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Marketplace Facilitator Sales Tax Collection

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Note: GunBroker.com updates this document as new information becomes available. Please check back regularly for the newest updates. 

Last Update: March, 14 2023 

 

What is in this document?

  1. Sales Tax
  2. What does this mean to me?
  3. As a Buyer
  4. As a Seller
  5. Future Updates related to Sales Tax
  6. For more details about Marketplace Facilitators

Sales Tax

Since the Wayfair Supreme Court decision, states have been allowed to force sellers to collect sales tax for items sold into a state, even if the seller has no physical presence in that state. Additionally, some states have enacted so called Marketplace Facilitator (MPF) laws in an effort to force marketplaces that perform certain functions to collect sales tax on behalf of the marketplace’s sellers. GunBroker.com complies with the new laws and collects and remits sales tax on all sales by all sellers who sell items into certain states.

The GunBroker.com MPF States

GunBroker.com calculates, collects, and remits sales tax on behalf of all sellers with sales in states with sales tax, including the following:

Note: Effective January 1, 2023 Missouri became the final sate with sales tax to require MPF Sales Tax collection. All states with sales tax now require MPF tax collection. 

  • Alabama - AL
  • Alaska - AK
  • Arizona - AZ
  • Arkansas - AR
  • California - CA
  • Colorado - CO
  • Connecticut - CT
  • District of Columbia - DC
  • Florida - FL
  • Georgia – GA
  • Hawaii - HI
  • Idaho - ID
  • Illinois - IL
  • Indiana – IN
  • Iowa – IA
  • Kansas - KS
  • Kentucky – KY
  • Louisiana - LA
  • Maine – ME
  • Maryland - MD
  • Massachusetts - MA
  • Michigan - MI
  • Minnesota - MN
  • Mississippi - MS
  • Missouri - MO
  • Nebraska – NE
  • Nevada – NV
  • New Jersey – NJ
  • New Mexico - NM
  • New York - NY
  • North Carolina - NC
  • North Dakota - ND
  • Ohio - OH
  • Oklahoma - OK
  • Pennsylvania - PA
  • Puerto Rico - PR
  • Rhode Island - RI
  • South Carolina - SC
  • South Dakota - SD
  • Tennessee - TN
  • Texas - TX
  • Utah - UT
  • Vermont - VT
  • Virginia - VA
  • Washington - WA
  • West Virginia - WV
  • Wisconsin - WI
  • Wyoming - WY

As used in this document, the term “GunBroker.com MPF States” means all the states where tax collection is mandated.

What is a Marketplace Facilitator?

Each state has its own definition of a Marketplace Facilitator, but in general, a Marketplace Facilitator is an entity that provides a forum for sellers to promote their sale of physical property, digital goods, and services, whether or not the forum is the actual seller of the items.

What are Marketplace Facilitator Laws?

Marketplace Facilitator laws are a set of state laws that shift the sales tax collection and remittance obligations from the individual seller to the Marketplace Facilitator. In states that consider GunBroker.com to be a Marketplace Facilitator, GunBroker.com will have to calculate, collect and remit state sales tax on goods and services sold by third party sellers for transactions destined to states where a Marketplace Facilitator law has been enacted.

What does this mean to me?

As a Buyer:

If your state is a GunBroker.com MPF State, your state requires Marketplace Facilitators to collect and remit sales tax on items you purchase, so you will be required to pay the tax due for your purchases on GunBroker.com. The tax amount will be included on your order during checkout.

These are state regulations with which GunBroker.com has to comply, and in no way amount to an additional revenue source for the business. All taxes received are remitted to the appropriate states.

Why am I being charged tax if my state is not a GunBroker.com MPF State?

Individual sellers may still be required to collect and remit sales tax for states not required by GunBroker.com. Each state places different tax obligations on GunBroker.com, Business Sellers and Individual Sellers that must each comply with with applicable regulations as they affect the sales tax for purchases. 

What if my business is tax exempt for purchases?

If your purchases are exempt from tax, you must submit your tax exemption documentation to GunBroker.com for review. Check with your tax professional and/or the following for the documents required by each state: Sales Tax Exemption Certificates. After review, your account will be set up as tax-exempt buyer.

