Wondering about how to file US income tax return online? There are a lot of businesses that buy things and then sell them again, like department stores, grocery stores, car dealers, and people who sell things through catalogues. A reseller buys things and then sells them almost precisely the same way they bought them. Often, resellers pay sales tax on the things they buy, but they must collect sales tax from the final customer when they resell the items.
Even though the things they sell are different, all secondhand shops buy things and sell them in the same condition as when they were first bought. It’s easy to see how someone who buys wheels from a wholesaler and then sells the same wheels back to wholesalers could be called a reseller. Attachments for a wheelbarrow, on the other hand, are more likely to be seen as a manufacturer than a reseller since the wheels you bought are a completely different product than the rest of the wheelbarrow.
Resellers must be “physically present” in a state where they sell goods and services to customers to be responsible for sales taxes. If you plan to have a physical presence in a state, you will have to collect sales taxes on purchases made in that state unless you are exempt from sales tax.
Most exemptions are for things that can be sold again. If your customer wants to sell the property again, you can give them a “resale exemption,” usually a “resale certificate.” This document can be in the form that the state gives, or it can just be a piece of paper with the minimum information required by state law. Either or, it can be on the resale certificate. It would be wise to get a copy of the customer’s sales tax certificate to give the customer the resale exemption. If the state auditor comes to your door and asks for proof of your resale exemption claim, you’ll be glad you have a certificate.
When collecting certificates to sell on, it’s essential to keep track of which ones were accepted by customers in good faith. As soon as you know that all of the requirements for getting the resale certificate have been met, you can add any shipping costs to your customer’s resale order.
Different states have different effects on trade-ins.
In some states, customers who trade in old equipment (called “trade-ins”) may be able to lower the amount of sales tax they have to pay by the value of their trade-ins. These states may have different ideas about what counts as a reasonable trade-in.
Conclusion
The goal of USA Expat Taxes is to make the lives of Americans who are living and working abroad easier by taking away the stress and worry that comes with doing taxes. With our help, it’s much easier to stay in good standing with the IRS while living abroad. Even though it may seem impossible, we’ve broken this down into three easy steps. USA Expat Taxes is eager to work with you because we have a lot of experience helping people worldwide with their U.S. taxes.