Discogs tax starting today!

Discussion in 'Marketplace Discussions' started by Strat-Mangler, Jul 1, 2019.

  1. eddiel

    eddiel Forum Resident

    Location:
    Toronto, Canada
    Ah yes, that's right. I read that on awhile back, I think on a Discogs thread, and totally forgot about it. I thought it was just a rumour at the time.

    It's a shame they are doing it that way actually because under the current method the seller doesn't get the cash and hence doesn't lose out on the portion that Paypal takes (which is what happens on Discogs). I wonder why they decided to change it.

    I think pretty soon you'll see most states doing this and more countries to follow.

    With all the changes with these tax rules and the postage rates, it's becoming increasingly difficult for me to justify selling online for anything but high value items. Items on the lower end of the value spectrum require just as much work as those that are higher in price and sometimes it really isn't worth the effort. Throwing them away is very appealing at times!
     
  2. R. Totale

    R. Totale The Voice of Reason

    I got a more clearly worded Paypal email this morning, and realized I misunderstood the eBay email. It appears that in cooperation with Paypal they will not be passing the tax through to the seller and recovering it as Discogs does. They (Paypal mostly) will just capture and remit it to the various states.
     
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  3. Strat-Mangler

    Strat-Mangler Personal Survival Daily Record-Breaker Thread Starter

    Location:
    Toronto
    The law passed a few months ago. AFAIK, every online business is now required to collect tax.
     
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  4. hobbes4444

    hobbes4444 Forum Addict

    Location:
    Massachusetts
    This s**ks. Being taxed on a purchase from a fellow collector is ridiculous. Hopefully enough people complain to their state reps to get states to exempt low volume sellers in some fashion.
     
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  5. Dave

    Dave Esoteric Audio Research Specialistâ„¢

    Location:
    Greater Vancouver
    Really, and what the Hell's next collecting tax at yard sales? :rolleyes: :wtf:
     
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  6. eddiel

    eddiel Forum Resident

    Location:
    Toronto, Canada
    This really only affects states that have passed Marketplace Facilitator laws, but quite a lot of states have passed these types of laws. Amazon has a handy list: Amazon.com Help: Marketplace Tax Collection
     
  7. eddiel

    eddiel Forum Resident

    Location:
    Toronto, Canada
    You know what in NYS state, unless your yard sale meets the special exemption rules for garage/yard sales, you may indeed need to charge tax and possibly even register. Now whether they can enforce that is another question. But those appear to be the rules.
     
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  8. hobbes4444

    hobbes4444 Forum Addict

    Location:
    Massachusetts
    MA must be one because I'm getting hit with tax on everything, even a purchase from the UK. That just boggles my mind, though I understand it in the context of the Supreme Court decision. So much for a conservative court. Just keep taxing like the liberals;)
     
  9. eddiel

    eddiel Forum Resident

    Location:
    Toronto, Canada
    Yes it is.

    I suppose it was inevitable considering how much money is changing hands and the loss of tax revenue to each state.

    Up here in Canada we've been used to getting hit with sales tax when items cross the border. But what's different about these new rules in the US is that it puts the onus on the seller/market place facilitator to collect and remit the tax. In Canada it's up to Customs to intercept, assess and charge the appropriate tax which is then collected by the carrier who makes the delivery. In addition, there's a small exemption, whereas in these states there is no exemption at all, everything, regardless of value, is taxable (as long as it's a taxable good/service).

    I imagine it won't be too long before Canada does something similar at least at the federal level.
     
  10. Strat-Mangler

    Strat-Mangler Personal Survival Daily Record-Breaker Thread Starter

    Location:
    Toronto
    34/50 is a huge portion!
     
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  11. Strat-Mangler

    Strat-Mangler Personal Survival Daily Record-Breaker Thread Starter

    Location:
    Toronto
    To be fair, most (all?) of the online purchases I've made have been taxed. I guess the only thing left is using eBay in Canada and buy from a Canadian seller. I believe that purchase would not be taxed, yet.
     
  12. eddiel

    eddiel Forum Resident

    Location:
    Toronto, Canada
    For sure and it includes states with big markets too. This really is a bad development for online sellers like me though. I'm a part timer and basically sell as part of my hobby (of buying records). Selling to the US is already difficult due to the high postage rates (well difficult even within Canada due to high postage rates!) and the sales tax just increases the prices even further, which likely means I'll need to lower my prices and hence my profits. In many cases, it's already easier to just sell locally to a store or at record shows. I expect these changes will make it even less attractive to sell online, for me anyway.
     
