What does being “sales tax compliant” mean for an auction house?
Being compliant requires you to know, understand, and follow your legal obligations in regards to collecting sales tax for all your business’ revenue channels, whether it be direct (e.g. through your own website), or through marketplaces like LiveAuctioneers.
Do I need to report to all states on all my sales? What extra processes would my company have to implement?
You may be responsible for reporting sales to state and local governments where customers’ purchases have been shipped. Determining factors include whether you have economic nexus in those states, what types of items were purchased, how/when those sales were made, and more.
To better understand the extra processes your business may have to implement, we recommend you reach out to a tax expert to help you navigate the process.
If I stop selling through marketplaces, would I not have to collect out-of-state sales tax?
No. As long as you are shipping to out-of-state customers, you are still liable for calculating, collecting, and remitting out-of-state sales tax.
LiveAuctioneers will automatically calculate, collect, and remit sales tax for transactions completed through Live.Payments. For transactions made outside of Live.Payments, either your business or a third party service of your choice is responsible for accurately collecting and paying sales tax to each respective state/local government.
Do these sales tax rules apply to sales made through my website?
Yes. Sales tax rules apply to all revenue channels, whether it is direct (e.g. through your own website) or through marketplaces like LiveAuctioneers. It is recommended that you review all of your revenue channels to ensure you are compliant, as you are required to collect sales tax for all applicable states and municipalities in which your customers reside.
What happens if I sell through a marketplace which is not compliant?
Selling through a non-compliant marketplace could potentially lead to more penalties for you as a business, as the IRS is more likely to investigate non-compliant marketplaces.