Where does your sales tax really go?

Because of the sales tax our Senator can't afford to buy cloths when he is in Washington. Shorts and hoodie is it. Well the people did vote for him, oh well.

Dave

Unless a buyer sits down and figures how much sales tax there going to pay ( you as a seller do not pay this ) now what may hit you is if you sell over $600 I think, the seller will get a 1059 and you or the seller will have to pay tax on that on your federal tax return. 
Yes shipping has gone up. usually ebay's shipping is reduced and basically your getting it at corporates rate, you can always check this by signing up for pirateship.com ( I use them when selling sometimes, especially if it's not eBay but if I'm selling eBay I still double check through this. )

eBay is suppose to be sending it to your state. They collect it and supposedly sending it.

The IRS knows everything. 

Big online operators like eBay, Amazon and the like, collect and remit sales tax to the states on behalf of the seller. You can bet they are doing it as the audit risk and financial penalty for not doing it is huge. Having worked in the financial reporting/accounting racket my entire career, I can tell you these companies likely have tax departments comprised of hundreds of clerks and accountants whose only job it is to make sure the tax is collected, remitted (typically monthly), reported (typically monthly), and prepare the annual or quarterly returns. It is an incredibly onerous task, one that could be made somewhat simpler by the adoption of a national sales tax. The sales/use tax laws are incredibly complex and vary widely by state. Some collect on a statewide basis, while states like Louisiana, for example, collect on a parish and/or school district basis (thereby raising the number of returns due monthly exponentially).

The laws used to be that a company had to have nexus in the state, i.e. a physical presence like a distribution center, a factory, a sales office, etc. If the company did not have nexus, than it wasn't required to collect and remit sales/use tax in that state, even if it did have sales in the state. That all changed with the advent of online commerce and the shift away from brick-and-mortar outlets. The states were faced with a drop in revenue as transactions moved onto the internet, and after a few years they began to pass regulations that gave them access to online sales.

The ones to be suspicious of are the small mom-and-pop sellers who collect sales tax but likely never remit it. I know of a few. They claim to collect it as a hedge against being audited, but that would not come close to covering their exposure as the penalties and interest likely to be assessed would be exponentially higher. They generally pocket the tax and work to evade the small likelihood of getting nailed (the thresholds for audit are relatively high, or at least they used to be), or are just ignorant of the process.

It's interesting to note that many state sales/use tax auditors are contractors that work on a bounty basis. They get to keep a percentage of any short-payments they uncover and recover. If you're an online seller managing your own storefront, that should keep you up at night.

 

An original reason to go commando.

Adam, that is just not right!!