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Mark D
Mark D, Enrolled Agent
Category: Tax
Satisfied Customers: 1279
Experience:  MBA, EA, Specializing in Business and Individual Tax Returns and Issues
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I am renting a space in SC where my jewelry is being sold.

Resolved Question:

I am renting a space in SC where my jewelry is being sold. The owner of the store now wants me to setup a merchant account for credit cards sales. How does this work and would I now be responsible for paying sales tax directly to SC. I live in AZ.
Submitted: 7 years ago.
Category: Tax
Expert:  Mark D replied 7 years ago.
Customer

 

Are you selling on a consignment basis? If so, the merchant selling the product for you would be responsible for collecting and remitting sales tax.

 

If you are strictly renting a space to sell, you would be responsible for the sales tax regardless of whether you had a merchant account or not. The merchant account is strictly to process credit card sales. The owner may want you to open your own so he/she can segregate the merchant fees.

 

Either way, I would recommend you ask the owner and ensure he has been taking care of the sales tax and if he will continue to do so in the future. If not, you will need to file your own sales tax returns and remit your sales tax directly. Please let me know if you have any questions.

 

Regards,

 

Mark D

Customer: replied 7 years ago.

It is not a consignment store. There are several people renting spaces and the owner sells our merchandize for us. So you are saying that each one of us would have our own merchant account for credit card sales. And we would have to report the sales tax on those sales. I'm still a little confused about how this whole process would work.

 

Expert:  Mark D replied 7 years ago.
Customer

 

Please do not confuse the merchant account with the sales tax. In your case, the sales tax would need to be collected and reported regardless of whether you have a merchant account. The merchant account is strictly so you can process credit cards sales and have the money, less a fee, deposited into a bank account of your choosing. It sounds like the owner is just trying to separate everyone's business at the store so he is not responsible for the sales tax and merchant fees. Please let me know if you have further questions.

 

Regards,

 

Mark D

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