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  13. eddiel

    eddiel Forum Resident

    Location:
    Toronto, Canada
    Yeah our sales tax rules are different so there would be no tax unless the seller is actually required to register for sales tax (ie meets the threshold in their province). There's no marketplace facilitator laws up where so sellers on eBay and Discogs would be considered separate sellers and not one big seller.

    Not sure how long that will be for there. There's talk of adding sales tax to Amazon Prime, Netflex and other streaming type services soon, which was always going to happen at some point.

    I usually escape sales tax on most of my purchases. Even some expensive ones get by sometimes.
     
  14. yesstiles

    yesstiles Senior Member

    Am I expected to collect taxes when I sell a cd on Discogs?
     
  15. eddiel

    eddiel Forum Resident

    Location:
    Toronto, Canada
    No but sort of...for any state that passed the market place facilitator law, Discogs will automatically add the tax to the invoice you issue to the buyer. When the buyer pays you, he also pays you the sales tax. But Discogs will then bill you for that sales tax when they bill you for their other monthly fees. Discogs then remits the tax to the state in question.

    It does mean that you lose out on the Paypal fee portion of the tax amount as Paypal deducts their fee on the total you receive and Discogs bills you for the full amount due.

    Discogs does give you the option to bar sales to any state that requires them to charge sales tax. But you'd be blocking yourself from a large part of the US market if you did that and in time I imagine most states will pass similar laws.
     
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  16. cdash99

    cdash99 Forum Resident

    Location:
    Mass
    Living in the state we both live in, do you think that will ever happen? There's never enough.

    I'd go on, but that would violate the rules of SHF.
     
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  17. SimonSaysCake

    SimonSaysCake Forum Resident

    From what I read on Discogs, and resources at taxjar.com, when you set up to sell merch they pre-check the boxes for the states you mentioned that are part of the MPFL so Discogs will handle the collection and distribution of the taxes from those states - which is good. What isn't stated is if you as a seller still need to do any paperwork for these states or is Discogs handling all that?

    For the states with open checkboxes my understanding is, if you decided to sell to them, you need to be very careful regarding each states tax rules as there are some general rules that are similar across them all but some states have very specific tax requirements. Apparently Pennsylvania expects you to file tax papers regardless of whether you have nexus or not, whether you are required to collect tax or not. And filing papers monthly seems to be the expected manner. Sheesh. Never mind that, if you do choose to collect taxes you apparently must first apply for a sales tax license for those states - no idea what's involved in that.

    What I plan to do is try to investigate all states not currently part of MPFL, I think my sales are under their financial limits (often 100k sales or 200 transactions per year), and they don't have onerous non-tax filing requirements, I will choose to sell to them. For me it's a hobby, just trying to thin the physical media herd so hopefully my plan works.

    -s1m0n-
     
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  18. hvbias

    hvbias Midrange magic

    Location:
    Northeast
    I would take your MA property taxes and state sales tax compared to our property taxes and state tax on capital gains (utter BS) :sigh:
     
  19. R. Totale

    R. Totale The Voice of Reason

    Discogs collects sales tax in many states. If you sell something there and are paid with Paypal, the sales tax is included in what you receive. On your next bill when you pay your commission on the sale, you pay back the collected tax, so you may have float on it up to a month. You do not need to keep paperwork for these states, and in your own state when you pay your local sales tax you report those sales on the form wherever you do for out of state sales, just like before (and like now for those states where Discogs does not collect). You lose the Paypal fee on the sales tax amount. If the buyer uses the internal Discogs payment system, they keep the commission and sales tax before they pay out. You don't pay Paypal fees, although there is a small payout fee from Discogs.

    On Paypal through eBay they charge the customer the tax, pay it into your account so Paypal can get their fee on it, then immediately take it back out and give the dough back to eBay to hold. In the end it's up to Discogs/eBay to finally pay the buyer's state and do the paperwork.

    I've never thought twice about other state's filing requirements and if as you say you are small time I wouldn't suggest you do either.
     
    Matthew Tate likes this.
  20. Dave S

    Dave S Forum Resident

    There was a entry of the MA tax form for out of state internet sales back in 2003. You were meant to fill it in.
     
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  21. eddiel

    eddiel Forum Resident

    Location:
    Toronto, Canada
    I sell privately into the US from time to time and I'm not even going to bother looking up the rules. I'm not going to get anywhere near any sales figure usually quoted.

    My advice, don't worry about it. If you're suddenly hitting hundreds of thousands of dollars of sales into a particular state, well maybe look into it.

    But really, a rule is only as good as the ability to enforce it. I think people are getting worried about nothing. I would only even consider this an issue if I was a professional seller of some note.
     

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