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TAXES!
Just wondering what the impact of all sales on BrickLink being taxed (eventually) will have on sales on BrickOwl?
I have no clue the percentage of BL customers who know of BrickOwl, but I would imagine if they know they can buy the same parts from the same store for less...
... Sales here might “pop” (as my son puts it😎)
... food for thought
I have no clue the percentage of BL customers who know of BrickOwl, but I would imagine if they know they can buy the same parts from the same store for less...
... Sales here might “pop” (as my son puts it😎)
... food for thought
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I will have to block Kansas as one of the states I am selling to for the simple reason that legally I have to charge sales tax in that state. There is no threshold. At some point if I grow enough, the amount of orders on BL, BO and eBay for me combined makes me pass the threshold in some other states, forcing me to set up a nexus and charge sales tax.
I hope some day BO will also be able to handle taxes the proper and legal way.
I know it's not fun, paying taxes has never been fun. But it has to happen...
How do you block a state, I was considering the same.
BrickOwl isn’t doing anything illegal, as far as I see?
Brickowl is not doing anything illegal, but we are as soon as we cross the >200 orders or ship to Kansas state.
It is time for the US to come with a sales/use tax on federal level. It's 2020, everybody buys everything out of state...
I'm not worried, we are all so small in the grand scheme of things. But we have to consider doing the 'right' thing. I'm somewhat comforted by having both Bricklink and eBay taking care of all of this thinking for us.
I don't fully understand how the US tax collection will work on BL. Currently I'm not posting internationally due to COVID, but if things pan out the way I understand their implementation, I will stop posting to US permanetly.
I'm also waiting to see how their VAT system will be changing. They imply that UK sellers will automatically have VAT added to pricing. Unlike mainland EU I suspect that the vast majority of us in UK are not VAT registered. I'd love to turn around £85K annually in LEGO, but that isn't going to happen.
@White Horse Bricks - the only change regards VAT is that they will start charging VAT on their fees. This is how it should have been for years, but now TLG are involved, BL can no longer hide behind their self-imposed ignorance and claim that EU law doesn't apply to them.
The minifigure sold did cost 15.50.
Buyer is in NC, so eBay charges sales tax: 1.42
My shipping is 3.84
Total gross amount I received on my paypal account is 20.76 USD
The amount lost for paypal fee is 0.90 usd
And then Paypal immidiately sends 1.42 usd sales tax to eBay.
Net total received is 18.44
First issue: I pay paypal fees over the total amount, also the sales tax, so there is a slightly bigger loss there. We're not talking a lot, in this case the difference is around 1 cent.
Second issue: the sales tax is not visible to the buyer until checkout. Whereas in Europe all prices include VAT, no way a store would display a price without VAT. Here in the states it's always a surprise how much you pay at checkout. Is it 8% more? Is it 10% more? Is this exempt from sales tax? When I moved 2 years ago, this was a major adjustment. But Americans are used to this, and no one gets upset about it.
For you there is no reason to stop posting to the US except that 1 cent loss on paypal fees. The sales tax is for the buyer, and no buyer will get upset if they have to pay sales tax. If anything, it shows reliability and trustworthiness of dealing with a legit buyer/marketplace.
@Lawrence, it might be worth considering to follow suit at some point. Legislation in the US is moving into this direction, it's a matter of time.
Without rewriting the constitution there will never be a federal sales tax!
And I see absolutely no way the 42 states collecting sales tax can impose anything on a company registered in the UK.
Bricklink is now fully LEGO Group hence the change there.
And once the UK finally gets away from the EU, I don't see the EU going after Brickowl either, at least it'll be no different to their relationship with, say, Israel
Attached is what it looks like on the buyer side for me (I'm in AR). Made an offer for 8.75 for a book, but end up paying more due to Sales tax.
From Graham: "I believe there is litigation regarding their zero threshold and until that’s gone thru the courts nothing will happen. Even if it stands I somehow can’t see the Kansas dept of revenue sending someone to collect a few dollars in unreported sales tax from thousands of etailers!"
I'm 100% with Graham - I know there's litigation on this, so was kind of stalling to see what happens. I am tracking all other states in real-time so I can tweak my tax settings for certain zip codes of need be later in the year. Ethically, I want to do the right thing - I may just pay anything owed at the end of the year out of pocket, we're talking less than $10 for me is my guess.
Again, our Federal government needs to keep up with tech and intervene here (something I don't normally want outside of national security stuph, but this kind of multi-state thing is why we have a Federal gov't <s>).