To submit your exemption please do the following:

Proceed to https://www.gunbroker.com/user/taxexemption and select your sales tax exemption reason and upload your documents. Once approved your account will be exempt from sales tax collections on your purchases.

You can view the status of your submission under account information in My GunBroker, or at this link: https://www.gunbroker.com/a/my-gunbroker/my-account/account-info

As a Seller:

GunBroker.com assists with the calculation, collection and remittance of the sales tax due, automatically calculating the sales tax required and adding it to the order during the checkout process. The tax calculation, for most states, will be based on the Ship To address on the order. This is the location of the Buyer, not the location of the Seller. The calculation will include sales tax for the item, plus any additional taxes imposed by that state on other things such as shipping or handling. Simply collect the Order Total Payable from the buyer.

GunBroker.com will track and bill you for the sales tax you have collected from the buyers on each item sold to buyers in the GunBroker.com MPF States. You will then remit the tax collected to GunBroker.com and GunBroker.com will remit it to the appropriate state.   

For sales of items on January 1, 2021 and afterwards that are shipped to GunBroker.com MPF States, you will be sent a statement by us for sales tax amounts in addition to your GunBroker.com fees (see below under “How will this process flow?”).  If you do not use the GunBroker.com immediate checkout process, please see the section below titled “What if I don’t use the GunBroker.com immediate checkout process for my sales?” for additional important instructions.

What if I am an individual and not a company or business?

Marketplace Facilitator Laws require GunBroker.com to collect and remit sales tax on all sales by its sellers into GunBroker.com MPF States, regardless of whether the seller is an individual, a company, or a business, the seller’s location, or total sales in a particular state.  The only exception to this is for tax-exempt sellers (see the section below titled “What if my account is a charity or tax-exempt?”) or tax-exempt buyers.

How will the sales tax process flow?

GunBroker.com automatically calculates and adds applicable sales tax to each order being shipped to a GunBroker.com MPF State. The buyer will pay the seller the Order Total Payable, which includes sales tax. The seller will be notified of the sales tax to remit via a sales tax statement. The tax amount will be remitted to GunBroker.com via a remittance process that is very similar to the one we use to collect fees using your payment method(s) on file. GunBroker.com will then remit the sales tax to the appropriate state.

Since GunBroker.com is not part of the financial transaction between the buyer and the seller, GunBroker.com cannot directly collect the sales tax from the buyer. The buyer's tax payment goes form the buyer, to the seller, to GunBroker.com before finally being remitted to the state.

How does this work if I use the GunBroker.com immediate checkout process?

The GunBroker.com immediate checkout process has the advantage of ensuring that the necessary sales taxes for sales into GunBroker.com MPF States is added to the amount collected from the buyer.

For sellers using the GunBroker.com immediate checkout process, those amounts will be added to the amount collected by you from the buyer.  GunBroker.com will then bill and collect these sales tax amounts from you in the same manner as we use to bill and collect your monthly GunBroker.com fees, via your payment method on file. GunBroker.com will remit the amounts collected to each state as the Marketplace Facilitator. All transaction payments go to the seller and no money flows directly from the buyer to GunBroker.com, the tax payment / remittance will flow from the buyer to the seller, then to GunBroker.com, and finally to the appropriate state. 

What if I don’t use the GunBroker.com immediate checkout process for my sales?

If you do not use the GunBroker.com immediate checkout process, you should use the GunBroker.com standard checkout for all your sales / orders. The checkout and order process will calculate the sales tax based on the Ship To address (for most states) on the order and add the amount to the order total payable. Collect the order total payable from the buyer so you have the correct amount.

The checkout and order process will work for sellers, no matter what payment methods you accept and what shipping methods you support. The checkout process allows for efficient communication between the buyer and the seller for all transactions.

If you do not use the GunBroker.com immediate checkout process, you will need to add the sales tax for the GunBroker.com MPF States to your own checkout process and collect these amounts from your buyers in those states, because GunBroker.com will be billing and collecting these amounts from you.

Will I have access to sales tax information?

