Quoted from Whysnow:
sorry, if this has already been brought up as I have not followed this entire thread.
I am wondering if sales tax needs to be charged/paid on secondary sales of games?
i.e. person #1 buys and pays for a game and is charged/pays sales tax. They then sell to person #2 (let's say NIB still for the simplicity of it all); are they also supposed to be charged/pay on that secondary sale?
I ask for 2 reasons.
First is there are lots of guys that act as the little distributors in their region. They buy a bunch of games for a discount from a bigger distributor and then resell.
Second is that technically the sale from Stern to the original distributor is the first sale. We all know that distributors have to pay stern and then turn around and mark the game up before selling to the end user. The reality is that every NIB game is being sold the second time when it makes it to a home user.
I remember in high school being taught that sales tax on commercial goods is only ever collected ONCE. (certainly there are exceptions to that rule, although I have never understood why you pay taxes on the sale of a car over and over again.) Otherwise you would have to charge sales tax at flea markets and garage sales or anywhere you bought anything.
Now mind you, I think I was in high school like 100 years ago. or at least it seems. so take that for what its worth.
for the jr. distributors, if they have a vendors license, they would not pay tax to the larger distributor because it would be marked as a wholesale purchase, and would have a tax exempt number, but then its up to the jr. distributor to charge sales tax on "their" sale. If they don't have a vendors license, their original purchase would NOT be tax exempt, and they would pay the larger distributor tax on their purchase of X machines.
I used to run a small business back in the day, and at least that is how it was explained to me. I had to report all sales for the year and the taxes I collected on those sales. depending on dollar amount, sales tax was paid quarterly or monthly to the state.