"The overall cost to the buyer is increased no matter where the order is coming
from, with the exception of cases where the US seller was previously charging
sales tax. But because this was based on a personal threshold, and not many (relatively)
US sellers were collecting tax. "
Not many US sellers were collecting tax on BL? Seriously?
If you are doing anything beyond clearing out stuff you owned already (i.e., if you are restocking and entering this business to make a profit) you HAVE to follow your state's sales tax rules, it's the law.
Do truly that many of US sellers at BL skirt the law, or are that many truly people just selling off what they have laying around and not restocking/not intending to make $$?
Just curious. The former would suck, as it really punishes those that try to earnestly follow the rules, obviously. And their state, of course (where do we think highway funds, education plus-ups, etc., come from? <s>).
The minifigure sold did cost 15.50.
Buyer is in NC, so eBay charges sales tax: 1.42
My shipping is 3.84
Total gross amount I received on my paypal account is 20.76 USD
The amount lost for paypal fee is 0.90 usd
And then Paypal immidiately sends 1.42 usd sales tax to eBay.
Net total received is 18.44
I pretty sure I read that BL will charge the tax on the full amount including shipping. Does eBay not do that currently?
Tyson.
At the very least, non-US sellers who still want to sell to the US states covered by this new policy should speak to their accountant or tax authority to find out how to record and report this going forward.
@Hoddie so if i understand correctly, when i ship a order to the USA from the Netherlands, bricklink will tax me based on local tax rules?
BUT how you - as a non-US seller - report this additional transaction to YOUR tax authority depends on your country's tax regime.
It's likely that full relief will be given, in which case the only damage is the time it takes to record and report it along with the rest of your tax submissions. BUT not every seller will be so lucky. Some countries won't give relief, or may only give partial relief, and in this case there will be a financial cost because any amount not covered by relief will be seen as taxable income.
Be wary of anyone who says not to worry about it. The only way to be sure is to speak to your accountant or tax authority.
@minifigforlife depends how your local governments see it, it passes through YOUR account, so income ? or maybe not? depend on the interpretation.
But will it, though? From what I understand they will collect the money and funnel the part that is yours to you. And if not, should BL then not include that deduction in their fee invoices? If they do that, as far as I can see, it's simply increased turnover offset by a corresponding business cost (I am aware tax is not a business cost but as a EU seller is not tax registered in the US I am assuming that the money sent to Bricklink for Bricklink to cover those taxes is a business cost)... but this is just what I figure based on logic not experience.
I'm unaware of any option that even allows a web host to "do this on my behalf", unless this is wildly new in terms of tax law, at least in the state of California? The burden is on me as the reseller to do this and to report the totals - otherwise, when I report my business tax schedules annually, it gives the appearance to the state that I am not even trying to collect sales taxes owed (unless, eBay and BL will be reporting those to each state in the name and using the resale license ID of each individual seller)???
Again, not affected, but super confused for others here.
The other thing is this July 1st 2021 change that is claimed to affect all in EU. Not seen or heard anything official about that so I don't know what to think. I pay in VAT to the tax authorities now every month but will they ask BL (and BO) for that VAT then??
Confusion is growing on a daily basis.
- Suppose customer places a $100 order (total of parts, and S&H added by seller), tax in his state is 5%, and sellers tax is 10%;
- BL sends an invoice for $105 ($100 + 5%);
- Buyer pays $105;
- BL instructs Paypal to send $100 to seller, and puts $5 in the pot for taxes to be paid to customer's state;
- Seller needs to pay taxes on $105, which is $10.50.
In both cases (before the BL-tax-setup, as well as after it), seller receives $100. However, before, he had to pay $10 taxes on this sale, whereas now he needs to pay $10.50. The upside for the seller is that he doesn't have to do anything to handle taxes for the customer's state, at the cost of (in this case) 0.5% cost of his sale. For most sellers, that is a pretty good deal.
But then again, I am not a tax expert on any level, so I am happy (and expecting) to be corrected.
Niek.
The actual increase would be higher when taking the additional PayPal fees into account, but even then it's minor.
But as I've said all along, it isn't the extra cost of servicing the order that's the main issue, it's the additional reporting requirements to your tax authority. Unless you're going to pretend that the US tax element doesn't exist, and forsake any relief that may be due, you will need to account for it in some way on your tax submissions. And pretending it doesn't exist may not be a legal option.