Question About Classified Price/Sales Tax Etiquette

[23strings]

I'm a longtime reader but new account.

Just wanted to know if it is considered standard practice on the Classifieds here to include sales tax in the price total? Or would you expect tax to be added on to the agreed price upon purchase like you would have elsewhere?

Did a transaction through a third party that accounts for state sales tax and adds on to the price. Just want to make sure the transaction went down fairly according to Mandolin Cafe etiquette.

Thanks!

[Mark Gunter]

Sales between individuals are not generally taxable sales. Business entities need to have a sales tax license and in addition to their other “hats” they actually function as tax collectors ​whereas individuals do not. So I doubt this normally happens through classified ad transactions involving individuals.

[23strings]

Sale was made through Reverb, so I don't have any control over the tax added of course since they do it according to state law. I just want to be sure the purchase price was fair for the buyer and would be glad to refund the added amount if tax is generally expected to be included in asking price here, since he was referred by my Mandolin Cafe Classified ad.

[sgarrity]

If it was purchased through Reverb the buyer has to pay tax. I see no issue here.

[Northwest Steve]

Not usually expected to be included. I think the buyer would have discussed the issue with you if they had a concern. The issue I have with Reverb and Ebay is you pay tax on items sold by individuals. I don't have a problem paying tax if it is a business. I know it is hard for them to identify if it actually a individual or business. Since the change I will see if the item is listed here or craigslist and try to deal directly with them to avoid the tax.

[walter carter]

Sales tax laws vary from state to state, but most have a sales tax and a use tax. In Tennessee, the state's website says simply "the sales tax applies to the retail sale of tangible personal property..." There is no exemption for individuals. If for some reason you bought something and were not charged sales tax, then you are supposed to pay the equivalent amount as "use tax." The payment requirements are more complicated for interstate transactions, as some states don't require sellers to collect until the seller reaches a certain threshold. However, in those cases, depending on where the buyer lives, the buyer may still be required by his home state to pay use tax. The level of enforcement may not have reached down to individuals but I'm guessing that in most states transactions between individuals are not exempt from sales tax.

[Northwest Steve]

I am aware of the use tax. I was under the assumption that if you purchased something where they do not collect tax (I live in Washington State and there is not sales tax in Montana or Oregon) the individual purchaser is to pay the use tax? I could be completely wrong but other than purchasing a vehicle I have never heard of individual to individual sales being a taxable event?