The hidden cost of buying online
Did you pay taxes on that second-hand furniture? Well, you should

By KEN MERRILL - Daily News

Feb. 19, 2016

Elizabeth Bartelt displays on her phone the Facebook home page for West Bend and Area Buy, Sell, Trade on Thursday afternoon in her store, All in Books, in downtown West Bend. Bartelt is an administrator for the page.
John Ehlke/Daily News

Have you bought anything online? Who hasn’t?

But did you pay taxes on it?

Wisconsin tax codes require that sales taxes be paid on most every transaction, whether or not it took place in the state.

Online sites like eBay and Amazon make it easy for buyers; they include a Wisconsin sales tax in your bill.

The Wisconsin Department of Revenue details some exemptions to the requirement to pay what it calls a “use tax” on Internet purchases.

There is a category the state calls “occasional sales,” including fundraisers by nonprofit organizations, neighborhood associations, churches, social clubs, civic clubs, garden clubs and others. Auctions are exempt. So are sales by someone not required to hold a seller’s permit, if the seller isn’t making more than $1,000 a year on sales. Think rummage sales and that old sofa you sold to your roommate for $50 when you moved out. You’re exempt from charging a sales tax.

But the growth of social media and online sites facilitating sales of second-hand goods, especially, make paying taxes the responsibility of the buyer, not the seller.

Craigslist, a website of classified advertisements for jobs, housing, items for sale and services, came online in 1996. It began spreading across U.S. cities in 2000 and now caters to users worldwide. And a quick search of Facebook for “buy/sell/trade” will turn up sites based in communities throughout Washington County.

There are Facebook groups titled “Slinger & Area Buy, Sell & Give Away,” a “West Bend & Area Buy, Sell, Trade,” “West Bend Area Guys stuff buy, sell” “West Bend Area Children’s Buy, Sell, Trade” and a “West Bend Washington County Buy, Sell, Trade $5 and Under.”

Clearly, if you’re interested in buying or selling online, you don’t have to look far.

Betty Bartelt, owner of All In Books, a used bookstore in West Bend, is also an administrator for the “West Bend & Area Buy, Sell, Trade” page on Facebook.

“I’ve been involved for about a year or so,” Bartelt said. “I opened my store because of the buy/sell/trade sites.

“I was getting such interest from people on the buy/sell/trade sites, but books, that I decided to open a used book store,” she said. “There are several of us who have opened up stores because of the buy/ sell/trade sites.”

Bartelt said tax payments for most buyers and sellers follow the rules of rummage sales.

“It would be no different than you having a rummage sale in your front yard,” she said.

Still, it’s a little different for Bartelt, since she does have a seller’s permit and operates a retail store. If you hold a seller’s permit, you’re required to collect taxes on your sales.

“When I sell on Amazon or on eBay I pay those taxes,” she said. “Even when I sell on Facebook I pay those taxes.”

Scot Schneider, a CPA and tax preparer at Glynn Accounting in Slinger, said if you’re not charged state taxes when you buy something online, it’s you responsibility to report it — and pay your taxes — when you file your individual state tax return.

“The buyer is liable any time there is a tangible item,” Schneider said. “They have a lot of different definitions for that stuff, but it’s mostly personal property, the obvious stuff — a computer, clothes.”

On Wisconsin Income Tax Form 1, there is a line to remit “Sales and use tax due on Internet, mail order, or other out-of-state purchases.”

Further, taxpayers are asked that “If you certify that no sales or use tax is due, check here.”

The Department of Revenue notes that Wisconsin coordinates with other states to make sure taxes are paid. Sales in other states to Wisconsin residents are linked to individual returns to determine if the sales were reported and the taxes paid.

What if I sell my old computer to roommate?

“Yes, he should be paying use tax on it,” Schneider said. “You, as the seller, don’t have to charge him sales tax because you don’t have a permit — that’s where the occasional sales come in.”

OK, but do people always pay their “use” taxes?

“I have a couple that do, but for the most part, no,” Schneider said.

Schneider related something a client, who is also a Wisconsin sales tax auditor, told him.

“She told me, ‘Nobody does that except for the auditors,’” Schneider said. “It’s more of a ‘catch me if you can’ thing.”

If you are caught, expect to pay the taxes due. The state can also charge a 50 percent penalty for filing an incorrect return.

Reach news editor Ken Merrill at kmerrill@conleynet.com.