kohl's simply refuse to sell to people who have a stated aim of reselling?If you are buying something for resale and have a sales tax ID number, the vendor you buy from may not collect tax. Whether Kohls likes it or not, they don't have a choice in the matter.
You, when reselling the item, must either collect sales tax from the buyer (and remit it to the state), or sell into jurisdictions where you don't have a physical presence (likely the other 49 states).
If you do pay sales tax on an item you buy for sale, you could include the tax in your cost of goods sold, if you actually included the buying/selling on your tax return. Few, if any, do this....taking the position (knowingly or not) that this is a money-losing hobby. Certainly once you factor all the costs (including depreciation of computers, Internet fees, mileage, etc), for the vast majority of people in this game this indeed a money losing hobby (ignoring the value of points received
Tom Capone
Level 2 Member
I've worked as a CPA and as a sales tax consultant in the past (quite some time ago). If you are reselling, you do not need to be paying sales tax. If you do pay sales tax, you are entitled to a refund from the state.
That said, if you file for a refund, you better make sure everything you are doing is above board. That includes collecting and remitting sales tax for sales within your state, filing appropriate income tax returns, keeping a separate set of books so show that items you've claimed for a tax refund were truly business purchases, etc.
Clearly not worth it for small volume, but could be worth it for some of the larger resellers. I would recommend talking to a regional CPA firm's State and Local Tax group. They can provide more specifics of how to claim a refund and also may provide a service to file a refund for you - they typically take ~30% of the refund. Might be worth paying the 30% for retroactive claims and learning to file refund claims yourself going forward.
That said, if you file for a refund, you better make sure everything you are doing is above board. That includes collecting and remitting sales tax for sales within your state, filing appropriate income tax returns, keeping a separate set of books so show that items you've claimed for a tax refund were truly business purchases, etc.
Clearly not worth it for small volume, but could be worth it for some of the larger resellers. I would recommend talking to a regional CPA firm's State and Local Tax group. They can provide more specifics of how to claim a refund and also may provide a service to file a refund for you - they typically take ~30% of the refund. Might be worth paying the 30% for retroactive claims and learning to file refund claims yourself going forward.
Only registered vendors (people/companies with sales tax ID) can get a refund for reselling tangible personal property (TPP). There are very few reasons for an individual to claim a refund in NYS. If you are a registered vendor coming in for a refund and not remitting any tax for reselling TPP you will be most likely audited. If you are remitting the tax you can file the credit right on the return so it would net out.
On another note trying to get big box stores to sell to you tax free is very hard. Most require you to have an account with them and all purchases have to go through them and you cannot use a credit card to pay when "on account".
On another note trying to get big box stores to sell to you tax free is very hard. Most require you to have an account with them and all purchases have to go through them and you cannot use a credit card to pay when "on account".