Sales tax on Amazon and Ebay

Discussion in 'Marketplace Discussions' started by slipkid, May 9, 2018.

  1. Reese

    Reese Forum Resident

    This may be of interest for those of you who order from Music Direct. For quite a while now, Music Direct (MD) has been collecting sales tax for orders delivered to Nevada. For this reason I have largely avoided MD in favor of other vendors that do not collect tax. However, the recent 20% off deal, the increase in pricing of MFSL products at places like Deep Discount, and MD's favorable policy regarding shipping of pre-orders made it worth placing an order with them.

    When reviewing the order, I noticed that the sales tax seemed a bit high. Indeed, MD was charging 8.25% instead of my local rate of 7.65%. I included a note with the order questioning this.

    A sales person replied that they are "charging the correct Tax [sic] based off of our warehouse location in Las Vegas and has nothing to do with the county you are in."

    I replied that while they are obligated to collect Nevada sales tax because they have a physical presence in the state, Nevada is a destination-based tax state, meaning that collect the tax in effect at the destination, not the store (or warehouse). Vendors must report Nevada sales tax by county. Not only that, but failure to collect the proper amount can result in a fine of up to three times the amount of your error. In an effort to be helpful, I provided links to our online state statutes and our department of taxation.

    The sales person responded with, "While this is true . . . we collect on the highest rate in the state because we do not have the ability to collect based on destination."

    I'll ignore the change in story and the flimsy excuse and instead focus on this: If you order from MD and they collect sales tax, verify they are collecting the correct amount. While a 1% difference (in this case) isn't a big deal on a $100 order, it is a big deal if you're buying several thousand dollars worth of equipment.
    hvbias and eddiel like this.
  2. Mr Bass

    Mr Bass Chevelle Ma Belle

    Mid Atlantic
    Yes this is the proverbial killing two birds with one stone. Amazon gets state govt off its back and also kills off the small fry sellers without directly targeting them.
  3. I believe that Amazon made a deal under the table with the major music labels to largely kill off third-party Marketplace sales. The major labels were getting upset that counterfeit sellers were starting to creep into the Marketplace and used sales benefit almost no one but private sellers.
  4. slipkid

    slipkid Forum Resident Thread Starter

    Wow, I had no idea of any of this until about a week ago. I've been selling off some of my music collection on Amazon for over 10 years but last week when I tried to list 4 CDs it would only let me list 2 of them! I was not an "authorized seller" and they were not "taking applications" for any more. I had no idea what the heck was going on and even called seller support and got a load of non-answers about not being "authorized to sell that brand". Like a CD is a designer handbag. Unbelievable. It also explains why I don't see as many buying options/sellers as I used to. Amazon used to be great for both buyers and sellers. Now it sucks. I am going to try to shift the majority of my music buying now away from Amazon (which used to be my #1 source) to places like Bullmoose. Save the goddam sales tax plus don't support Amazon as much as I am able to boycott them.
    Reese likes this.
  5. tommy-thewho

    tommy-thewho Forum Resident

    detroit, mi
    I personally haven't seen any sales tax charges on used items.
  6. eddiel

    eddiel Forum Resident

    Toronto, Canada
    I have no idea if this really happened, but it sure sounds like something that could've happened.
  7. I believe it was included as a sweetener when Amazon negotiated their digital music deals with the major labels. Something similar went down when Amazon was negotiating with Hollywood over wholesale rates. It was a quid pro quo situation.
    eddiel likes this.
  8. slipkid

    slipkid Forum Resident Thread Starter

    Aka pure greed. Cut down on their "competition" (marketplace sellers).
  9. ScramMan2

    ScramMan2 Forum Resident

    Portland OR
    Amazon collects sales tax for Washington and Pennsylvania from third party sellers.

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