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Should I pay tax on a consignment purchase?

JoeYello

Silver Supporting Member
Messages
1,908
A local store has a guitar I may be interested in that is on consignment. Should you have to pay tax on the full amount of the purchase or only on the approximate 15% that the store will make?
 

Jahn

Listens to Johnny Marr, plays like John Denver
Silver Supporting Member
Messages
28,931
full amount of the purchase if the store's on the level.
 

JoeYello

Silver Supporting Member
Messages
1,908
I fine that intereesting since if I bought the guitar directly from the owner I wouldn't pay tax, The store is only making a fee. On a trade in you only pay tax on the difference..............
 

Smakutus

Member
Messages
8,367
I fine that intereesting since if I bought the guitar directly from the owner I wouldn't pay tax, The store is only making a fee. On a trade in you only pay tax on the difference..............
If the state could get money from private sales they would.

Jeff
 

clarkram

Member
Messages
3,064
I fine that intereesting since if I bought the guitar directly from the owner I wouldn't pay tax, The store is only making a fee. On a trade in you only pay tax on the difference..............

If you bought the guitar from the owner most states would deem it a casual sale and not impose the tax. Each state is different on how this is handled, if its not covered in statutes then it is most likely addressed in regulations.
 

Guitar Josh

Resident Curmudgeon
Gold Supporting Member
Messages
18,943
Yes, and the reason is simple. The store is simply acting as an agent for collecting the tax which is then collected by the government authority. Whether they are selling on behalf of themselves or a third party, that tax is owed.
 

jordanL

Member
Messages
1,478
If you bought the guitar from the owner most states would deem it a casual sale and not impose the tax. Each state is different on how this is handled, if its not covered in statutes then it is most likely addressed in regulations.
As I understand it , in that sort of a sale the buyer still owes the tax and would file the forms, etc. This would be a strict interpretation; in reality no one is going to enforce this, except on large items like a vehicle.
 

dantedayjob

Member
Messages
1,866
As I understand it , in that sort of a sale the buyer still owes the tax and would file the forms, etc. This would be a strict interpretation; in reality no one is going to enforce this, except on large items like a vehicle.
Correct... this is also one of the controversies with internet or mail order state to state sales... in those cases, the buyer is supposed to report the purchase and pay appropriate taxes, however, in practice, this is unenforceable
 

Dcountry13

Member
Messages
18
I think it wierd that a store would enforce this at risk of losing a sale. A big box chain store, maybe, but a with mom&pop store it would be unlikely that they would enforce it (especially at risk of losing a sale) and/or report the full sale properly.

Also, to answer your question about whether you should pay the full tax, the real answer is a question....How bad do you want the guitar?

Just my thoughts.
 

TravisE

Silver Supporting Member
Messages
4,542
I think it wierd that a store would enforce this at risk of losing a sale. A big box chain store, maybe, but a with mom&pop store it would be unlikely that they would enforce it (especially at risk of losing a sale) and/or report the full sale properly.

Also, to answer your question about whether you should pay the full tax, the real answer is a question....How bad do you want the guitar?

Just my thoughts.
Why would this be weird? The paper trail leading to sales goes further than the receipt that they hand you when they send you on your merry way. Are you paying with a card? Well, if you do and they don't charge you taxes, the taxes will have to be paid by them. Otherwise their accountant is going to ask where that money went. Often buyers are very one-dimensional when it comes to business operations. If you don't want to pay the tax, have them call the consignor to negotiate a price reduction that will cover the taxes. Another option would be to have them ship the instrument to an address across state lines which means that you pay shipping rather than taxes. You simply weight your options at that point.
 




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