Yes. GunBroker.com provides sales tax information for sellers via My GunBroker > Account > Billing Info > Sales Tax Balance. This section contain information about the order, applicable state, and tax amount.

Will I have to change my listings?

No. On January 1, 2021, the GunBroker.com checkout process began calculating sales tax on all orders. No changes to your listings need to be made. Existing tax information on your listings will be overridden for the GunBroker.com MPF States. Other states will calculate tax based on the information you supply. The sales tax selections are “GB Marketplace Facilitator States Only” or “GB Marketplace Facilitator States and Others”.

How do I know if I need to collect sales tax? / How will tax calculation work? 

For each order, GunBroker.com will check to see if the Ship To address is in a GunBroker.com MPF State. If it is, GunBroker.com will calculate the sales tax due for the order. If the address is in any other state, GunBroker.com will use the tax information you provided (including by notations in your listings or through Tax Cloud), to determine the appropriate tax.  If you have not provided information about a particular non-GunBroker.com MPF State, no additional sales tax will be added.

Is Sales Tax on my monthly fee statements? 

Sales tax will not appear on your monthly fee statements for items you sell. The sales tax will be billed to you on a separate statement and collected via a separate collection process. 

What is a Sales Tax Statement? When will I receive them?

The sales tax statement is completely independent of the statement you currently receive related to fees. We are keeping the processes separate to assist with tracking and accounting related to sales tax.

Sales Tax Statements will be sent out near the beginning if each month. Your statements will include all new activity since the last statement.

When and how will remittance / collection / payment of Sales Tax Occur?

Your remittance of sales tax to GunBroker.com will occur approximately 10 - 14 days after you are sent your sales tax statement. This process will be completely independent of the fee collection process, as sales tax and fees will be completed separate.

In a manner similar to the process for your fees, they are automatically collected. GunBroker.com will collect the sales tax you are due to remit. The process will use the payment methods you already have on file. The primary payment method will be attempted first. If this payment method is unsuccessful, we will attempt your secondary payment method.

You can review the payment methods you have on file via My GunBroker > Account > Billing Information.

How will this impact the sales tax filings I submit to states?

If you are already remitting sales tax for GunBroker sales into one of the GunBroker MPF States, you should no longer do so. States with MFP laws force the marketplace, not you, to collect and remit sales tax.

Sales tax requirements and regulations vary by state. GunBroker.com suggests you consult a tax accountant or tax attorney for guidance in these matters.  

Will this change how my fees are calculated?

No. GunBroker.com fees will continue to be assessed on the sale price of the item. The collection of state sales tax will not change your GunBroker.com fees. GunBroker.com does not assess Final Value Fees on sales tax.

What if my account is a charity / tax exempt?

If your sales are exempt from tax, you must submit your tax exemption documentation to GunBroker.com for review. After review, your account will be set up as tax-exempt seller. To submit your exemption please do the following:

  1. Send an email to SiteInfo@gunbroker.com
  2. Attach your tax exemption documentation.
  3. Send it from the email address used on your GunBroker.com account.
  4. Use the email subject: Sales Tax Exemption Request - Seller
  5. Briefly describe why you are tax exempt in the body of the message.

Future Updates related to Sales Tax:

GunBroker.com updates the system regularly to support sales tax processing and continuously works to determine if new or additional state regulations apply. If additional states require the remittance of sales tax, GunBroker.com intends to make the necessary changes at the beginning of each calendar quarter.

Please watch this article for additional updates.

For more details about Marketplace Facilitators:

Please see the links below for additional publicly available sources of guidance on Marketplace Facilitator Laws. Note that by using the information below, you are committing to understand that these links have not been reviewed for accuracy by GunBroker.com and may not be relied upon as tax or legal advice to you in your particular situation.  You should obtain any such advice from your own accountant or other tax advisor.

https://www.avalara.com/us/en/learn/guides/state-by-state-guide-to-marketplace-facilitator-laws.html

https://www.taxconnex.com/blog-/top-marketplace-facilitator-questions-answered

https://quaderno.io/blog/us-marketplace-facilitator-sales-tax-laws-everything-you-need-to-know/

https://www.google.com/search?hl=en&q=why+do+marketplace+facilitators+have+to+collect+sales+tax

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