eBay clothing sales - do I charge in-state sales tax?

September 7, 2008 8:31 PM

Am I required to charge sales tax for clothing sold from a home-based eBay business out of New York City?

I've recently decided to start a home-based business selling vintage clothing on eBay. I know that I'm not required to charge sale tax on out-of-state purchases, but just wanted to make sure that this applies for clothing items sold in-state as well. The way I understand it, clothing under $110 is exempt from sales tax. Am I understanding this correctly? Will I be responsible for remitting any tax to New York State each quarter?

I just received my sales & use tax "Certificate of Authority" and I want to be sure I'm making the IRS happy.

Again, my little business is based in New York City.

Thanks for your help in advance!

posted by kmtiszen to Work & Money (2 answers total)

NYC.gov says no. (Although I imagine you already looked at that page.) You could always call 311 to clarify.
posted by greenland at 9:00 PM on September 7, 2008

I live in a different state than you, but sold vintage clothes on ebay as my main source of income for awhile and followed all the proper procedures for running a small, home-based business. Trust me, when it comes tax time, you will wish that you had charged your in-state customers sales tax. By not charging your customers sales tax, you are screwing yourself because the taxes on an operation like this are typically beastly, especially if you are moderately successful! Don't let this information scare you, but it's best to be as savvy as possible.

You are going to want to start holding back at least 25-30% of your profits in the anticipation of using it to pay taxes. You might want to pay your quarterly taxes, but I never remembered to. I did have to pay around $100 extra in penalties for not doing so. Start keeping really good records of your sales, purchases, costs and fees. Keep receipts for everything you buy related to your ebay business (laundry products, dry-cleaning, mannequins, hangers, storage racks, tissue paper, packaging supplies). Keep a log of the mileage and transportation costs you incur from traveling to places to acquire inventory. Keep a mileage notebook in your car. Going to an estate sale or auction? Record the mileage. You can deduct it from your taxes. There are other small business related expenses you can deduct, as you may already know.

Send me a message if you have any questions! Best of luck with your new business venture.
posted by pluckysparrow at 9:54 PM on September 7, 2008